Would love to hear other people’s investment philosophies. This doesn’t get talked about enough.
Here are some of the points from my perspective:
- Buying and selling stocks for a profit is when the market prices your underlying asset less in the present than what you believe is fair for the future.
- If you believe in sector rotation/event-driven/deep value investing, you must buy a stock that has the strength to deal with a downturn.
- If your buying an undervalued asset, you must figure out if the market is overreacting/pricing information fairly or it has good reasons for falling to a cliff.
- To look at high return objectives, you must find stocks that have the range to justify going back close to 52 week highs from 52 week lows.
- Be content on making less money when you reach your percentage gain target. Rules are rules. If you wanted to make 50%, make 50%. Do not break your rule on hopes stock goes up. If it is justifiable to hold for longer (via new positive information), sell at least half position at 50%.
- There is no such thing as doing too much research on a stock.
- Macro events can dictate price movement versus company fundamentals. Macro event sell offs drives investing opportunities. In long run though, company fundamentals matter
- Invest in things you understand. If you don’t understand it, then don’t buy. If you don’t understand and buy, take advantage of macro events as leverage for stock to go up.
- Read Investor page on every company you buy.
- Begin starter positions first to have skin in game. Not too little, not too much. Just the right amount at your buy target range.
- Dollar cost averaging is your friend, not your enemy when buying quality plays.
- To protect you from day trading losses, play with stocks that you have a positive long term outlook on. When dealing with a big loss for the day, extend it to a swing trade. If it doesn’t work, wait until it does. If it doesn’t work, wait long term. You won’t lose your money; you will have opportunity cost. Opportunity cost is your enemy.
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