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I don’t think I’ve yet made a single post outlining my investment strategy. There are plenty of posts about little bits & pieces, but not a single post that outlines it all. This post will attempt to do that.

First, I’m not formally educated on investing. Serious investors may think this is the biggest joke ever, but it works for me, giving me just over 30% returns year after year. Even when times are bad, there are stocks that will go up.

Let’s start with a simple concept: what makes a stock price rise? P/E ratio? Earnings? Leaked news? No. Much simpler than that.

A stock price will rise when there are more buyers than sellers.

So I don’t care what’s going on with the company - as long as I know what others think of a stock, I can generally pick good ones. So what do I look at?

In the end, I look at the NetNagel Stock Index, which is an ever-evolving formula that takes numerous sources into consideration. The one constant, however, is that I need a stock that’s positioned to go up at least 33%. That’s my trigger point. I also look at ratings on other websites and analyst opinions.

So let’s say I find a stock that I like… say OXPS. I love OXPS, actually. Not today, but I loved it about a year ago. So I ran out and bought some, then bought some more when it went down.

I should make a side-note here that if I believe in a stock, it goes down, and there is no reason for me to change my opinion on the stock, I buy more. Now, it has to go down enough to make it worth-while… say 10%. OK, back on track…

I then figure in my commissions: $7 per buy, and $7 to sell. I keep track of the dividends I’ve received from the stock, and from that I have a total cost (shares & price paid plus commissions minus dividends). Now take the total cost, divided by the total shares, plus 33% and that’s my target selling point. Finally, take the target selling point, divided into the total cost and that’s how many shares I will sell at that price. Here’s my OXPS example:

Shares: 118
Paid: $23.3839
Commissions: $21.00 (I bought twice, and will sell once (well, I’ll sell twice, but only once short-term))
Dividends: $22.14
Total cost: $2,758.16
Target price: $31.17
Sell off: 88.5

Paid: $2,758.16
Sell 89 at $31.17
Remaining: 29 (valued at $903.80 )
Cashed in $2,773.74

What I’ve done is sold enough to cover my initial cost, but held onto the rest. That’s my “profit”. I’ve done this time & time again, and in doing so have built up a wide portfolio that includes FDO, DLB, JBLU, DIS, CDL, VEIEX, GRMN, YHOO, UTI, NTDOY.PK, PRAA, IRBT, and ADY.

The final element to my investing strategy is that I must understand the company that I’m buying. You’ll hear that a lot from other places, too. You can understand the numbers, but if you don’t understand what the company does, how can you be confident in your buy? Doing this means my portfolio is a bit tech-heavy, but I also own a couple coffee stocks (I love my coffee), retail stores, financial institutes, an automaker, a railroad, energy companies, and others.

One word of caution: investing in foreign markets can be tricky. Not only do you have to look at the company you’re investing in, but also the currency fluctuations that’ll affect the stock price.

Now be strict with this plan… once you’ve bought your stock, figure out what your target sell price is, and put that sell order in! It’s OK to do a trailing stop, though… you can squeeze out a few more bucks, and still be OK if the stock comes back down.

This entry was posted by Eric on Wednesday, October 17th, 2007 at 10:51 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a comment, or trackback from your own site.

In accordance with my investing strategy, I sold ADY today for a 35.28% gain. I bought ADY on July 20th. Of course, I only sold my initial investment, and kept 10 shares as my “profit”.

ADY is a milk company based in China. Even though more than 90% of Chinese adults have lactose intolerance, this company focuses on schoolchildren and I believed their alliance with the Chinese government would prove to be profitable for the company (well, at least profitable for me).

I took the proceeds from the sale and re-invested in Toyota. This is my second purchase of TM, averaging down my price per share to $120.48. I’m now looking to sell at $162.80. Long term, TM will get there. They’re leading the auto-industry, IMO, and with rising gas prices and Toyota setting the bar for fuel-efficient vehicles, I believe TM is a good buy.

A few other stocks are on the verge of being sold, including WLT, OXPS, TIVO. Even my emotional pick, Tim Horton’s, is up nearly 20%. Go-go Timmy Ho!

This entry was posted by Eric on Thursday, October 11th, 2007 at 10:03 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a comment, or trackback from your own site.

Garmin was upgraded today, so the stock is up. Wee!

However, it was upgraded from a “sell” to “neutral” by AmTech Research. AmTech Research put a “sell” on Garmin when it was $43 / share. Since then, it’s paid $1.25 in dividends & rose to a high near $120 / share.

Should we even listen to these chuckleheads at AmTech? Doesn’t seem they have any clue as to what’s going on.

Moral of the story: do your research before you buy.

This entry was posted by Eric on Monday, October 8th, 2007 at 11:06 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a comment, or trackback from your own site.

I made another investment yesterday in a Tortilla sales business. Well, not really an investment, but a micro-loan.

I loaned $25 to Antonia del Carmen Viera Arguijo in Honduras so she could buy corn and firewood for her business. Over the next 9 months, she’ll repay the loan, and then I can get my money back, or use the $25 as a loan to someone else. It’s a pretty neat program - read up on it at kiva.org.

This entry was posted by Eric on Wednesday, September 26th, 2007 at 10:41 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a comment, or trackback from your own site.

I’ve created the NetNagel Stock Index yesterday - it’s a formula I’ve created that aggregates information about a stock from various sources and assigns them values. Based on these values, the ticker symbol is given a rating; the higher the rating, the stronger the probability of the stock going up.

So I picked a handful of stocks (about 10), ran it through my program, and got values ranging from the single digits to over 100. The stock that ranked > 100 has a potential ROI of 41.24% (based on the mean analyst recommendation), has 99.3% of all fool.com CAPS users rating it an outperform, and a recommendation of 1.9 (1.0 is strong buy, 5.0 is strong sell).

My September IRA contribution went to UNT. I’ll put in a sell order at $67.15.

This entry was posted by Eric on Wednesday, September 26th, 2007 at 8:41 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a comment, or trackback from your own site.

What do you do when half of your business is being threatened with a major lawsuit? Split the business in two, to protect the other half. That’s exactly what EchoStar is doing now in loom of Tivo’s current court battle over DVR technology.

EchoStar says it could split its set-top box and manufacturing divisions from its DISH Network business.

As a Tivo shareholder, I’m a bit pissed. EchoStar knows they’re going to loose this one.

This entry was posted by Eric on Tuesday, September 25th, 2007 at 9:02 am and is filed under Business, Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a comment, or trackback from your own site.