Winners Only Handbook
Blog
This is not professional financial advice and I currently hold no FINRA licenses. All opinions are my own.
Now that we got that out of the way, I think every single person who puts their hard-earned cash into the market should have an inkling of an idea about an investment philosophy. And this philosophy should translate not just into the stock market but every type of investment vehicle you endeavor such as real estate, vehicles, fine art, etc. I feel it is my duty to give you a beginner’s guide for a non bullsh*t, common sense, summarized rundown of my investment philosophy for 10 easy payments of $100.00. I’m kidding, look to other bogus Finance Twitter accounts to be willingly scammed like that. If you aren’t on Twitter trust me when I say there are people out there that do this. On my Twitter account @rebelmarkets, shameless plug sue me, I frequently like to mess around and have a good time, but this blog is a little different and somewhat serious. Here is the rundown that is not going to waste your whole day reading because I know you have important things to do and I do too.
1) Know what you are buying – It’s horrifying how many people buy shares of a company that they legitimately can’t list 5 things about the company. Remember, you are OWNING a tiny slice of a company when you buy shares of stock. Would you buy a car without knowing anything about the technology or specifications of the car? Probably not, unless you are a part of the Tesla cult who just buys whatever Elon Musk pumps out of his factory. In less than 10 minutes you can look up and read a company’s balance sheet so there is truly no excuse to not know what the company’s current standing and future projections are. Odds are right now you are quarantined and bored out of your mind, you should have plenty of time to start researching on your investments or future ones. Make spreadsheets or do whatever works for you, get nerdy your money is on the line!
2) Have a plan of when to get out – Getting out of an investment is in my opinion the hardest transaction to make. You are up 100% from your initial purchase price: what do you do? This question is a perfect world that should be answered before you initially buy the stock. I have found it actually more difficult to sell a stock when I have made a massive gain rather than getting burned alive. If you are completely new to investing, a general rule you can go by is to sell 50% of your initial purchase value (in # of shares) when the stock is up 50% and then sell the rest of your initial purchase value (in # of shares) when the stock is up 100% from your initial buying point. This way the number of shares that are leftover is purely profit and if you have dividend reinvestments on (commonly referred to as DRIP) your number of shares will increase over time (if there are dividends for that stock). Of course, this strategy is simply a suggestion that can be tinkered with and over time shaped to your own style of investing as you get more seasoned/willingly reckless.
3) Wait a day – If a stock is up 20% in one day don’t have FOMO (fear of missing out) and pull the buy trigger. Wait at least a day for the stock to settle unless you want to enter a short position. Just know that deadbeat day traders (I was once one) have scanners in which if a stock skyrockets up or down the stock ticker will show up on millions of people’s screens. Day traders will move into a stock in droves if it has made a large position move up or down causing the stock to be manipulated to hell and back in which all balance sheet and research goes out the window. Hate to break it to you, but if a stock is up big you simply missed the train. There’s the old saying “By the time you read about it’s too late”. If you are planning to enter a position for a swing or long-term hold it is better to wait at least an hour or two after market open, usually day traders get up to change their diapers by then and stocks tend to settle (usually).
4) Know thyself – Speaking of deadbeat day traders, know what type of trader you are. Are you a swing trader looking to be in and out within weeks/months based on FUD news on CNBC? Are you a long-term investor who knows the company they invest in like the back of their hand and still catches every falling knife? Or are you a day trader who puts their entire paycheck on a biotech stock that according to StockTwits will undoubtedly get FDA approval. Obviously, the above examples are what can go wrong with being each type of investor, so long story short there’s no ‘one way’ to invest. You can make money being a day trader, swing trader, or long-term investor. However, my advice is to not go into a stock position with a day trading mindset, have things go wrong, and panic switch to be in a long-term position or vice versa. A good way to avoid this is to have three separate accounts. One for long-term positions, one for day trading, and one for speculative swing trades. This will force you to maintain the trading mindset you had prior to entering the position.
Well, there it is, a four-step philosophy that should help your initial investing career. If you already knew this then kudos to you, it’s worth hearing again. Lastly, I write these blogs because it helps me/forces me to do my own due diligence and research more than I normally would. However, I greatly appreciate people’s engagement and questions on my Twitter account so shoot a follow if you would like to see more content.
Winners only,
REBEL
Thank you for reading today’s Rebel Markets newsletter,
If you enjoyed please consider sharing for more to see!
Places that you can also find my content!
Twitter: @rebelmarkets https://twitter.com/rebelmarkets
Youtube: Rebel Markets https://www.youtube.com/channel/UCDiWRQkMpW-N7sGo-WovDWg?view_as=subscriber
To Support my content/See my portfolio: https://www.patreon.com/rebelmarkets?fan_landing=true