Creating an Investment Worksheet - Part Six

We have finally made it to the last Part in the series “Creating an Investment Worksheet”. The last topic is on buying, selling and tracking/monitoring your stock market investments.  We have worked towards getting all of the research together and analyzing it in the first five Parts, now it is time to actually put that information to work.

Once the time has come and you are ready to actually make a purchase of a stock you have been watching, you can revert back to How Do I Actually Purchase a Stock on the Stock Market as well as Questrade 90 Day Free Trading Trial – Try It!. These articles will guide you through the actual purchase of the stock and provide you additional information on logistics. 


As previously covered in the post How Do I Actually Purchase a Stock on the Stock Market, in order to make a purchase, you need to open a brokerage account. This can be done through a discount online brokerage where you will do the buying and selling or, through a full service brokerage firm where a financial advisor will manage it for you. If you are interested in managing your investments on your own, the best bet will be to open an online discount brokerage account where you can buy and sell. Please refer to the above article for more information on this step. Once you have an account open and are ready to purchase, you will want to familiarize yourself with market and limit orders. This topic was discussed in detail in the post Questrade 90 Day Free Trading Trial – Try It! Recall that a market order is a buy at the current price. This is a good approach if you want to buy the stock right now and are convinced the price is not coming down anytime soon. Limit orders purchase the stock at the price you set. So, after doing your research you can come to a decision at what price point you want to buy in. You can set that price point with the brokerage account and if the stock hits that price, it will make the purchase according to your instructions. This takes some of the volatility out of your decision as you can set the price and let the stock do the work of coming down to that price point without your emotions getting caught up in it.


Deciding when to sell can be an extremely difficult decision! Should you take money off the table now when the stock is high and put it elsewhere? Should you sell to avoid further losses? Should you sell when you think the stock might still continue to rise? A good starting point in making the decision to sell is to return to your Reasons and Limits worksheet. Recall that you produced this worksheet during your research and set out reasons as to why and when you would sell a particular stock. You made that worksheet with a calm and clear head (hopefully!) so return to it when you need some advice on when to sell. Stick to what you have researched and analyzed and try to cut through the rumours and noise that might be going on around you concerning a company or stock. Jason Kelly (please see previous Parts for a discussion of Jason Kelly and his book The Neatest Little Guide to Stock Market Investing) also advises reviewing your stocks to watch sheet to see if something else would be a better buy at this time. If this is the case, you may want to sell one and purchase another stock on your list. Also, you can refer to the charts we covered in Creating an Investment Worksheet – Part Four. They can provide some signals and direction as to where the stock price might be headed.

Finally, just as was the case with making a purchase, you can use a market or limit order to sell. You can set a price at which you want to sell (limit order) and if the price hits that price, the stock will be sold. A market order will execute right away at the current price.

Tracking and Monitoring

You will want to monitor how your investments are doing beyond just having a sense of things. You will want to pay attention to your profit, loss and what the commissions are you have been paying to buy and sell the stocks. Most brokerage accounts will do these calculations for you on a regular basis. It will set out what money you put in as well as your current balance. From this, you can determine if you are up or down. Also, most brokerages will set out what you paid in commission charges. You can set up an online portfolio for free using Yahoo! Finance. You can input your transactions as to when you bought and sold and for what price thus having everything in front of you in one place.

Finally, Jason Kelly recommends keeping track of the following four items in respect of the stocks you purchased: 1. The price three months before you bought 2. Purchase price you paid 3. Sell price you sold at and 4. The price three months after you sold. He calls this the “Fearsome Foursome” and you can look at this information to see if there are trends in your buying and selling behaviour. If it was a growth stock, the price three months before you bought should be lower. The exact opposite is true for a value investor. When it comes to selling, everyone is in agreement that you want to sell at a higher price than you bought! Overall, you may want to use the Fearsome Foursome to identify trends in your own tendency to buy and sell at different points and to determine if you can make improvements in that decision making.

This concludes our series on Creating an Investment Worksheet. We have covered the gamut from figuring out what metrics we should be looking at with each stock to finally deciding when to buy and sell. We even delved into some rather advance charting (see Part 4). Actually putting all of this into practice is much more nerve wracking than just reading and writing about it! But, if one can put some method to the madness, we can feel much more comfortable with our decisions and continue to learn from them. I am excited to move forward!


****Top photo courtesy of Viktoria Sotsugova on Unsplash