1 year of stock market trading — lessons learnt
Welcome everyone and a happy new year 2021. This is my first post in 2021 and I will cover all the trades here until mid Jan 2021. A little introduction about me — I have been investing in stock market since 2020 and I feel that everyone should get a chance to earn some extra money by investing some funds into stock market.
Here is my screenshot of total earnings from all the stocks that I have traded since Jan 2020. ( I have not disclosed the actual numbers for privacy reasons). However, I was able to get roughly 75% profit from my investments in 2020.
Lessons learnt
Be fearless
Nobody can time the market well and it is important that we keep investing for long term returns. That is one thing that I have learnt from stock markets. There is obviously some risk involved but if you play safe with SnP 500 stocks such as Apple, Microsoft, Nvidia — overall you will never lose your money. Reason? Because these are technology giants that are never going to go out of business. Their products are going to be valuable to the economy for next 10–15 years, which is a big enough time range for anybody to invest their money in.
Be less emotional
There are times when you invest in a stock and then it dips by more than 5–10% because of various reasons. Remember that if you want to enter the market and buy a particular stock, you need to understand how it moves. Sometimes there can be a big crash (like the pandemic in 2020 where there was a huge emotional sell off), but a pullback or a correction is fine for any stock. As far as you are investing money in regular time period (like weekly or monthly) in a stock, you are averaging out the cost of that stock in your portfolio. It also means that you wont be able to maximize your profit but it also comes with risks. So, remember to not panic when you see a SAFE STOCK going down. It will rebound (unless there is a major sell off like March 2020). A simple strategy is to keep buying stocks at regular intervals of time.
80–20 split
I think this is one of the important lessons that I have learnt in last 1 year. There are several instances where you see some stocks shooting up more than 20–30% in a day because of some market news. It might seem lucrative at first but if you are new to stock market, what you should do is play the safe stocks first. Understanding the stock market has its own learning curve and it takes time. Rather than jumping into a stock that is rising but you do not know much about, it is better to keep investing in the safer stocks. As a thumb rule, I have learnt that 80% of my overall investments should go in safe stocks and rest 20% is something that I can play around (if I cannot resist myself). This will allow you to bear minimum losses and also keep a steady growth in your overall portfolio.
5 Stocks that I will not sell in 2021
Based on my learnings and the growth that I see in future, there are some stocks in my portfolio which are safe(remember 80–20 split) to trade and by investing over a period of time, it will give higher returns in future. Here are my top 5 picks that I will not be selling in 2021 —
- Tesla
- Apple
- Nvidia
- Roku
- Icln (iShares Global Clean Energy ETF)
Obviously, there are a few more of the stocks which I think it would be better by holding and investing in longer term, but I have not included them because my highest equity lies in above stocks.
My Jan 2021 transactions
This section covers my stocks that I have sold in January 2021. I am keeping a note of this so that I can use it to analyze these transactions in future and also keep a note on my taxes. I am maintaining an online spreadsheet for this and will keep updating this article as and when I sell my shares.
Happy investing !!!
