Successful Investing Shortcuts — The Easy Way
A Guide To Investing At Any Age
99% of active funds do not beat the 30-year market. You are not special so read what I am about to tell you.
When we read in the news that someone has become rich with this stock, we don’t see all the people who have lost their underpants with another store concentrating their money on this stock.
We underestimate (and significantly) the risks associated with concentration.
This is a mistake that many investors also make: they entrust their money to a single company (or very few) because they believe that this company can’t have bad results.
- “It’s Nokia. How can Nokia have bad results?”
- Kodak?
- Burford Capital?
- Blockbuster?
- Polaroid?
- Terra?
The list is enormous.
Great companies, consolidated in their sector and with stable and bomb-proof business models that ended up sinking in the mud.
Many people bought companies like these because they kept growing. Once they start to fall, they start buying because it’s a good buying opportunity. They start averaging down until they have 40% of their portfolio losses.
They hold these positions to infinity, and it is no longer the losses but the opportunity cost.
Hence we must have systems at the time of investing. We must have one and stick to it. Keep this in mind: “If you improvise, you will screw up.”
Today you would have lost your wife and even your slippers. It would have been an excellent purchase if you had bought the company in 1995. However, if you have done to buy at 40, get excited about 50% rises (up to 60) and buy like crazy with all your capital.
What makes you think something like that couldn’t happen to Facebook (Meta), Google, Tesla, or Apple? The answer is yes:
Without a crystal ball to predict the future, I am convinced that the best investment strategy anyone can apply is to diversify well.
The more companies you hold in your portfolio (from different sectors and geographies), the less risk you take.
My advice is that you should not try to choose the companies that will be part of your portfolio, as it is very likely that you will not make a good selection.
Remember that nobody knows what is going to happen in the financial markets. Neither do you.
For this reason, I am a fervent advocate of investing in stock market indexes through index funds and ETFs or mutual funds.
Not only is it the easiest and lowest-fee investment I know of, but it’s also the one that allows me to invest in hundreds or even thousands of companies around the globe.
And thousands of companies from all over the world enter your portfolio. I don’t know how you will see it, but I think this possibility is incredible. You don’t have to worry about doing rigorous analysis of financial statements (which we have no fucking idea how to do). You don’t have to worry about what happens today in the Japanese stock market and what will happen tomorrow in the US stock market.
In addition, I would complement this investment with highly de-correlated assets such as gold and crypto. I would even hold different currencies in addition to the dollar, such as the Swiss franc or the Hong Kong dollar. Why? Because I don’t know what might happen in the future, and I prefer to be hedged in the face of that uncertainty.
For example, if we go back to the gold standard, dollars lose all their value. US companies falter and fall 40%, and I need money.
The worst thing I could perhaps do is to sell my shares. But if I have gold that has appreciated or another currency that has done the same, I can benefit from that without selling my shares at a loss.
It allows you to sleep very peacefully and remember the previous point when having fun. You are going to lose a lot of money.
If you are tired of “get rich quick schemes” that don’t work, and what you want is to start changing the course of your life, creating assets that allow you to achieve it, you might be interested in my community. In just 12 weeks people have more knowledge than in any MBA. Places are limited.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
