I've been investing in individual stocks since 2005. The idea of owning a business fascinated me when I was then just 12 years old. Over the next several years probably 95% of all the money I earned doing odd-jobs around my community went into individual stocks that I researched and analyzed on my own time. Unfortunately for me, I started investing in a very inflationary, bubble environment. At the time it didn't get much attention and I thought I would easily ride out any downturn. I subscribed to the belief that bubbles and recessions are the "side effects", or something of that sort, to a capitalist free market. I even consistently wrote that there's always something to complain about and used that as an excuse to avoid thinking about the possibility of a serious downturn. Certainly, I'm not saying optimism is a bad or dumb thing. I consider myself a skeptical optimist. Today I believe a lot of "optimism" is really just ignorance or avoiding looking at all of the facts because they are a nuisance to one's beliefs.
My stock portfolio has never really made money. I can remember only a couple times in the past four years that I was worth more money than what I put in. However, this isn't something that frustrates me, because now is the time when I can afford to make mistakes and (hopefully) learn from them. I made mistakes and really I think I got careless, and I take responsibility for a losing effort so far with my investments. I've always believed and written about long-term investing with individual stocks, and there is good evidence from past investing legends such as Warren Buffett and Peter Lynch to show that this is a very worthwhile method. I still strongly believe that the philosophy of finding businesses you know, love, and understand is the way to go if you want to invest in businesses through stocks.
In early 2007 I watched an online video of the 2008 Republican presidential debates. Ron Paul was among the candidates, and at first I wrote him off as a loon who was simply being overly pessimistic about foreign policy and the U.S. economy and didn't really know what he was talking about. After months of job growth in the economy and jumps in U.S. production and exports, it sounded crazy when he talked about a major recession being not too far off. However, he just wouldn't go away! He stuck in the presidential race, and in October of 2007 I decided to take a closer look at what he was saying. I watched his speeches, read his articles, and researched his voting record. He was not simply a pessimistic looking to get attention. He analyzed everything, and that's something that drew me in to research him further. And most impressive of all, his objections to both foreign and domestic policy weren't based on only his personal opinions, but rather on the Rule of Law and what the Constitution says on every issue. It wasn't long before I was a full fledged Ron Paul supporter, but I still couldn't help but wonder if his predictions and constant warnings of a deep recession were a bit far fetched and overdone.
"We are at the verge of bankruptcy, we are moving into a New Era, believe it or not, with the dollar and our economy and the world economy. This is a New Era." -- Ron Paul; January 24, 2008
The economy seemed strong. Unemployment was dropping, exports were rising thanks to a lower dollar, and companies were reporting strong earnings. But over time I started to realize that his reasoning actually made a lot of sense to me and, evidently, a lot of other people around the U.S.
