AuthorZeb Pilcher |
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Week 125/16/2021 This week I did a wrap up on all the information I had learned through my books. I did further research on Mutual funds, Bonds, indexes, risk and reward, and stocks in general. I found that youtube videos are a good way to do research like this if they are a trusted source such as a financial advisory or even Khan Academy. Through Youtube and Google searches I learned a lot of stuff the books didn't go into detail about. I would recommend a mix of books and internet when doing research on the Stock Market. I didn't have time to finish all of my books. I was able to read 2 out of the 3 and I finished around half of the 3rd one. The books were hard to read and take notes on because I didn't have any physical copies to look back over. The first two books The Little Book of big Profits from Small Stocks by: Hilary Kramer and A Beginners Guide to the stock market By: Matthew Kratter were very helpful in establishing basic knowledge and going in depth in a active investing strategy. The last book The Art of Investing Lessons from Histories Greatest Teachers By: John Longo was helpful but extremely long and drawn out. It gave good information but within that information was stories about the investor that were not relative to investing at all. For that reason I wouldn't recommend this book near as much as the other 2. This project taught me two valuable things. Don't procrastinate and I also learned a lot about investing which will hopefully allow me to make money off the stock market.
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Week 115/16/2021 During week 11 I read chapters 10 and 11 of The Art of Invest Lessons from History's Greatest Teachers by; John Longo. These two chapters covered Peter lynch and his theory of buy what you know and Bonds. Peter Lynch is a very successful investor who wrote the book One Up on Wall Street. Which has sold over a million copies. He stepped down from managing Fidelity Magellan mutual fund after he increased its amount managed from 20 million to 14 billion in 13 years. He had a simple philosophy of buy what you know. For example my dad is a contractor therefore he more than likely knows more about the construction industry than the average wall street investor. So if he knows a lot about that industry and sees an opportunity to make money there he should. Construction prices are extremely high right now and materials are hard to get. He knows this and plans to watch prices and availability of materials so when the availability increases and pricing decreases he can buy those companies that sell those materials on an upward trend and hopefully beat the crowd. Another example is say you are a car manufacturer or work in the food business you should use your knowledge of those industries to invest when you see a chance. This philosophy doesn't limit you to just investing in what you know but it encourages you to use your prior knowledge to your advantage. Chapter 11 was about bonds. Bonds basically is the investor becoming a banker but with more risk. A bond is an investment that you put money into and you earn interest on your investment and hopefully your initial investment back. Like stocks the more you can earn the higher the risk is. Bonds that you issue into the Government or strong companies is relatively safe. Bonds that you issue to smaller companies are more risky especially if the company has a chance of bankruptcy. Bonds are not liquid so its is a lot harder to sell them as soon as you want to. You have to wait until the bond time is up or pull the money out which will have fees and other expenses taken away from it. I personally am going to wait and do more research before I start to even think about investing in bonds. This image represents interest rate that is paid to the investor
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Week 105/16/2021 For week 10 I read chapters 8 and 9 of The Art of Invest Lessons from History's Greatest Teachers by; John Longo. Chapter 8 was all about buying global stocks. I listened to his chapter but I didn't take any notes on it because the basics don't require me to learn about foreign trading. As a I continue to invest and learn I might read more into it but right now it isn't a priority. Chapter 9 focus on the stock trader David Derman who was a contrarian. A contrarian is someone who goes against the crowd most of the time. Stock prices are based on the herd and who is buying them along with the fear and greed of those people. If the heard is fearful of a stock they sell off and the stock goes down. If the herd is optimistic they buy the stock making it go up. David Derman knew this and he exploited it in his favor. He would buy stocks that had dropped off in hopes that they would soon be bought back. This is a hard way of investing because it is much easier to be wrong with a thousand people than to be wrong alone. Contrarian investing is also a form of value investing which is buy low and sell high. David Derman is a very successful investor and at one point was managing 22.2 billion dollars.
The images below show the contrarian style of investing. Crowd vrs. Singular.
