Most professional investors use pretty much the same approach to investing assets. They try to ignore the trend of the market, don’t waste their time on economic forecasts and overweight a sector, industry or company plus or minus a few percentage points.
It’s been well shown by the performance of index funds that outperforming the markets, year in and year out, is one heck of a difficult task.
Without going into detail, I’ll summarize the market in one quick sentence. There is ample opportunity to win if you are either smart or lucky. The key word is opportunity.
Over the years I have successfully invested my own money by buying securities, both for trading and investing. I’m happy to share with you, for whatever it’s worth, some of my more rudimentary thoughts about making money.
1. KNOW YOUR RISK LEVEL
2. KNOW IF IT’S JUST A GAMBLE
3. NOT BELIEVING THE TREND OF CURRENT EARNINGS PER SHARE IS MORE IMPORTANT THAN VALUE
4. NOT BEING ABLE TO COMPARE FEELINGS OF VALUE VS. FEELINGS OF THE CHART
5. POSITIONS CAN BE SMALL
6. BUILD ON SUCCESS
7. ONLY DO WHAT YOU THINK IS RIGHT
8. NOT ACTING ON A THOUGHT WHEN YOU HAVE IT
9. LACK OF PATIENCE
10. NOT WAITING FOR A THOUGHT TO COME
11. ACT ON FEELINGS WHEN YOU GET THEM
12. KNOW WHY YOU ARE DOING SOMETHING
13. GAMBLE A BIT MORE
14. LOOK AT ALL DIFFERENT CHARTS
15. CORRECT MISTAKES – RIGHT OR WRONG
16. WORK A LITTLE HARDER ON THE FACTS
17. YOU MUST ACT IN ORDER TO SUCCEED
18. IF YOU CAN, RATE YOUR FEELINGS – WEAK, MEDIUM, STRONG
19. IF THINGS DON’T GO WELL, WRITE DOWN WHY NOT
20. VALUE IS NOT THE STORY, TREND AND DIRECTION OF EARNINGS IS
21. WHEN THE CHARTS SEEM TO READ A DIFFERENT STORY FOLLOW THE ONE WHICH IS MOST LONG TERM
22. YOU DON’T HAVE TO SELL THE WHOLE POSITION
23. SMALL GAINS DON’T MAKE YOU RICH
24. WHEN YOU MAKE A LOT OF MONEY TOO FAST, TAKE PROFITS
25. WHEN A COMPANY MAKES THEIR NUMBERS AND ACHIEVES THEIR GOALS YOU REWARD THEM BY STAYING BY THEIR SIDE, WHEN THEY FAIL YOU LESSEN POSITION
26. TRIPLING YOUR MONEY MEANS NOTHING IF IT'S ONLY SMALL PERCENTAGE OF YOUR ASSETS
27. ONLY TOTAL RETURN COUNTS
It’s been well shown by the performance of index funds that outperforming the markets, year in and year out, is one heck of a difficult task.
Without going into detail, I’ll summarize the market in one quick sentence. There is ample opportunity to win if you are either smart or lucky. The key word is opportunity.
Over the years I have successfully invested my own money by buying securities, both for trading and investing. I’m happy to share with you, for whatever it’s worth, some of my more rudimentary thoughts about making money.
1. KNOW YOUR RISK LEVEL
2. KNOW IF IT’S JUST A GAMBLE
3. NOT BELIEVING THE TREND OF CURRENT EARNINGS PER SHARE IS MORE IMPORTANT THAN VALUE
4. NOT BEING ABLE TO COMPARE FEELINGS OF VALUE VS. FEELINGS OF THE CHART
5. POSITIONS CAN BE SMALL
6. BUILD ON SUCCESS
7. ONLY DO WHAT YOU THINK IS RIGHT
8. NOT ACTING ON A THOUGHT WHEN YOU HAVE IT
9. LACK OF PATIENCE
10. NOT WAITING FOR A THOUGHT TO COME
11. ACT ON FEELINGS WHEN YOU GET THEM
12. KNOW WHY YOU ARE DOING SOMETHING
13. GAMBLE A BIT MORE
14. LOOK AT ALL DIFFERENT CHARTS
15. CORRECT MISTAKES – RIGHT OR WRONG
16. WORK A LITTLE HARDER ON THE FACTS
17. YOU MUST ACT IN ORDER TO SUCCEED
18. IF YOU CAN, RATE YOUR FEELINGS – WEAK, MEDIUM, STRONG
19. IF THINGS DON’T GO WELL, WRITE DOWN WHY NOT
20. VALUE IS NOT THE STORY, TREND AND DIRECTION OF EARNINGS IS
21. WHEN THE CHARTS SEEM TO READ A DIFFERENT STORY FOLLOW THE ONE WHICH IS MOST LONG TERM
22. YOU DON’T HAVE TO SELL THE WHOLE POSITION
23. SMALL GAINS DON’T MAKE YOU RICH
24. WHEN YOU MAKE A LOT OF MONEY TOO FAST, TAKE PROFITS
25. WHEN A COMPANY MAKES THEIR NUMBERS AND ACHIEVES THEIR GOALS YOU REWARD THEM BY STAYING BY THEIR SIDE, WHEN THEY FAIL YOU LESSEN POSITION
26. TRIPLING YOUR MONEY MEANS NOTHING IF IT'S ONLY SMALL PERCENTAGE OF YOUR ASSETS
27. ONLY TOTAL RETURN COUNTS
This is great advice - Thanks
ReplyDeleteGood rules to follow.
ReplyDeletewhat stocks do you like
ReplyDeleteGreat advice. Your years of experience have served you well. Point #16 is probably the most important, don't you think? Thanks for sharing.
ReplyDeleteit reminds me of the story of the guy that keeps asking the lord if he could win the lottery... after about ten years of this the lords turns to the guy and says if you want to win the lottery why don't you buy a lottery ticket
ReplyDeleteWhat is the difference between
ReplyDelete#8 not acting on a though
And
#11 Yes acting on feelings?
Thanks for your question - its a good one.
ReplyDeleteA thought is basically numerical. The P/E ratio is too low, the profit margin is too high, based on historical analysis of numbers and current trends.
A feeling is less quantitative, more qualitative and derives from conclusions that don't necessarily have to do with the facts.