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.)

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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.)