Most millionaires invest in the stock market
But they don’t teach you how to build a successful portfolio in school
So let me show you how:
But they don’t teach you how to build a successful portfolio in school
So let me show you how:
The stock market is inherently unpredictable and volatile
But certain tried-and-true principles can help investors boost their chances of long-term success
It can be tempting to lock in profits on great stocks and hold onto your losers in hope of a rebound
But this isn't wise
But certain tried-and-true principles can help investors boost their chances of long-term success
It can be tempting to lock in profits on great stocks and hold onto your losers in hope of a rebound
But this isn't wise
The following are 10 of the main principles of investing you must apply in order to achieve long-term success in the stock market
Implement these and you'll build extraordinary wealth for years to come
Implement these and you'll build extraordinary wealth for years to come
1. Ride your winners
Peter Lynch speaks of "tenbaggers" - investments that increased by 10x
He attributed his success to a small number of these stocks in his portfolio
But critically, this requires you to have the discipline to hang onto stocks through volatility...
Peter Lynch speaks of "tenbaggers" - investments that increased by 10x
He attributed his success to a small number of these stocks in his portfolio
But critically, this requires you to have the discipline to hang onto stocks through volatility...
The key here is to have the discipline to hold onto your winners even after they've already multiplied many times
A wise investor knows when to add to their winners, paying attention to the fundamentals of the stock rather than the price action
A wise investor knows when to add to their winners, paying attention to the fundamentals of the stock rather than the price action
2. Sell a Loser
There's no guarantee that a stock will rebound after a steep decline
So, it’s important to be realistic about the prospects of a poor-performing business
Acknowledging losing stocks is admitting a mistake, which many people struggle with...
There's no guarantee that a stock will rebound after a steep decline
So, it’s important to be realistic about the prospects of a poor-performing business
Acknowledging losing stocks is admitting a mistake, which many people struggle with...
But there's no shame in selling a loser to stem further loss
In both scenarios, it’s critical to judge companies on their merits, to determine whether a price justifies future potential
In both scenarios, it’s critical to judge companies on their merits, to determine whether a price justifies future potential
3. Don't Sweat the Small Stuff
Spend less time tracking short term price action, and more time tracking long-term business execution, revenue, and profitability trajectory
Daily movement don't matter
Long-term investors succeed based on periods of time lasting years or more
Spend less time tracking short term price action, and more time tracking long-term business execution, revenue, and profitability trajectory
Daily movement don't matter
Long-term investors succeed based on periods of time lasting years or more
4. Don't Chase a Hot Tip
Regardless of the source always do your own analysis on a company before investing your hard-earned money
Tips do sometimes pan out, depending upon the reliability of the source, but long-term success demands deep-dive research
Regardless of the source always do your own analysis on a company before investing your hard-earned money
Tips do sometimes pan out, depending upon the reliability of the source, but long-term success demands deep-dive research
5. Pick a Strategy & Stick With It
There are many ways to pick stocks
But it’s important to stick with a single strategy
Switching between different approaches effectively makes you a market timer, which is dangerous territory
Write down your goal & strategy and refer to this
There are many ways to pick stocks
But it’s important to stick with a single strategy
Switching between different approaches effectively makes you a market timer, which is dangerous territory
Write down your goal & strategy and refer to this
6. Don't Overemphasize the P/E Ratio
Investors place great importance on P/E ratios
Placing too much emphasis on a single metric is ill-advised
P/E ratios are best used in conjunction with other analytical processes
A low P/E ≠ undervalued
A high P/E ≠ overvalued
Investors place great importance on P/E ratios
Placing too much emphasis on a single metric is ill-advised
P/E ratios are best used in conjunction with other analytical processes
A low P/E ≠ undervalued
A high P/E ≠ overvalued
7. Focus on the Future & Keep a Long-Term Perspective
Investing requires making informed decisions based on things that have yet to happen
Past data can indicate things to come, but it’s never guaranteed
A stock may look like it's topped out after a 100% gain...
Investing requires making informed decisions based on things that have yet to happen
Past data can indicate things to come, but it’s never guaranteed
A stock may look like it's topped out after a 100% gain...
But upon checking the fundamentals of the business, you might realise the stock is still cheap, buy, and go on to make a 700% gain
Just as Peter Lynch did with Subaru
Invest based on the future potential of the business, not past stock price action
Just as Peter Lynch did with Subaru
Invest based on the future potential of the business, not past stock price action
8. Be Open-Minded
Many great companies are household names
But many good investments lack brand awareness
In fact, small-cap stocks have historically shown greater returns than their large-cap counterparts
Here are some facts for you...
Many great companies are household names
But many good investments lack brand awareness
In fact, small-cap stocks have historically shown greater returns than their large-cap counterparts
Here are some facts for you...
From 1926 to 2017, small-cap stocks in the U.S. returned an average of 12.1%
While the S&P 500 returned 10.2%
I'm not telling you to go all-in on small-caps
I'm telling you to look beyond the stocks in the Dow Jones once in a while
While the S&P 500 returned 10.2%
I'm not telling you to go all-in on small-caps
I'm telling you to look beyond the stocks in the Dow Jones once in a while
9. Resist the Lure of Penny Stocks
Beginners mistakenly believe there’s less to lose with penny stocks
Whether a stock is $1 or $100, if it plunges to $0, you've lost 100% of your initial investment
Penny stocks are riskier as they're less regulated & see much more volatility
Beginners mistakenly believe there’s less to lose with penny stocks
Whether a stock is $1 or $100, if it plunges to $0, you've lost 100% of your initial investment
Penny stocks are riskier as they're less regulated & see much more volatility
10. Be Concerned About Taxes but Don't Worry
Putting taxes above all else will cause you to make misguided decisions
While tax implications are important, they are secondary to securely growing your money
Achieving high returns is the primary goal
Putting taxes above all else will cause you to make misguided decisions
While tax implications are important, they are secondary to securely growing your money
Achieving high returns is the primary goal
It can be tricky to always make the right decision with investing
Humans are emotionally charged beings that act on these emotions in the choices we make every day
And going against your biology is hard
Understanding these tried and tested tips can help
You can also...
Humans are emotionally charged beings that act on these emotions in the choices we make every day
And going against your biology is hard
Understanding these tried and tested tips can help
You can also...
Level up you investing game today
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I'll show you exactly how to build & maintain a winning portfolio
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financiallysavvy.gumroad.com
And join The Investing Masterclass Sessions
I'll show you exactly how to build & maintain a winning portfolio
70% off
15 copies only!
Click here 👇🏼
financiallysavvy.gumroad.com
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