I’ve listened to many different people speak on how to invest and there are some good takes and some bad ones, here today are some really important lessons I’ve learned over my lifetime and we provide a link below on Ray Dalio explaining this.
I’ve learned there’s nothing more important to know than what you’re dealing with, knowing how people think, and forecasting the future but we always need to keep in mind group trends and don’t fall into a trap that leaves you holding the bag; remain individualistic when researching a long term future growth stock so you can pick it up at a great price.
This is basic psychology 101, the individual will act in a way intrinsic to ones self but the probability of one acting individually in a group setting falls to nearly a zero sum value and that’s why so many people get in late to a stock that’s rising without even glancing at that stocks financials, because everyones in it, it must be good.
The group is stronger than the individual.
The macro environment in this case over takes any one individual and this is highly important in the world of business and finances a trending stock or industry may have no future value because the stock in question may be in the midst of being day traded or its a setup for a pump and dump or maybe its being used for swing trades, but in the long run those stocks fall to its normal average price, before the run up.
When you buy a house or any real estate property the number one thing to think of before anything else is location location location, once you’ve established this, you can focus on the land size, size of the home and other internal and external factors; as your basic needs and neighbours, so the number one factor here is the Marco setting and then you dive more into the Micro setting.
What does this have to do with the stock market, the answer is exactly as stated, in our opinion the Macro is the first most important factor and then its the Micro that takes place and if you use this in the Stockmarket over the long run, you should do well, take for example retail, brick and mortar vs digital; which one is growing and which one is dying; macro first.
No matter what stock you look at, you want to look to where the company is listed, what country is it in and don’t forget what plays a major part in this decision making process; POLITICS!
After looking at what country this stock is positioned in, what industry it’s in, we look at political stability, we then compare it to its peers and what makes it stand out above the rest; what’s its competitive edge and who’s steering the ship.
You can have a great idea but if the leadership isn’t great, the stock can fall into bankruptcy as Pets.com in the turn of the millennia and most recently Quibi.
Once the – research – is completed and we finally have our company, now we must establish – prepare – what our play is concerning that stock; is it a day trade, swing trade or long term trade and how much are we investing -executing- the plan!
At Betweenplays we’re big on diversification across uncorrelated industries, we use this formula to find winners; and take into account the companies balance sheet, a focused and driven leader at the helm with a competitive advantage.
Now, its been said when you find these types of great stocks in your lifetime by people as Warren Buffet, Jim Rogers, Ray Dalio respectively, you should buy up as many of those shares as possible.
In our opinion
At betweenplays, proper diversification is a technique we enjoy using for our long term stocks and it allows us and our friends to sleep at night; it’s all about the research that prepares us to execute our investment into a company.
This is an excellent excerpt from Valuetainment Patrick Bet-David interviewing Ray Dalio on the art of diversifying your portfolio properly, go to Valuetainment to see the full video.
On behalf of betweenplays, remember to do your research and invest wisely.