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Week 95/16/2021 Week 9 consisted of chapters 5,6,and 7 of The Art of Invest Lessons from History's Greatest Teachers by; John Longo. Chapter 5 was really hard to follow and I didn't get much out of it besides the saying "risk only what you are willing to lose". This is very important to understand about investing. There are alot of risk involved. A company could go bankrupt, the market could crash, a stock could slip and drop 50% cutting your investment in half. The chances of these things happening are relatively slim but there is definitely a chance you could lose money. Chapter 6 taught me about index funds. Index funds are a form of mutual funds that are based on an index such as the S&P 500. Index funds are passively managed and usually have. decent returns. They have smaller amounts of risk because of diversification. They also have a lot smaller fees compared to mutual funds. The only downside compared to mutual fund is the stocks are not selected and cant change. This is one things that I plan to invest a lot of my money in because historically they have good returns, little fees, and relatively safe. Below is and example of an index fund. Chapter 7 was all about small cap stocks which are stock with smaller amounts of capital usually above 300 million and and no higher than 2 billion. These are the types of stocks mentioned in the other book I read which was The Little Book of Big Profits from Small Stocks By: Hilary Kramer. The main advantage to these stocks are smaller investors are able to buy them before the herd. The herd is referred to as large mutual funds managers, and wall street. These stocks are under the radar so they are harder to fine but can have massive rewards especially if you are able to buy before the herd. Like all stocks the more risk involved the more rewards are available. The stock market is almost like legal gambling with the ability to cheat by doing research.
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Week 85/16/2021 This week I continued to read he Art of Invest Lessons from History's Greatest Teachers by; John Longo. Chapter three focused on growth stocks. Growth stocks are stocks that have high P/E ratios of 15 or more. They are generally more risky but, with more risk comes more reward. These are stocks that have high potential to grow. These stocks are normally held for shorter period of times even if they lose money most investors cut losses and exit quickly. There are different levels of risk with growth stocks. Facebook and amazon are considered growth stocks and those have very low chances of falling down alot. There are also less developed companies that are growth stocks. These stocks are very hard to succeed in but if you are able to succeed your profits can double, triple, or even quadruple. Stocks like this are usually break through stocks that introduce new technology, products, or medical related breakthrew. ![]() Facebook has upward trend and high P/E ratio
I plan to invest 10% of my account on growth stocks just incase I can hit a jackpot. The rush of something such as a stock tripling would more than likely be one of the most exhilarating things that could happen to someone.
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Week 75/15/2021 This week I continued reading The Art of Invest Lessons from History's Greatest Teachers by; John Longo. Chapter two talked about another legendary investor Warren Buffet. Warren buffet is one of the most successful investors of all time. His net worth is almost 110 billion. Warren Buffets investing philosophy is the best time period to own a stock is forever. Warren Buffer is a value investor who runs the company Berkshire Hathaway which is a holding company that specializes in investing. This is all the stocks that Berkshire Hathaway owns right now. Warren Buffett likes to invest in stocks that have very little competitors. These companies also need to be necessary such as automobiles, planes, food, social media, or technology. The 5 requirements of his investments are
1. Threat of new entrance in that field is harder for new company 2. The threat of substitutes is very limited 3. Bargaining power of the consumer is little to none 4. Bargaining power of suppliers to make the good or service is little to none 5. no rivalry or intense rivalry This type of investments are safer investments that have smaller amounts of risk and with smaller risk slower rewards. This method of investing is very viable for someone who wants to buy and forget about their investment for a long period of time. There will more than likely never be another success story quite like Buffet there still is success that can be had from these teachings and principles in investing. For these investments its better to start today than tomorrow and the longer. you hold them the better.
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Week 65/15/2021 ![]() This week I read The Art of Invest Lessons from History's Greatest Teachers by; John Longo. The first chapter was about the legendary investor Benjamin Graham who founded the Idea of Value investing. Value investing is a long term version of investing that is relatively lower risk. The 7 Criteria he set for value stocks are 1. Adequate size of 6 million or more in sales 2. current assets are twice the size as current liability 3. Earn stability 4. If the stocks pays dividends which is a small amount of money they give investor for owning stocks 5. growth 6. P/E ratio of at least 10 or greater 7. Book value is 1.5, Book value is assets divided by liabilities I also learned that my idea of investing at first was flawed. I thought penny stocks were a lot better and I was more likely to make money off of those rather than larger stabler companies. It takes a lot more know how and time to make solid investment in lower priced stocks. Value investing however is a lot more realistic to do and be successful at. This type of investing isn't a get rich quick rather a slow gradual creep up a mountain. Value stocks should also be almost always bought in a dip. The dip shouldn't be a long dip such as a 52 week low but rather a small drop from week to week. This adds a little more cushion.
