The feedback from the interview I did with Borderless concludes that it was entertaining but my investment philosophy was unclear. I agree. By attempting to keep answers brief and avoid coming across as a boisterous know-it-all, I failed to convey how I grow my money. This new article series will rectify that.
Forget Short Term Trades
The stock market is not a get rich quick scheme. Don’t fall for the ridiculous Forex ads you see around the web which purportedly outline how you can make money trading currencies. Let me tell you, YOU can not make money trading currencies!
The same goes for flipping stocks for a quick profit. Yes, often you can make a quick buck flipping something after just a few days but you can just as easily lose. I suggest playing roulette instead. Your chances are better as there’s always the green.
What Makes a Stock Rise or Fall
A stock exchange is simply where you can buy an ownership stake in a company. A stock is proof of your ownership. How big the float is, i.e. how many shares outstanding a company has, determines the ownership percentage a stock represents.
A stock’s price is driven mainly by:
- the company’s fundamentals
- growth projections
- investor’s sentiment
- industry outlook
This makes them notoriously hard to predict. A company can grow earnings yet still see its share price fall. The industry outlook for the sector it operates in may have soured. Or it’s debt burden and the interest it pays to service it may both be on an upward trajectory. Despite solid earnings on the latest quarterly report, sentiment may drive the stock into the red.
The danger posed by investor’s sentiment should not be underestimated. Lord Keynes’ classic quote sums up why… TO READ ON SUBSCRIBE AND BECOME A PATREON.