A blogging Fool!

By Benjamin Karns - July 9, 2012 | Tickers: CLNE, GS, JPM, DIS, WPRT | 0 Comments

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Blogging would not normally be my thing. I have no long tyrannical rants for or against fruit in my yogurt, pink slime in my cheeseburgers, or folks who drive the speed limit in the fast lane of the interstate. I love getting paid. I love learning about investing. I occasionally like to write. I am not an expert in any of those three. I am however, an expert Fool who is more than comfortable wading around in the shallow end of the investing pool while splashing you in your face every now and then.

I invest for retirement. I do not spend time worrying about credit default swaps, derivatives, or the European debt crisis. I have a clear understanding that I am the biggest threat that exists to the future value of my retirement investments. I try to protect me from me the best I can by allocating almost all of my retirement investments to low cost mutual funds and really low cost index funds. I buy at regular intervals and plan to hold them for the long haul. Dollar cost averaging and no fee transactions is the base of my investing strategy.

Fireworks & Investing

I love fireworks too. Watching a large professional fireworks display is a lot of fun. As much fun as watching a giant well planned professional fireworks display may be, you still are only just watching. Lighting the fuse, even on much smaller ordnance is much more fun than just watching professionals set off the big stuff. Maybe the most important way I try to protect my investments from myself can be related to my enjoyment of July 4th consumer explosives. I keep myself from blowing my arms off on the big stuff by letting myself have fun with the small stuff. My “small stuff” is buying individual stocks. I allocate a very small amount of my monthly contribution to my retirement investments to a cash account in my Roth IRA brokerage account. I patiently wait and watch for those very modest deposits to accumulate to a large enough sum that allows me to make a single stock purchase in which the cost of the transaction is less than 1 percent of the amount of the entire purchase. It won’t be long until there is enough cash for my first large stock purchase and I am still confused as to what strategy I want to take when it comes to the company I want to invest in.

Should I go with a stable dividend paying stock from a company that my family and I are familiar with such as Disney  (NYSE: DIS)? As a father of 2 children under 6 years old I am confident that I will be able to keep my eyes on how the media giant is performing in terms of our family's experience and frequency of consuming their offerings. If we notice we haven't had to haul the kids to the theater to see the latest Disney movie, or if we are disappointed with our latest trip to a Disney theme park, or if the only thing we can find on ESPN is junior ladies badminton semifinals, I will have first hand knowledge that it might be time to find another company to invest in. I think Disney is a well run company offering diversified content, products, and services at the highest level of quality. I don't expect that to change, but if it does, I will know about it.

Should I take a little more risk and become part owner of a “too big to fail” bank such as JPMorgan Chase & Co. (NYSE: JPM) or Goldman Sachs Group, Inc. (NYSE: GS), whose share prices like their reputations may be beaten down due to recent headlines?  I know that it is never a good idea to invest in something I don't understand, and both of these companies fall into that category. I have no relationships with either one of these companies that will allow me to experience how they treat customers or their partners. Living in a city where JPMorgan Chase has a large corporate presence and thus a great amount of news coverage about aspects of their business that may not rise to the level of national coverage helps, but I am not sure if it is enough. For the most part I would be flying blind on both of these companies, leaving me with only the opinions and analysis of others to guide me.

Is a more speculative purchase of a company like Westport Innovations (NASDAQ: WPRT) or Clean Energy Fuels Corp. (NASDAQ: CLNE) too much like buying a lottery ticket on the hopes that natural gas will power most of our vehicles in 30 years? Cars that run on natural gas are something I understand and can see happening around me. The city where I live, Columbus, Ohio has built and maintains a fleet of natural gas vehicles in partnership with surrounding suburbs. I am not sure this is a trend that will continue to grow even after government subsidies go away. I know that natural gas is cheap and plentiful right now just from opening my natural gas bill each month. Instead of going to a gas station, or plugging a car in an electrical socket, maybe I will be able to fill my car from the natural gas that is already being delivered to my home. If natural gas fueled vehicles become the standard in the future, it is going to mean drastic changes in infrastructure, technology, and the behavior of how we fuel our vehicles. 

I know the value that can accrue in holding the stock of a high quality company over a very long time. I also understand that there can be value to be found in companies that are in the heights of bad press. Sometimes long shots can payoff too.  During the next few months I am going to have to decide what fuse I want to light.

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