• Losing Is Part Of Winning!

    Good morning!

    Warren Buffett is considered one of the greatest, if not the greatest, investor of all time.

    His first two rules for investors are as follows:

    Rule Number One: Don’t lose money.

    Rule Number Two: See Rule Number One.

    Now, let me tell you off the bat that being down in an investment will happen for sure.  After all, my crystal ball hasn’t worked in years, and I doubt yours will be any better.

    Being down, however, does not mean you have lost money.

    I’m going to share my personal experience with you.

    Two years ago, I purchased shares in a company called Splunk (NASDAQ: SPLK).

    Splunk is a leader in cloud computing, data analytics and security.  They help companies make sense of the massive amounts of data they collect.

    When I purchased the stock, the price was $69 a share.  Soon after my purchase, it proceeded to go from $69 to $54 over the next few months.  That’s a 21% decline, in the blink of an eye.

    Fast forward to January 2019, and…the stock is at an all-time high of $135.

    Here’s another example for you.  Around that same time, I bought shares in a company called Invitae (NYSE: NVTA) for around $7 a share.  Invitae is a small genomics company trying to become the Amazon of their industry.

    Soon after my purchase, the stock went to $5 a share – a 28% haircut.

    Over the next six months the stock would remain between $5 and $6.

    Today, it’s $17.

    Many times, you’ll have to lose in order to win.  You’re not always going to purchase a stock at the bottom and have it be smooth sailing all the way.  That’s how investing works.

     

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

  • Ask Wealthy Joe: How Investing is Different From Trading!

    Q: I read your post this morning that explained why everyone needs to own stocks.  It made absolute sense! 

    But I’m apprehensive.  I have a relative and a coworker who are both very into stock trading, and their lives are both a big series of ups and downs – both financially and mentally! 

    Both of them have lost large amounts of money, and I’ve seen each of them get very bent out of shape to the point that they curse and pound their fists on tables. 

    They also obsess about their stocks constantly.  My relative almost missed seeing his son being born because he was watching the market!

    They’ve both made big profits at times.  But I can’t imagine living the kind of life they do. 

    Does investing in the stock market mean I have to turn my world upside down?

    A: OK.  I want to take this moment to distinguish between a trader versus an investor.

    A trader is someone who, like your relative and your coworker, buys and sells stocks within a short period of time.

    Ideally, a trader would like to buy the stock at one price and then sell for a higher price in the future.

    The time frame for a trade can be holding for literal seconds to quite possibly years.  On average the time frame is usually less than a year.

    Most of the time, traders buy because they believe (or have been told) that there will be a catalyst in the near future that will cause the stock price to go higher.  A catalyst is a news event that will have a material effect on the financials of the company.

    If you are a shareholder, you are obviously waiting for good news.  Once the news is out, a trader sells his or her position and moves on to the next trade.

    Sometimes the news ends up not being good.  That catalyst does not come to pass.  So the trader loses money, sells his or her shares at a loss, usually utters a few choice words, and starts the whole process over again with a new stock.

    An investor – which is what we are here – is completely different.

    Think of the very nature of the word “invest”.

    An investor purchases shares in a company with the expectation to hold those shares for at least two to three years.  (This is by no means the official definition, by the way – it is mine.)

    Investors typically buy and hold for years, upon years, upon years.

    Many investors own companies for multiple decades.  Why?  Because they are fabulous businesses.

    These investors then pass those shares off to their beneficiaries, if the money is not needed during their own lifetime.  Conscientious long-term investors often end up very wealthy in their later years, have more than enough to live off of, and are able to leave a considerable legacy for their children and grandchildren.

    Investors don’t get bogged down by the short-term outlook.  We’re focused on the future.

    Here at Wealthy Joe, my mission is to help you become an investor.

    Which one would you rather be?

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

  • Three Reasons You Should Always Own Stocks!

    Good morning!

    Unless you hit the lottery and win millions of dollars, you should always have money invested in the stock market.

    Even if you are retired, you should own stocks for the rest of your life.

    Here’s why:

    Reason Number One: We Are Living Longer.

    Better eating habits, drugs, and medical technology have resulted in our living longer.

    In the 1940s, life expectancy for a man and a woman at the age of 65 was 77 and 79, respectively.  Today, life expectancy has gone up considerably – to 84 for men and 86 for women.

    You’re going to need a lot of money to ensure that you don’t outlive it!  Investing in the stock market over time is the best way to assure that.

