Wednesday, May 23, 2007

Get More HD?

Well, last year I decided that I'd been investing long enough that I wanted to get some real understanding of how individual stocks worked when it came to investing. I had read Jim Cramer's Real Money which was fairly intriguing, but I didn't have the time in order to really give myself over to investing stocks like a day trader. I never really felt like I would have the kind of time that Jim described in his book to make it really worthwhile.

My resulting strategy was basic: buy stocks that seem pretty good over the long, long term. Expect that there could be significant losses along the way and that during those times, it might make sense to buy more.

Now here we are, several months later and Home Depot which I bought in the mid thirties has gone up to around 40 and come back down. We're not talking a ton of money here, just a couple hundred bucks. But, does it make sense to buy more?

Here's why I'm thinking it might:

1. HD continues to pay chunky dividends. (I'm not sure how long that will continue though since profits are down  .)

2. The housing market is going to come back, eventually. The growth of population creates demand for housing virtually ensures that.

3. Lowes is taking a beating as well, so it is not a competitive issue most likely.

4. HD has been quite high in the past during the go-go days where it was splitting. And I don't think that we've hit saturation yet. The need for home repairs is a renewable market and HD is a pretty big component of meeting that demand.

Again, this is all off-the-cuff thinking without any real analysis. But when you're dealing with small amounts and it is more of a game than serious investing. I still haven't decided whether or not to pull the trigger. Right now, it's watch and wait.

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