Showing posts from July, 2022

What Are the Consequences of Overpaying for Stocks?

If you follow Facebook groups and listen to podcasts about trading it seems that a lot of people today, choose a company that they like or identify with and that’s all the parameters that qualify them buying a stock. Or they buy a stock they believe will be trendy in the future and they buy the stock immediately without understanding the company or the value of the business. They pay the stock price and sit back and wait for it with the expectation that it will go up.  This is trading using the “Efficient-market hypothesis” that these people invest by because it's used in academia and a style often shared in media. The Efficient-market hypothesis won a Nobel prize and very loosely defined by stocks are always correctly priced because investors have all the available information needed. But is that true – do you believe that people today have all available info when they invest in a stock? The info might be out there but it seems that many people on social media ask the crowd instea

Does Time in the Market Beat Timing the Market?

Timing the market means that you buy stocks when they’re at an all-time high and sell again and an all-time low. It’s a topic that I’ve written about a few times on the blog so those who follow the blog often likely already know my stance on timing the market: it is not possible to perfectly time the market.  I’ve seen on social media that some accounts focused on stock market trading explain how time in the market beats timing the market and I want to share my view on this. There is definitely some truth to it – that time in the market is important. When Warren Buffett bought his first stocks in 1942 the Dow Jones index was at $112. The Dow Jones Industrial Average, also called the Dow, includes the prices of 30 of the most actively traded stocks on the New York Stock Exchange and the Nasdaq. Today the Dow is at $31.794,16. In 1942 you couldn’t buy an index like you can today through the so-called ETFs, but staying put would’ve given an amazing return. However, a return isn’t always

3 Ways to Celebrate You're An Investor

My investing anniversary came up this week and here you can get some inspiration on how you can celebrate your investing milestones. For some people getting started with investing in stocks is something they need to overcome – I was definitely one of these people that spent years wanting to start but just didn’t have the courage. It can be uncomfortable and even scary, so in order to change mindset and mentality you can condition your mind to make investing a fun and motivating experience.   Annual Traditions There are so many possibilities to celebrate investing events on a recurring basis. Marking the calendar for an annual celebration of you as an investor will create a new tradition. As mentioned, I have a special celebration once a year on July 13th – the day where I opened a book about investing and for the first time really found an investing method that resonated with me, and I realized that for 10 years, I had been doing it all wrong. I had been speculating if a stock would be

Is Value Investing Too Complicated?

One question you ask me in the coaching sessions and in free 30-minute meeting is: “Investing like Warren Buffet must be complicated; how do I know it’s not too complicated for me? “ I get it. Gaining avg. 20% percent per year for decades, would leave most people thinking that only Warren Buffett can figure this strategy out. However, the reality is different.   “Warren Buffett Invests according to four simple principles. One of the greatest strengths of Warren Buffett is his ability to make things simple. His principles are straightforward and easy to remember.” Stig Brodersen, Value Investor, Author, and Business Owner The four principles that Stig mentions in the quote above are shared by Warren Buffett and his business partner Charlie Munger in annual letters and in interviews over the years. They only invest in companies that they are capable of understanding, and once they are over that threshold, they want a business with a durable competitive advantage and to have management in

Should You Sell Your Stocks Now?

This article is inspired by a Facebook post in one of the many groups where people discuss stocks and the stock market. I see it happening a lot these days: some people are sharing on social media that they’re selling now that the market is low. I’ve created this "frequently asked questions" article about selling and holding on and hopefully it will help you make selling decisions on your own.  How long do you have to hold a stock before you can sell it? There’s no limit per se to how long you must hold a stock before you can sell it. You can buy it and within a heartbeat turn around and sell it again. However, as a value investor you’re in it for the long haul. As Warren Buffett says: “If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes.” We’re making decisions based on our research, so we buy and then we hold for as long as the business stays wonderful – hopefully decades (read the last answer in this post to find out w