A Stock Guide For Stonk People
This is more so for this author than it is for you. Putting the process in writing helps test the validity.
These are a couple maxims discovered through my hobby of investing.
Avoid stupidity above all else
Discovering a valuable investment is difficult. It’s a lot easier to avoid the stupid ones.
Avoid stupid advice, media, news articles, and blogs
Copying Main Man Buffett
People copy people.
Don’t buy based on others. (Click here to find out why)
The “500 Stocks For A Dollar Each” Rule.
If you have 500 bucks, put it in an S&P500 index fund and forget about it.
Think about it as owning America’s top 500 companies for a dollar each.
Don’t Make Money
This is something that can confuse people.
Do not invest to make money.
Do it to own assets.
Assets get you leverage. Money finds leverage.
The Value In Cash-Flow
A valuable company has recurring cash-flow from operations.
Free cash-flow and a company’s ability to gain cash every quarter is key.
Cash for a company is like fuel for a car. Your job is to make sure the car’s tank is full so it doesn’t break down in the middle of the highway.
Only put money into a car if it makes recurring refills on gas.
Bull or Bear are just animals
There’s no predicting the unpredictable. Uncertainty is inevitable so you can accept it or get fooled by it.
The key to prepare is to invest with caution;
Risk and aggression is a luxury you can afford when you’re young. Bear or bull don’t matter as long as you aggressively invest in something you’re cautious about.
Judgement can only be good when you accept and prepare for uncertainty.
Bears are the better mammal
Investing means you’re accumulating assets. You want to be buying at discounts when collecting.
Sophisticated investors get happy when markets are down because when collecting, they purchase at good prices.
It’s like the food court at a mall right before closing hours. No one’s there, fast food is selling cheaper, so collect and eat.
just avoid the spoiled food selling cheap.
Temperament for the long run
Everything above can be done correctly and you’d still fail depending on your temperament.
Have good judgement, make good decisions, and tolerate the rest.
To battle weak tolerance:
think about a date, not a price to sell at.
As an example, a Korean pal of mine said he’ll only sell his Disney shares when buying a plane ticket to arrive in Canada.
(Whatever’s left will go towards a local Mediterranean meal with 5 lines of spice).
He doesn’t know what Disney’s price is at currently. What he does know is, he’ll sell when it’s time.
If you care about the bottom line like a stock broker, this picture sums everything up well: