Pick Your Weapon ⚔
It’s time to select an investing strategy. There are many to choose from, but value investing stands alone as the most successful historically. This lesson will prime you on day trading, penny stocks, derivatives, and momentum investing, before we delve into the meaning of value investing. We’re about to start stacking change, so stay tuned!
Find The Perfect Strategy Match ?
We have three guiding requirements. The strategy must be;
Investment-oriented, not speculative.
Able to yield in the region of 10% over 30 – 50 years.
An index fund returns 7% on average (9% if you use other time spans). If we’re actively stock picking, it seems sensible to aim for more than 7%. 8 or 9% would be cutting it way too close which is why I’ve suggested 10%, and at a 30 to 50 years time frame to ensure we see the benefits of compounding.
Allows us to earn control over risk by improving our skills.
After seeing what’s under the surface of some of the strategies below, it will be clear that we can’t have a strategy that is overly risky by its very nature, dragging us down.
The Contestants ?
An ⛔ indicates the strategy does not fulfil all three requirements. A ✅indicates that it does.
Value investing is the approach we will follow in this course!
Value Investing is a Sport of Information ℹ
To win at value investing, learn, learn, learn! The better your insights, opinion, and overall understanding of a business, the better your valuations of what the stock is worth. Your skills at working that out are up against everyone else’s. Stock prices are set by institutions (banks and hedge funds) that invest for passive investors because they move the most money. Therefore, we’re competing against Wall Street “pros,” a privileged class of know-it-alls! Beating them is a piece of cake, actually. Here are three tips:
Find a niche and dominate it. Pick what calls you and have fun learning! It could be an industry, a certain country, or even in a type of business situation. Drilling deep into one area is the most reliable way to develop an understanding and highly rank yourself as an investor.
Let’s pool our insights together in the comment sections of this site and Instagram. Stronger together!
Wait for the fat pitch.
Enthusiastically buying and selling around the clock (otherwise known as “hustling”) is a terrible idea. Don’t compromise on the quality of the stocks you buy just to feel active in the market. When a home run lands on your desk, run with it, but that won’t be a weekly or even monthly occurrence. Read, learn, read a bit more, and then explode into a punchcard investment with devastating speed and efficiency!