I’m going to start out a new set of articles about investing in paper.  No, I’m not talking about the stuff you write on.   Nope, this is about paper certificates of company stock that are traded in the stock market.  This is certainly the type of investing that physicians can wrap their minds around.  And it has always been the type of activity that I have used to grow my savings.  Out of the major categories of investment:  real estate, small business, and stock trading/investing, this has been the most easily accessible method for me.  I have done very little with real estate although I have read and researched the topic fairly extensively.  I have had some small business experience, and I believe very strongly in what a small business can do to help you achieve wealth.  But stock market investing and dealing in paper has been my first love, and I would like to share that information with the hopes to provide value to the reader.  In this first article, I’ll briefly touch on the subject, and then I will have follow-up articles in the future. 

My first foray into stock market investing was after I had started residency, and I was initially contributing into a 403B plan. Utilizing this plan, I began to do some initial investing into mutual funds.   I had read a book by Charles Givens called “Wealth without Risk”, and it actually ended up being a good time to invest in mutual funds.  It was a time when a lot fewer mutual funds were in existence, and some of the better funds were easy to identify.  It’s completely different now that the total number of funds has dramatically multiplied.  It’s very difficult now to determine if a mutual fund is any good these days.  What is even worse is the fact that many individuals are trapped in their 401K’s.  By this I mean that they can only choose the mutual funds that are available via the company plan.  This is what will be the unfortunate case with physicians that are employees of hospitals.   Your stock investment opportunities through your 401(k) plan will be rather limited.  This is truly unfortunate because you should be able to have the freedom to direct your money to whatever fund or stock that you want.  In a future article, I’ll discuss why I don’t invest in mutual funds.

Individual stock investing has been my love for many years.  It has been the one investment vehicle that I felt like I could consistently do “on the side” while practicing medicine full-time.  I love capitalism.  And I love the idea of owning a piece of a company.  I like investing in stocks, and I like trading stocks.  I also like the fact that I’m in control of the company stock in which I either invest or trade.  I believe the keys to investing/trading in the stock market involve defined risk, appropriate position sizing, and solid exit strategies.  On the fundamental side of things, to me, the most important determination to make about an individual stock is whether the company’s true value is reflected in the stock price.  If the price is too high, you’re not likely to get much value from that stock.  Whereas if the stock price is cheap, you’re in a much better position to obtain value.

In future articles I will discuss some of the techniques that I’ve utilized, and I’ll share some of my failures as well.  I hope to add to your arsenal of valuable information and help you on the road to financial success.  Until next time, here’s to your wealth.

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