Common Sense Investing

“My best trades turned out to be the ones when my hand was shaking as I gave my trader the blue ticket.” – Bob Hager, co-founder of Phillips, Hager & North

My dad has a saying... "Care, when you are reading the news and the headlines are all good is probably time to sell...and when you are reading the news and all the headlines are bad is probably a good time to buy."

I'm not promoting Bob Hagers technique and I realize my Dad's quote is quite vague! The general idea is that the public tend to react emotionally (understandably so) to economic news (good or bad). This can have an effect on your stock prices. The stock market reacts to BUSINESS news (most of the time). Are sales up or down? Did the company raise their dividend (often a signal to investors they have good cash flow)? Think about last week when Warren Buffett announced he was investing $5 billion into the Bank of America and the stock was up 10% shortly after.

When emotion comes into play and business news is taken out of context, you can often find some fantastic "deals". It is a lot like walking past a designer store with a big SALE or CLEARANCE sign in the window.

When you are thinking about investing take a look at the businesses around you. What makes sense? What companies out there have a GREAT business model? What companies do you LOVE and what companies inspire you? Investing, is in many aspects, common sense. We all know what a good business can look like...they have a lot of customers and they fulfill a need. (Hello...think of all the lineups there are at Tim Hortons, Costco, Walmart, Target, Lululemon, TJ Maxx/Winners). The list goes on and on. Do you have a company you are thinking of yet?

This week - I challenge you to find one and do a little research... investing can be fun you know! :P
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