Investing - The Basics

[behappyalways]

How young people can grow their wealth, according to the experts
https://mothership.sg/2017/10/how-young ... e-experts/

[winston]

Why Most People Will Never Be Good at Investing

by Vishal Khandelwal

…because most people in the stock market, most of the time, don't do investing, which is…
Thinking how markets work,
Understanding how people behave,
Studying businesses,
Sticking only with what is simple and what they understand, and
Buying stocks at appropriate valuations.
Instead, they are busy…

Envying (others making money fast or losing money slow),
Cloning (others' stock ideas mindlessly),
Predicting (future of markets, stock prices, and economy),
Fearing (missing out on future gains),
Regretting (past mistakes),
Avoiding (accepting current mistakes),
Denying (reality, especially when it's harsh), and
Indulging (in useless information and noise)

And if that's not all, these often lead us to -

Trading (frequently, which adds to our costs),
Averaging down (on bad businesses),
Boasting (about our lucky short-term gains), and sometimes
Trolling (other investors on social media, who have not performed as well as us in the recent past).

With such a busy schedule, where is the time to practice investing?

Source: Seeking Alpha

[winston]

A Crash Course in Financial Freedom

by Alexander Green

1. "A share of stock is not a lottery ticket. It's an investment in a business." - Peter Lynch

2. "The big money is not in the buying or the selling, but in the sitting." - Jesse Livermore

3. "A great business at a fair price, is superior to a fair business at a great price." - Charlie Munger

4. "In a bear market, the winner is the man who loses the least." - d**k Russell

5. "Easy money - isn't." - Ken Fisher

6. "Investors should purchase stock like they purchase groceries - not like they purchase perfume." - Benjamin Graham

7. "You can't pick cherries with your back to the tree." - J.P. Morgan

8. "Never confuse genius with a bull market." - Humphrey B. Neill

9. "The one investment certainty, is that we are all frequently wrong." - Bill Gross

10. "If you don't profit from your investment mistakes, someone else will." - Yale Hirsch

11. "Investments should be based not on optimism but arithmetic." - Benjamin Graham

12. "My broker told me to buy this stock for my old age. It worked wonderfully. Within a week I was an old man." - Eddie Cantor

13. "If past history was all there was to the investment game, the richest people would be librarians." - Warren Buffett

14. "Investment success accrues not so much to the brilliant as to the disciplined." - William J. Bernstein

Source: The Oxford Club

[winston]

8 Critical Tests a Stock Must Pass Even in an Explosive Bull Market

by Louis Navellier

1. Sales Growth: the percent change in a company’s sales this quarter versus the same quarter last year. Companies that show increasing sales at a very high rate are among the best candidates to become big winners over time. If a company can continually increase sales over long periods of time, then it would seem to indicate that they have a product or service that is very much in demand. I look for companies that show year-over-year sales growth of 20% or more.

2. Operating Margin Growth: the profits left after direct costs such as salary and overhead are subtracted. I then look at whether this percentage margin is contracting or growing year-over-year. A company’s operating margin will increase when its product is in such high demand that the company can continue to raise prices for the product or service without an offsetting increase in costs.

3. Earnings Growth: the percent increase in a company’s earnings per share (EPS) this quarter versus the same quarter last year. EPS is just the company’s earnings divided by the number of shares they have outstanding. Naturally, companies that are continually growing earnings year-over-year get a higher score than those that aren’t.

4. Earnings Momentum: how rapidly a company’s earnings have been accelerating over the past four quarters. Companies that are accelerating and growing earnings faster year-over-year are stronger candidates for my Buy Lists than those where earnings are slowing.

5. Earnings Surprises: a company’s ability to exceed the consensus earnings estimate among Wall Street analysts. Here I am looking for stocks that can exceed what Wall Street believes they can achieve. Stocks that deliver positive surprises for several successive quarterly earnings periods often go on to become growth stock megastars.

6. Analyst Earnings Revisions: the size of raised magnitude in which earnings projections have increased over the past month. When an estimate is raised, it has tremendous positive implications fora company and its stock. If the expectation is up, then the stock should be worth more —and rise in price to reflect that fact.

