From the Newbie Desk: why pick this stock?

V

VicBee

When I started trading almost 3 years ago, I picked stocks that I was familiar with or that friends suggested I look into. I don't come from finance or accounting and reading fundamentals of a company is like trying to decipher hieroglyphics.
Over these years, my portfolio hasn't changed much and is actually consolidated to half a dozen stocks that I trade and/or invest in. I've been thinking about why these and not others, what criteria I use for picking stocks and these are:
1. Volatility
2. Spread
3. Price

I don't look at trading stocks that aren't volatile (exception: CTAS as investment )

Volatile stocks with spreads of less than $5 don't interest me. Feels like too much work for too little returns.

I like AMZN, but at 3k a share with much volatility and huge spreads, it takes lots of courage to jump in.

Size isn't one of my criteria but perhaps should be. I'm learning not to go all in and pull all out... I always aim for $ per share, not percentage, and I trade in 100 units, or multipliers of, relative to the $ amount I'm trading.

The reason I'm discussing this is to get a better sense of what others do. Am I typical (I assume I am)?
 
VicBee said:
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I like AMZN, but at 3k a share with much volatility and huge spreads, it takes lots of courage to jump in...
More...

Never be afraid of AMZN. That company has established itself as a major source of commerce for the world. That is a great position to be in. Why do you think their Q4 earnings last week were uber? It was obvious why. Stay-at-home shopping, plus an increase in income with the announcement of Prime membership price increases?

 
VicBee said:
Size isn't one of my criteria but perhaps should be. I'm learning not to go all in and pull all out... I always aim for $ per share, not percentage, and I trade in 100 units, or multipliers of, relative to the $ amount I'm trading.

The reason I'm discussing this is to get a better sense of what others do. Am I typical (I assume I am)?
More...
Why are you dealing in board lots? When I started trading it might get you a little better price but today you can buy a single share at no disadvantage.

Also percentage makes more sense. Looking at dollars per share limits your choices.

I size my positions by the risk I'm willing to take as a percentage of my account so my shares size is rarely close to a multiple of 100 shares.
 
AMZN is also profiting from inflation since rising prices means more earned commission in the market place. More revenue means more taxes but AMZN is good in using international tax holes. There are few companies that profit from inflation without risking market share since that is what uppricing bears and AMZN is one of them.
 
I traded AMZN throughout 2020 and part of 2021. But the not unusual $200/share drops for no apparent reasons have made me weary of trading it. Heck, it dropped 1k between early November and mid January!
The other issue is simple... Imagine having $100k to trade. That's 31 shares at today's price. If AMZN gains $500 within 6 months, that's a $15,500 gain. For the same amount, you get 108 TSLA shares which comes to $54,000 gain. Even if it only went up $200 that's still nearly $6000k more than AMZN's gain. It just gets hard to justify buying AMZN at that price.
 
Overnight said:
Never be afraid of AMZN. That company has established itself as a major source of commerce for the world. That is a great position to be in. Why do you think their Q4 earnings last week were uber? It was obvious why. Stay-at-home shopping, plus an increase in income with the announcement of Prime membership price increases?
More...
Pfft commerce, more like AWS/Clooooooooooud and just about nothing else.
 
VicBee said:
I don't understand why...
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Why percent makes more sense:
Well in your example above where you compare two stocks; if AMZN gains $500 that's a 15% gain and if TSLA gains $500 that's a 54% gain.

As for limiting you choices I was referring to your wanting to buy 100 share positions.
 
VicBee said:
I traded AMZN throughout 2020 and part of 2021. But the not unusual $200/share drops for no apparent reasons have made me weary of trading it. Heck, it dropped 1k between early November and mid January!
The other issue is simple... Imagine having $100k to trade. That's 31 shares at today's price. If AMZN gains $500 within 6 months, that's a $15,500 gain. For the same amount, you get 108 TSLA shares which comes to $54,000 gain. Even if it only went up $200 that's still nearly $6000k more than AMZN's gain. It just gets hard to justify buying AMZN at that price.
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%%
Exactly; that's why some do partial shares/i use ETFs.
WHEN i did stocks, i looked @ fundamentals/ price + volume.
SAVE sector[airlines] tends to underperform or go bankrupt.......................................................
 
deaddog said:
Why percent makes more sense:
Well in your example above where you compare two stocks; if AMZN gains $500 that's a 15% gain and if TSLA gains $500 that's a 54% gain.

As for limiting you choices I was referring to your wanting to buy 100 share positions.
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I see. When I look at AMZN and TSLA, for example, I consider their potential for a $500 rise, and time to get there. If equal, I'll trade the cheaper stock for greater gains. In the end it's the same logic.

The 100 share logic is just practical, for speed of execution. I don't enter numbers of shares. Although that's a habit from when I was day trading a lot, something I'm probably not going to go back to. Too stressful.
 
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