Your Second Job

Regardless of whether you are employed and drawing a paycheck, are a parent raising children, are a business owner, are retired, or even if you are drawing a paycheck at a second job, you have a separate, additional job responsibility:  managing your investments is itself a job.  

Whether your investments are in a 401k, an IRA, an after-tax account, or all three, your purpose for investing is to successfully increase your quantity of money over time.  

If you are just starting out, you want to grow your investments as quickly as you can, building up your wealth to provide for retirement, your kids’ college tuition, that dream vacation, a vacation house on the lake, etc.  

You want a better rate of growth than a savings account can offer, while still minimizing your mistakes and the risks involved in investing generally.  

As you near retirement, that quantity of money in your stock investments should be well into the hundreds of thousands of dollars, and hopefully into the millions when you retire from your day job.  

That takes a lot of work, planning, and decision-making on a frequent and on-going basis.

In other words, managing your investments is a second job.

Things On an Investor’s Mind 

For each of your stocks, is it time to sell?  Is it best to sell some of any particular stock, or all of it, or should you hold on to it?  Are there other stocks that seem like good investments that you should buy, based on the news?  

How will you pay for those stock purchases?  Usually, most of your available money should be invested in stocks.  You cannot have gains if you are not invested (of course, in a declining market, you cannot have losses if you do not own any stock).  But to buy more means you will have to sell some stocks you already own.  Do you anticipate that the prospective new stock will outperform the stock you intend to sell?  If not, rethink whether the sale and new purchase make sense.

If that stock is in an after-tax account, will that mean you will owe taxes?  Have you owned the stock long enough so that the gain will be treated as a capital gain, or as straight income?  Your tax depends on the answer.  In either case, will the tax be too high, resulting in an overall transaction that is not sufficiently profitable?

Buying the latest copy of the Wall Street Journal about once a week is a good idea.  Read it, looking for any information on any of the factors which can impact your investments, for good or bad.  

Are there any political issues?  What is Congress doing?  What is the President doing?  

How is the economy doing?  

How is that segment of the economy doing to which your companies belong?  

For example, if you own stock in railroads, is shipping by manufacturers increasing, steady, or decreasing?  What is the specific railroad you are considering doing to attract new shippers?  Are manufacturers being encouraged to build new plants near that railroad?  

Every company belongs to some niche of the overall general economy.  Learn what drives their economic niche, and what makes their businesses more or less profitable than the average for that niche.

What makes a company so good that they deserve a stockholder like you?

Is there any news about the companies in which you own stocks?  Are they growing?  Are the decisions of the executive management team continuing to move the company in the right direction?  Is the CEO retiring soon?  

The world changes; it is dynamic, never stagnant.  What was once a profitable high-growth niche or specific company may no longer be so.  Competitors work to increase their edge.  When they are successful, their profitability goes up.  It is up to you as an investor to decide to sell – to pull out your money and choose a better opportunity to make an investment.  The world changes.  Sometimes it is best to sell one stock and buy another stock.  Sometimes it is best to sell only some of the stock you have, and buy only a fraction of the new stock – and then watch the performance of both the old stock and the new stock.

These and other issues are part of the learning curve which every investor experiences over the years.  Your investments are a second job – but in this job, you are your own boss.  You perform your own performance evaluations.  And your “raises” are totally and unequivocally a direct result of your “job performance” – in other words, your success as an investor.

That is part of what makes being an investor so challenging and exciting.

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