I’d like to share the two biggest takeaways I learned from two decades of investing
“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” — Warren Buffett
About 20 years ago, I became interested in the stock market and the promise of residual riches. Having had parents/mentors who were afraid of it, I had no inherent source for knowledge or leadership.
Still, I paid attention to my interest and pressed on looking for guidance. After all, the possible payoff in cash does have its allure.
I really had no idea how to get started. Who makes the trades? How do I pick stocks? How do I get paid? What is a dividend? On and on it went, I knew there was much I did not know.
So, I read.
The first piece of information I could find said,
“Invest in what you know.”
That made sense so, I began to look at a few companies in industries I had experience in, Restaurants and Motorcycles. But, how would I watch them?
And what was up with the Bull and the Bear?
“Know what you own, and know why you own it.” — Peter Lynch
What is the Stock Market?
According to Wikipedia:
A stock market, equity market or share market is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately.
That sounded like mambo jumbo to me in the beginning, and in many ways it still does.
Yet, as I watched Warren Buffet buy his way into majority ownership in companies through the stock market, it began to click.
Knowing that I learn more by doing, I had to jump in.
It was a slow start.
I knew my money was not growing fast enough in some savings account at 1%, plus that avenue was zero in the fun and excitement department.
I thought, “How can I do this?”
Something I found suggested that I start watching stock symbols via a watch-list. Another said I could play with fake money and see how it goes.
I decided to make some lists on my Yahoo Finance account, one looked like this.
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” — Paul Samuelson
This was the start of my hospitality portfolio. I had worked at Taco Ball as a General Manager and they were owned by YUM Brands. They also had Pizza Hut and KFC. These all seemed like leaders in the food industry where I had worked for over a decade.
I also started a portfolio called Motors. I was a motorcycle rider, had an interest in cars and had rebuilt several engines, even restored an old pickup at 16 years old.
I started this folio with Harley Davidson.
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” — Robert G. Allen
Years ticked by, I took no action. Even worse, I became discouraged by the slow movement in the stocks I was watching. It was going to be harder than I thought. Life kept coming and I kept putting investing on the back burner.
Until fate stepped in….
A man entered my life through another avenue and over time, we became friends.
He is retired military, Let’s call him Jim. He seemed well off having made several good real estate decisions at the right time. Plus, he enjoyed a good pension from his 20 years of military service.
Then one day he shared that he worked as a stock market investment advisor.
Alarms went off in my head, Ding, Ding, Ding!
I told him my stock market story and asked if he could help.
His reply seemed a bit terse and after just a few questions he replied,
“If you want me to help save $1,000 that you don’t need and use it to open a Scottrade account. Then buy a subscription to the IBD, don’t call me again until you have all three.”
“But, What is the IBD” I asked, his reply, “You’ll figure it out.”
After I recovered from the “this guy is an asshole” thought I went on to figure it out and learn more about it’s founder William O’Neil.
“Mentoring is a brain to pick, an ear to listen, and a push in the right direction.” — John Crosby
Having done all the Jim had asked, I called him and he invited me down to his house for dinner and an information session. The food was fine then he shared and I got to ask some questions.
Now it all clicked! I thanked him and said goodnight.
I was anxious to get home and get started.
As I already knew, starting was important for me so I got up early the next day and made some stock purchases.
At $7.00 per trade, along with my humble account balance, I couldn’t go crazy. My first trades were just gut guesses and they did not go well.
Somehow, I had mistakenly made up a story that I could jump in and out of trades quickly amassing a fortune.
I had read somewhere that Warren Buffet started out with $40.00 from each of three neighbors in the 60’s. He invested others money to get his start and the rest is history and one of his company stocks at Berkshire Hathaway trades at $311,632.00 per share as of this writing.
It’s been 10 years since my dinner with Jim.
“Be fearful when others are greedy and greedy when others are fearful.” — Warren Buffet
Oh, where are the Take-aways you ask?
I’ve given you many but the first one I immediately grasped and have used for much success is…
1: Invest in what you know
One of the most important tools in my content creation model is the Adobe Creative Suite. I purchased their popular product Photoshop upon its first release in 1992. That’s 29 years of getting to know a companies flagship product. This gives me the insight I do not have for other companies.
2: Don’t Jump Around
Just staying in the market as a whole over time will net you nearly 10% returns. You don’t have to know much to follow that. If you have $10,000 dollars in one year it will be worth $11,000. This is just a start, for instance, if you had gotten in on Adobe back in 2013 just 5 years ago with that same $10,000. It would be worth roughly $45,000 today.
That’s a bit more than 10% and actually over 400%.
Do you have $1,000 and an IBD subscription?
I hope you found some value in this article, if you did please follow the links below for more of my recent work, maybe another will resonate. Cheers!
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© Christopher Boswell 2019. All Rights Reserved.
When Christopher isn’t writing from wherever, he can be found traveling or capturing photographs somewhere in the United States. He may be generating Graphic Design, building a website, processing images or video, flying his Unmanned Aerial Vehicle, wrangling dogs, or backpacking and kayaking. He lives in Tacoma, WA. We invite you to learn more about Christopher at Real Window Creative