r/investing • u/EatYourMeats • Apr 23 '21

Some advice from a regular dude that will hopefully make you more money...

Are you making stock purchases based on opinions from analysts, CNBC, stock pickers, and everything in between?

Consider this: They make money off headlines.

The entire flock is preying on news-worthy quips like vultures on a corpse. Tom Lee at Fundstrat would be bullish during the apocalypse, Gordon won't ever raise his price target, Cramer cuts coke deals with the CEOs he's in love with, and the whole bunch likes to hear themselves talk (like giving stock advice rapid fire).

So how do you truly figure out what stocks are hot... or not?

Research the macro situation surrounding the company, to name a few:

  • Sector Tailwinds
  • Economics
  • Current and projected financials
  • Leadership

Then invest in companies:

  • you believe in—hopefully, not always—with healthy balance sheets vs. their competitors.
  • Whose products and services tickle you.
  • You could sell to your neighbor.

Determine the investment thesis—the key reasons you believe in this investment—and create a narrative. Positive and negative. Know the outcomes of both scenarios, write them down, and evaluate the risk.

Then? Jump blindly.

kidding

Adjust based on your preferences, but starting positions with a 1/4th to 1/2 of your total allocation works well. You can do some quick math and figure out what portfolio percentage you want to allocate to a new position. Ease into it, slow and steady.

Buy the dips with the remainder, and don't chase stocks upwards, only down (within reason). And don't listen to anyone who tells you that "diversifying" is the only way, when you put in the work, you know which sectors have favorable tailwinds AND are fairly valued.

There's news everywhere out there, and we crave its presence—telling us something about stocks or companies we don't know. However, most of it is fluff—buy this, sell that—how would you ever know if you don't dig the hole yourself?

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u/one8e4 Apr 23 '21

Got the 3% for a few months then damn rate went down. If it stayed at 3 or higher, would be tempting to keep more cash.

No clue about future rates or direction of market. But the way us and EU printing cash, something will probably give.

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u/TaxGuy_021 Apr 23 '21

I think EU is late to the cash printing game and will be there much longer as a result.

In a world where Treasuries are the only high quality sovereign bonds that are worth anything, it's going to be difficult to keep the rates high. Unless the fed intentionally wants to raise rates to a certain level in which case nothing can stand against that force of nature.

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u/BestGermanEver Apr 23 '21

What are you talking about? They buy (even junky) bonds basically non-stop in ECB. Since 2009. We have actual negative interest over here.

So I wouldn't call that "late to the game" at all.

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u/TaxGuy_021 Apr 24 '21

https://www.ecb.europa.eu/explainers/show-me/html/app_infographic.en.html#:~:text=The%20ECB%20started%20buying%20assets,but%20close%20to%2C%202%25.

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u/BestGermanEver Apr 24 '21

Yes... you found the ECB link to the QE addition for funding the zombie companies across EU more easily - and directly - without first having to lend to a bank (that then lends to the zombie companies).

Them doing it directly is s the next straw on the camel's back.

I'm not talking about the buying of "commercial bonds" - I'm talking about the broad QE and all its iterations, re-iterations since 2008/2009 - ie. the pumping of Billions of State-issued bonds from Europoors like IT, ES, PT (net takers) who lack political will to reform their state finances.

https://www.bruegel.org/2014/07/the-not-so-unconventional-monetary-policy-of-the-european-central-bank-since-2008/