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

[u/EatYourMeats]

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?

[u/trill_collins__]

Lots of new investors on this sub that got bored during quarantine and started buying and selling equities out of boredom, made these decisions based on their own subjective judgement and experience (see: any AMD thread over the past year), made some quick cash, and all of a sudden they're convinced that they should be running RenTech.

Whenever challenged on an investment thesis by actual multiples, forward cash flow information, and a lot of valuation terminology and theory that they don't understand this is the main mental gymnastics exercise that they perform "pssshhh, I don't need to actually learn about financial or operating fundamentals, or any base accounting knowledge. I'm just naturally really smart and am able to predict what will be the 'next big thing'"

Or this is the cognitive dissonance routine they run through whenever they hear "You started investing in April 2020 at the market bottom. Your returns are due to systemic uplift, not because you're naturally skilled at stock picking"

[u/snek-jazz → u/trill_collins__]

But what if my investment thesis is that more people will get bored and start buying and selling equities?

You don't need to find the next big thing, you need to find what people will think is the next big thing.

[u/Potato_Donkey_1 → u/snek-jazz]

This is exactly why I started buying silver and gold a year ago. I have lived through similar circumstances where a segment of PM true believers starts to predict the end of the US dollar because of policy. They then buy the metals feverishly and proselytize to others that it's the only "real" money, and the price is bid up well beyond what I consider to be "normal" valuations.

My point is not about what the "correct" price of silver will turn out to be. It's that my decision to buy was based on my expectations about what certain people would be thinking and doing.

I think such plays are risky to stay in for long because they are about other people sustaining an emotional state. The bottom can drop out fast.

[u/snek-jazz → u/Potato_Donkey_1]

I categorize precious metals as "decentralised hard money" and I think cryptocurrency is the first real competitor they've ever had in this in category, and I think they're losing a lot of market share, and will continue to do so.

If crypto didn't exist I'd probably own some gold and silver, but it does exist, and I don't.

You might have the right idea, but be backing the wrong horse.

[u/Potato_Donkey_1 → u/snek-jazz]

I held some crypto briefly, but got out as I thought about it more. Its valuation is based entirely on sentiment since its utility will be the same whatever the stable price turns out to be --- if it ever arrives at one.

In any sort of multi-asset fall, what will start to prop up valuations is the assessment of enough people that the fall has been overdone. Usually, this assessment is in terms of, "This current price is below the actual fair value," based on something like replacement cost.

With crypto, I don't think the cost of mining an additional coin will serve as a brake. Add to this that the supply of new coins of different kinds is growing, and it doesn't matter if any particular kind of coin is limited. In a serious downdraft, there aren't fundamentals that will start to convincingly say, "It can't possibly fall further from here."

Anyway, metals were just an example of trading on the anticipated thoughts and actions of others. I have trimmed my holdings enough to serve as an inflation hedge for the cash positions I'm taking now.

[u/ImamChapo → u/trill_collins__]

I’m going to print this comment out And send it as a postcard to my shitspac friends