We mentioned 5 parts to value investing in the last post, and it’s easy to remember using the acronym PLANE: Patience, learning, analysis, news, and emotion. This post will look into patience and emotion, covering 40% of what you need in picking the right stocks. All though there aren’t any calculations and the theory is logical, whether we can rewire our brain to think accordingly remains to be seen.
Having given 3 introductory posts to investing in the stock market, today’s post will set the stage for my actual value investing series for individual stocks. Before we dive in, I should mention it’s not easy to survive or thrive in these shark-infested waters. Dollar-cost-averaging is a fire-and-forget method of mimicking a long-term 10% return with index funds. But to attain annual returns of 11% and beyond, you must invest in each individual stock in one go. More on why later. Let’s cover 5 prerequisites you must have before reading further. If you lack any one of them, it’s best to stay with index funds.
Having established that you must consistently allocate 40% of your salary into high-return investment vehicles for the long-term, let’s look at a popular investment option: the index fund. This low-cost fund doesn’t require the services of advisors and managers, as it only tracks the prices of indices, such as the Dow30 (ticker symbol: DIA) and S&P500. The only fees you’ll pay are the transaction fees for buying the fund, and taxes on dividends and capital gains. In some regions, such as the one I live in, there aren’t any taxes on capital gains (when your stock appreciates in price).
The last post was an introduction into the mentality of value investing, a discipline practiced by Warren Buffet, Charlie Munger, Seth Klarman, Jason Sweig, etc. If you haven’t read the first post, I highly recommend you read it here, as this post is a direct continuation of it. Everything I write here today is from the above gentlemen and Benjamin Graham, David Dodd, Robert Ziyosaki, and Grant Cardone.
This post may be 1.5 months late or 1.5 months early depending on which analyst you ask, reason being there are people who’re saying the worst of the pandemic is behind us or the worst is still yet to come. Add in the speculation that President Trump may impose a new round of tariffs against China and the ongoing Saudi-Russia oil crisis, and most stock investors are truly left in the dark.
MANTA Piece 