Saturday, December 5, 2015

Loyal3 Lunch: Week 5

How many lunches?

If you haven't been following this series, I'm trying to break my habit of eating out at lunch for no good reason.  Each day I bring my lunch gives me $5.00 to invest in stock with Loyal3, an online commission-free broker.  This week I brought my lunch each day and so I had $25 to invest.

Which Stock?

This week I decided to buy stock in Hershey's.  I saw this analysis and I like chocolate.  

What have I learned?

I have learned that I don't have the patience or the interest in heavy-duty research about all the numerical data that is supposed to tell you when it is a good time to buy stocks.  I have learned that (well, I already knew it, I just hadn't quantified it in any way) that I was wasting a lot of money on mediocre food.  

Am I making money?

Well, I've invested $80.00 and my portfolio is now worth $78.76.  Given the short time I've owned these stocks, I'm not concerned.  

Do I recommend Loyal3?

Yes, as long as you know and accept its limitations.  Loyal3 does not charge to buy or sell stocks, and they allow you to purchase fractional shares.  This makes it economically feasible to invest small amounts of money frequently, as I have been doing in this series.  They are able to do this because they engage in batch trading.  Where I can call my traditional broker and tell him to buy so many shares of XYZ right now, Loyal3 goes to market once daily; if there are big swings in price that day, your cost could be different that you thought it would be when you placed the order.  Traditional brokers also accept orders to buy a particular stock if the price drops to a certain point, or to sell shares if the prices rises or drops to a certain point.  If you plan to trade frequently (and statistics indicate that for most people, that's not a good idea) Loyal3 is not for you.  If you plan to buy and hold, Loyal3 may be appropriate.  

The other limit to Loyal3 is that they only offer about 70 different stocks, and they focus on companies with which consumers are familiar.  They don't have any energy stocks, REITs, or utilities.  On the other hand, I think it is a lot more manageable to research and/or follow 60 stocks than the whole market.  I guess in some ways Loyal3 is the stock market with training wheels.  The restrictions mean you won't go as fast as you could without them, but they also make it harder to fall.  

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