7. Cash Flow: the money the company has left after paying the cost of doing business and the upkeep and the maintenance needed to stay in business (relative to its total market value). In simple accounting terms, free cash equals operating earnings minus the capital expenditures needed to run the business. This is especially important for dividend stocks. And in a bear market, analysts suddenly emphasize this part of the balance sheet above all others. It shows if the company has the liquidity it needs to ride out the storm.

8. Return on Equity: a company’s profitability in terms of profits made from the money shareholders have invested. It is calculated by dividing the earnings per share by the equity (book value) per share. The higher the number, the more profitable a company is, and the higher return management is providing to shareholders.

From there, a stock must also prove its mettle, so to speak, on Wall Street. When it also earns a strong Quantitative Grade (my proprietary measure of institutional buying pressure), it becomes an urgent buy in my Portfolio Grader.

This system allows me to avoid the bad stocks and also signals when to sell a stock if its fundamentals begin to deteriorate or institutional buying pressure dries up. By concentrating on the numbers, my system takes the guessing out of picking winning stocks.

Source: Market 360

[winston]

5 rookie mistakes investors make: hedge fund veteran

by Ethan Wolff

1. Plan before, not during a crisis
2. The stock’s price changed for a reason
3. Policymakers play by their own rules
4. Valuations don’t matter

5. Misunderstanding time frames
“Only look at charts where the time period shown matches your holding period. If you plan to hold US equities for 20 years, look at a 20-year chart.”

Source: Yahoo Finance

https://finance.yahoo.com/news/5-rookie ... 44782.html

[winston]

What You NEED to Know to Be a Successful Investor

by Dr. Steve Sjuggerud

1. You aren’t going to get rich overnight through investing.
2. Start small. That keeps your investing “tuition cost” low.
3. Don’t invest in something you don’t understand.
4. What’s a good return these days?
5. Don’t put all your eggs in one basket.
6. History repeats – or at least it rhymes.
7. Don’t fight the trend.
8. Cut your losses early.
9. When in doubt, don’t do it.

Source: DailyWealth.com

https://dailytradealert.com/2021/01/02/ ... -investor/

[winston]

Cramer lays out 7 rules for new investors to follow: ‘We are at a critical point in this market’

by Tyler Clifford

1. Augment your capital with the stocks of companies that deserve to go higher over time
2. Don’t try to wipe out other investors
3. Find opportunities to capitalize on stock moves driven by emotional trading
4. Don’t depend on the government to introduce regulatory changes
5. Don’t borrow money from brokers to buy stocks
6. Keep a sound head and follow corporate earnings reports
7. Invest in companies that are in good shape and poised to do better in the future

Source: CNBC

https://www.cnbc.com/2021/02/03/cramers ... arket.html

[winston]

Before You Invest Another Dime into the Stock Market, Read This

by Jody Chudley

Rule No. 1: Never Sell Stocks During a Market Crash
Rule No. 2: Treat Your Money Like a Bar of Soap
Rule No. 3: Trust the Overwhelming Historical Data

Source: Wealthy Retirement

https://dailytradealert.com/2021/05/02/ ... read-this/

[behappyalways]

Older men are more likely to panic sell stocks: MIT study
https://www.theedgesingapore.com/news/f ... -mit-study

[winston]

The one thing a legendary Wall St. analyst says you should focus on when picking stocks

BY JENNA SCHNUER

"The single biggest mistake I've seen investors make is to get stuck on trading around tech stocks rather than investing in high-quality stocks," said Mahaney.

But if there's just one tip investors should follow, Mahaney said, it's "think DHQ. Not DQ—that's Dairy Queen. DHQ, dislocated high-quality stocks. Hunt for these."

"Companies facing large TAMs [total adjustment markets] that show relentless and successful, hopefully, product innovation, compelling customer value props, and great management teams."

Following the rule of DHQ and you "do at least one of the two things we're trying to mitigate when we invest: get rid of the risk or, at least, minimize it."

So, said Mahaney, wait for stocks to get dislocated as "they all get dislocated. They trade off 20% to 30% either on company-specific steps or on the market.

Every single high-quality name has gotten dislocated. That gives you a chance to buy it or add to positions. Dislocations happen to the best of us."

Source: Fortune

https://fortune.com/2021/12/02/the-one- ... ldatasheet