Watchlists

I recommend that everyone who is interested in individual stocks maintain one or more watchlists.

This is simply a list of companies that you are interested in. Most brokerages allow you to maintain a list, or Yahoo Finance! does quite nicely. If you get into the habit of checking in every day, you'll see a few benefits.

For one, you will hear news about your stocks very quickly. Of course, most people don't live and breathe the market, and conventional wisdom has it that one should not do this as it leads to that most evil practice of all - day trading. Ha!
Of course, conventional wisdom also counsels one to place your long term dollars in mutual funds and let the experts do their thing. As you are reading this, gentle reader, I assume you probably had an internal "Ha!" go off yourself.
It's usually not necessary to know news of a stock that is important to you immediately; very few things will be life and death to a corporation. Biotech may be the exception - trial news can kill or revive those very quickly, of course. But being aware of something at least gives you the power of choice. Here's an example: Oncothyreon (ONTY) received the unwelcome news a couple months ago that Stimuvax trials were being halted on safety concerns. It dropped immediately, of course, but kept dropping some more over the next few days. If this news spooked you, you at least had the chance the next day to sell at a higher price than the succeeding days would have allowed you.
Immersing yourself in the news also mean you are more in tune with your choices. You see earnings announcements, insider buys or sells, product information and the like; and hopefully you begin to understand the company somewhat better over time.

The other main benefit of a watchlist is that you begin to have an appreciation for the daily swings in price. I am not endorsing very active trading (although not disparaging it either) - but knowing that a stock you are strongly interested in is at a low point for the year, with no appreciable bad news or other information, may give you the slight extra nudge to become a shareholder. Entry price does matter - even in the long term, buying a stock at $9 instead of $10.50 will mean several extra percentage points of gain, or allow you to buy more shares than you could otherwise have done. And over the course of months, a swing of a couple dollars in price WILL happen.

I desperately need to update my blog watchlist: JAV is being bought out at $2.19 (a nice gain from my rec about 16 months ago at $1-ish), SGMO probably won't see sub $5 again, and Dendreon almost certainly will never be available at my latest upgrade of under $30.

My additions will include MannKind, Oncothyreon, Paramount Gold, Lexicon, and Opexa. I hope to talk of some of these soon in future posts. MannKind, Oncothyreon, and Paramount are probably the most timely buys; Arena and Elan would be next.

On a final note: I sold some small amounts of Dendreon over the last couple days but intend on holding the majority for the absolutely long haul. The guy who sold Microsoft for 3 or 4 times his stake looked really smart in the short term, but I believe this puppy has legs. :-)

Regards,
Trond