My Stock Market Investment Strategy

Stock investment as an engineer

Ever since I started working as an engineer, I’ve heard co-workers discuss different stocks, their strategies, which companies to invest in, which companies are about to explode, and much more. After accumulating some of my own capital that was simply collecting the 0.02% interest at the bank, I started doing my own research on the matter.

Information about stocks

The reality is that no matter who you ask what which article you read, there are always different opinions. You will often find contradicting statements from articles, news media and other sources. Some will point you to the high tech companies as the “hot market”, others to the pharmaceuticals, others to big oil companies, others to renewable energy, others to… Needless to say, I quickly learned that I needed to come up with my own strategy and try it out on the market.

My strategy

I’ve followed the market for a few months without investing anything at all. I researched big companies, scandals surrounding them and tried to figure out a pattern. What I’ve noticed was that whenever a big company’s stock would drop for a “non-financial” reason, it would very quickly climb back up. This was true with BP, VW, Chipotle and a few others. I found a great online source which allowed me to browse through the companies whose stock had dropped the most during the last 52 week period. You can find the resource below:

52 Week Lows

Knowing that the stock is at its low is not enough for me to invest in it. I simply screen the companies which have the potential to rebound. The following step is verifying their income statement through Google Finance. I won’t go through the entire process, but what I look for is to make sure that the company is making money and has been making profit during the last quarters. If it is on a clear decline, I won’t be investing. Here’s where you can research any stock

Google Finance

Fill in with Bonds & ETFs

One point that everyone seems to agree on is that you need to diversify your portfolio. That being said, I also currently hold bonds and ETFs from Vanguard. These are much safer investments which will help you offset the losses on your bigger investments should they occur.

Current portfolio and statistics

I’ve been investing for about a year now and although my portfolio fluctuated several times, I’m happy to say that over the year, it is at +18.5% time-weighted rate of return.

The current tickers on my list are as follows: BLV, BP, CSCO, IVV, TGT, TM, TXN, VCLT, VOOG, VWO.

Recommendations for newcomers to stocks

You need to start investing on the real market to see what it’s like. Until you start putting your own money in the market, you won’t feel the pressure and need to constantly monitor your savings. My advice is to start small, just like I did, with 100$ into the account. As you get comfortable, you can slowly increase that amount.