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Week 53/21/2021 This week I finished Hilary Kramers The Little Book of Big Profits from Small Stocks. The last 5-6 Chapters focused providing examples of her success stories and how to find your own success stories. The authors stressed that the single most important thing a person can do when investing is 1. Know how and what to research and 2. Do research. The main websites where you can do this invaluable research is Sec.com and once you find a stock search for that stocks investor relations website. This is Johnson and Johnsons investor relations website. It contains easy to access information that tells you everything you need to know about the stock and direction of the company. Sec is a website that all stocks and major companies file their financial records. This is a great place that provides all the information you need to better predict how a stock will do. A great way to use the sec is to see if the ceo and major figures of that company are heavily invested or if they have exited or have no money invested in that company. If they don't have money invested in their own company neither should you. Sec also shows you earning reports and the financial situation of companies.
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Week 43/14/2021 This week I continued to read The Little Book of Big Profits from Small Stocks by: Hillary Kramer. I mentioned the three types of low cost stocks in my last blog and this week I learned how to profit from them and what to look for in them along with general market tips and basic knowledge that is necessary to understand. The first piece of basic knowledge I learned about buying and trading these stocks are supply and demand and how it influences the market. The stock market is based of the general idea of supply and demand. The more demand for the stock the more it will increase. Penny stocks do the same but way faster due to the fact they have less supply than a large company because they are not worth as much money. This can cause drastic increases in the price of the stock once the herd starts to buy it. The trick to making money is to buy before the herd. This is why the stock market is risky. The herd may never come or the stock could plummet at any time. To decrease the chances of this, time and research are necessary. The first type of penny stock discussed in this book is the "fallen angel stock". This is a stock that were major company's and drastically fell off. There are Two questions you should ask yourself when it comes to these stocks the first is, "What went wrong and why?" and "Can the problem be fixed?". To learn this information you cannot look at spreadsheets of the stock but you have to do more intensive research of the company. Find the problem and determine whether or not the problem can be fixed. Another important factor is stocks that have sold off very quickly and not over time. If it takes forever to sell off there is an ongoing problem with the stock. To find these fallen angles you will need to scan for 52 weeks lows or the standards and poor 500.
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Week 3 `3/7/2021 This week I started the book The Little Book of Big Profits by: Hilary Kramer. Hilary Kramer is very successful investor who has made millions and worked for large mutual funds and provides investing tips and strategies to help the average person reach financial growth. This book is all about the low dollar stocks. These stocks are often overlooked by major investors or mutual funds. These stocks are considered very risky and not worth to invest in. Cheaper stocks come with a lot of risk but with the right knowledge and enough time and effort put into research they can increase wealth drastically. The goal of this book is to learn how to pick these stocks and what to do once you purchase them. I haven't got to read as much of this book as I would have liked too but I still have learned of few of the basic trends, patterns, and markets which are the best to buy these low dollar stocks from. The Three categories of low cost stocks are 1. the bargain bin this is the holy grail of low dollar stocks, 2. undiscovered/ newer businesses 3. Large companies that have fallen off. These categories define stocks that are worth the buy and not worth the buy. The third category is usually never worth buying because if they have lost substantial amounts of money they usually stay losing money for a long time. The First stock is rare but not impossible to find and are always worth the purchase. The 2nd is worth the buy if it has promise of a good business. There are also three things you should look for in a stock that are less expensive. These are whether or not it is undervalued, cheap, and has a promising business. Stock like these are cheap, come with lots of risk, and are not an easy investing strategy but with knowledge and research they can increase your wealth by leaps and bounds.
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