    Reason Number Two: Stocks Make Money Long Term.

    Over the last 100 years, stocks have made money if you bought and held them.

    Sure, there are instances where that has not been the case.  This is why we diversify, by owning at least 15 stocks at any given time in our portfolio.

    But history has shown that stocks are more likely than not to go up.  These statistics prove it:

    • Stocks held for at least one year go up 73% of the time.
    • Stocks held for five years go up 85% of the time.
    • Stocks held for 10 years go up 95% of the time.
    • Stocks held over 20 years go up 100% of the time.

    I will be an investor and holder of stocks for the rest of my life.

    You have to look beyond the age of 65.  Many people do not look past that age when it comes to investing.  Remember, hopefully you’re going to live to be much older than 65.  So you will need that money to last you for many more years.

    Reason Number 3: Stocks Beat Inflation.

    Stocks are the absolute best at beating inflation.

    If you own bonds, your return is fixed at, let’s say, 2% or 3%.  Meanwhile, inflation may be 7% to 9% annually.  In this scenario, you are losing money, because you are not keeping pace with inflation – let alone beating it.

    Stocks will give you the best chance of beating inflation over time.

     

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

  • Three 3D Printing Stocks You Should Watch!

    Last week I wrote a post on the emergence of 3D printing.  As promised, I’m following up with three recommendations for you of stocks to watch in the sector.

    3D printing is shaping the future, as it is applied to more and more industries around the world every day.  From aerospace, to automotive, to education, to medical, 3D printing is capable of revolutionizing every industry in some way.

    Here are three companies that stand to benefit from this trend:

    Stratasys (NASDAQ: SSYS): The global leader in 3D printing and additive solutions.  Stratasys has a market cap of $1.5 billion, and currently trades at $28.08 a share.

    3D Systems (NYSE: DDD): Designs, develops, markets, and services rapid 3D printing, prototyping and manufacturing systems and related products and materials.  3D Systems has a market cap of $1.55 billion and currently trades at $13.65 a share.

    Proto Labs (NYSE: PRLB): Proto Labs does rapid prototyping and low volume manufacturing via injection modeling, CNC machining and 3D printing. Proto Labs has a market cap of $3 billion and currently trades for $111.40.

    Each of these companies will do very well if the projections for 3D printing manufacturing come to fruition and the industry sees a tenfold increase in demand.

     

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

  • Bank On The Unbanked!

    There are 20 million Americans that do not have a bank account today.  We call them the unbanked.

    Most of these people live in the South.  States like Mississippi and Louisiana make up a large percentage.

    As financial transactions become more and more digital and we move further away from cash, these people will be at a huge disadvantage.

    However, peer-to-peer digital wallets, like Square’s Cash App or PayPal’s Venmo, have been downloaded more than 85 million times since January 1, 2019.

    Square’s Cash App dominates in the South, where the rate of the unbanked is highest.  The app can be used just like a bank account.  Employers can deposit paychecks in there, and consumers can use the app just like they would a debit card for purchases.

    So what does this mean for an investor?

    Well, as I said, Square (NYSE: SQ) and PayPal (NASDAQ: PYPL) are leading the charge in this area.  So these are two companies you should definitely keep on your watch list!

     

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

  • Don’t Call It A Comeback!

    The market is still trying to find its way back from the thumping it took that started in October of 2018 and ended in December.

    At their lows, all three indices – the Dow, the NASDAQ, and the S&P 500 – were in bear market territory.  A bear market is when an asset is down 20% from its high during a 52-week period.

    Since the end of December, the markets have been on a tear, with the Dow, S&P and NASDAQ up 19%, 18% and 20% respectively.  I guess what we thought was a bear market turned out to be a really nasty correction.

    A member of a Facebook group that I’m a part of posted that you should never buy stocks in a down market.  To this I replied that you should be buying stocks all the time.

    In fact, let me share my shopping list with you of stocks I had been waiting to go on sale.  Here are their prices in late December compared to today:

    Stock Price 12/2018 Price 2/15/2019 % Change
    New Relic (NYSE: NEWR) $67.70 $107.25 +59%
    Okta (NASDAQ: OKTA) $53.26 $84.31 +58%
    Twilio (NYSE: TWLO) $74.00 $106.25 +43%
    The Trade Desk (NASDAQ: TTD) $104.00 $159.00 +52%
    Roku (NASDAQ: ROKU) $27.26 $52.40 +92%

    These are only five stocks on my shopping list.  The performance on most of the others is similar to these.

