This is the first in my series of articles on how to do an end-of-year review on your stock trading in order to better prepare for the coming year.   

This is the time of the year when everybody starts to wind down a bit.  Holiday parties and gatherings begin to take up a lot of our time and even businesses start to shift into low gear.  It's tempting in this environment to just put your stock investing on cruse, but don't.


There is no better time than the holidays to review how your stocks performed for the year and to get a plan set up for 2015.  The way you approach this process depends on what type of investor you are; fundamental, technical, or buy and hold.  I am going to break down what each type needs to look and how it can help you next year.

First up, the fundamental investor.

To start with, you should download all of your 2014 trades from your brokerage and then import them into a spreadsheet program like MS Excel of Google Spreadsheets.  Once you have done this, open up the file and match up opening positions with closing position, or if the position is still open, with the current market price.

What we are trying to accomplish here is to find out which trades were profitable for you and which ones weren't.  Once you have done that, figure out the percentage win or loss you realized on each trade.  This is important because percentage profits/loss, opposed to dollar based ones, will tell you more about your true performance.

Now, sort your trades from the biggest winners to the biggest losers.  At this point it should be very easy to see which trades worked -- and how well -- and which ones didn't.  Here is where you want to check for patterns.  Is there any one sector in which you did particularly well?  Particularly bad? Did large cap stocks work well or were small caps the standouts?  

Once you have done this, you need to extract the winning groups out and start your research.  For example, if the construction industry did particularly well for you in 2014, start by seeing what the outlook was for the sector was at the end of 2013.  What were analysts saying?  What did the fundamental projections look like for 2014?  How true did the actual performance compare to what was predicted?

What you are trying to do is see if there is an underlying fundamental story that started this year, and if so, will it be likely to continue into 2015?  

If you find that this is the case then the next thing you want to do is to look at the PE ratios on winning stocks to see if they look like they are still reasonable or if price has gotten ahead of itself, possibly setting up a fall in the coming year.

There are a number of different variable you can look at to determine what your plan for next year will be, and everybody has their own opinion on what is most important.  But above all, it is the process itself that is most important.  By reviewing what has happened, you will get a better feel for where the market has come from, where it is currently, and where it may be going next year.  And that will help you be a better fundamental investor in 2015.

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