Hi all,
I've been investing actively for around 5 years with decent success, going from $150K to $560K, with 27% annualized returns, and wanted to share my results and insights. Hopefully, I can spark some good discussion with my fellow investors and hopefully learn some good lessons along the way!
First, here's proof and my results: https://imgur.com/a/dJJSTii.
My investment philosophy:
- Take every investment very seriously and do extensive research. How serious is serious? Like buying a car or a house serious. I spend probably a good 20-40 hours doing research on every stock I buy. And I don't buy options and don't recommend them - too much gambling involved.
- Invest with only money you can afford to lose 50% on, and that you don't need to survive on. Think to yourself: if I lost half of this investment, would my life be OK? If not, then don't invest with that money. I have my 401K and IRA accounts separately outside of this investment account, so this money is my "gravy" and my life won't be doomed if I lose 50% of this.
- Have a strong stomach for variance. It certainly helps if you follow #2. Don't get jittery and sell when stocks crash. Easier said than done (I've made this mistake many times before but now I'm finally learning, at least I hope so). In the beginning, I've sold shares (especially TSLA) when it bottomed out. Bought back when it was at a local peak. Now I've built enough mental fortitude to not do that.
- Be disciplined - don't be easily swayed by others' opinions. This is not being irrational, and not being unable to listen to what makes sense, but rather, if you do the research like in #1, you'll have a very deep understanding of why you should buy XYZ stock, and when others talk about why stock XYZ is going down, you should immediately know if those reasons are valid or not. If they are not valid, then dismiss them. But if they are, re-evaluate your original decision.
- Have a mix of higher risk/higher reward stocks, and some lower risk/lower reward stocks. Nobody is 100% sure of any stock, so you can use this to properly mitigate your risk. I'm hyper aggressive in terms of my mix, so my lower risk stocks are AAPL, AMZN. My higher risk stocks are CCL, LUV.
- Hold investments for at least 1 year (with rare exceptions), because short term day trading is a separate beast, and you get much better tax savings when you hold it for 1+ years.
- Always try to learn! Talk about stocks with your friends, family, coworkers, get their view on things. When doing social activities, think about how it relates to your investments. Browsing Instagram can be fun, but it also can help you discover social trends and patterns that can dictate where the world is moving toward, which is super good knowledge for investing!
What are your philosophies, experiences and what did I miss? Would love to hear all your thoughts!
Submitted June 17, 2020 at 06:54PM by zztopdollar https://ift.tt/2YKn1vh