    I don’t know how much higher the market will go, but if you didn’t get in, you missed a great opportunity!

    However…I’m sure it won’t be the last.

     

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

  • Refund Anticipation Loans Are Not Wise!

    Good morning!

    If you live paycheck to paycheck, like the majority of Americans, you really look forward to your tax refund.

    I’m a big proponent of investing at least 20% of your refund in the stock market.  But the reality is that most people’s tax refund will go to catch up on past due bills or some other “emergency”.

    Many tax services, such as H&R Block, will offer you the opportunity to get your refund immediately.  Now if you’re in a financial bind, I understand why you might do it.  But it’s not wise.

    Let me explain.

    You work all year for this tax refund.  This is your money coming back to you.  If you opt to receive a refund anticipation loan, you’re going to pay interest on the money you’ve earned over the last 12 months.  That makes absolutely no financial sense at all!

    Decisions such as taking out a loan against your tax refund have contributed to your poor financial situation in the first place.  Start making good choices.  Be patient enough to wait to receive your full refund.

     

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

  • Panicking Never Works!

    If I had to put a number on it, I would say that at least 75% of your success as an investor will come down to your temperament.

    Can you remain calm while others panic?

    Can you see the big picture while everyone else focuses on the headline?

    Can you be greedy when others are fearful?

    Can you commit to the long term while everyone else is fixated on the quarter?

    Each of these questions sound simple in theory.  But doing it when your account is getting decimated is another story.

    None of us has a crystal ball and can say with certainty what the outcome of any investment will be.  One thing I know for certain, though, is that historically, the real money in the stock market is measured in decades.  Not weeks, months or even years.

     

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

  • What Are Soft And Hard Credit Inquiries?

    Good morning!

    At least once a year, you should get a copy of your credit report to make sure all the information on there is accurate.

    One category of items you want to check is called inquiries.

    A credit inquiry is when an outside party – like a prospective employer, credit card company, or some other entity – runs your credit.

    It’s important to know the difference between hard and soft credit inquiries, so as to not do anything that will damage your credit score.

    Soft inquiries are pulled for the purposes of gathering information, and not to qualify for a loan.  If you apply for a job, for instance, and they pull your credit, that is considered a soft inquiry.  Soft inquiries will not affect your score.

    I use Credit Karma, which updates me on my score monthly.  That’s also a soft inquiry.

    A hard inquiry occurs anytime your credit is pulled for the purpose of borrowing money.  This includes applying for credit cards, auto loans, mortgages, and credit checks done by a prospective bank lender.

    Each hard inquiry can lower your score by five points.  However, the credit bureaus assume that you are going to shop around for the best deal when looking for credit, so they allow you to pull your credit multiple times over a 30-day window and will only count those inquiries as one.

    You should keep hard credit inquiries to no more than a few every three years.  Think about it: three inquiries in a year could cause your score to drop 15 points.  That can make a huge difference in your credit rating.

     

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

  • Is The Golden Age Of Investing Really Over?

    Charlie Munger was interviewed by Becky Quick on CNBC this morning.  If you don’t know who Charlie Munger is, he is Warren Buffett’s right hand man and one of the most respected businessmen in this country.

    Becky Quick asked Mr. Munger what he thought of the stock market, and his response was sobering.

    He said that the golden age of investing is behind us, because it’s much more difficult now to pick individual stocks.  He said the valuations are just too high, and finding value would be extremely difficult.

    I have a tremendous amount of respect for Charlie Munger as an investor.  His track record is stupendous.  I don’t know, though, if he’s right about the golden age of investing being behind us.

    I will acknowledge that the 60s, 70s, 80s, and 90s were incredible times to be in the stock market.  Companies like Walmart (NYSE: WMT) have turned $1600 into $16,000,000 over a 30 year period.

    However, we are entering a completely different world.  A world where market opportunities are in the trillions, not billions.  Never in the history of mankind have we had so many technological innovation platforms emerging at the same time:

    Bill Gates said that a breakthrough in artificial superintelligence would be worth ten Microsofts.  ARK Investment’s Catherine Wood and her analysts believe a breakthrough could be worth 35 Amazons.

    For all we know, the golden age of investing could very well be ahead of us.

     

    My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

    Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

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