How I Think about A Portfolio
Once upon a time, I knew very little about human nature. Now that I know so much more, I realize how little I know about it. So, I'll write out a broad outline of what I do, and you can determine for yourself how useful that is. I'm always happy to help.
First, know what's important and what the goal of the portfolio should be. Warren Buffett's number one goal is: Don't lose money. Another always useful goal is to be cognizant of tax consequences and investment expenses. Tax advantaged accounts are a gift to compounding investment returns. Minimizing your expenses puts money in your pocket. Know what you're paying for, and why. Lastly, realize that there are historical returns, positive and negative, and that those will accrue to your money as well. If you accept those numbers, you'll be less prone to panic, buy / sell with abandon, or do other money destroying things.
These things are hard to do, and they need to be done continually. Good luck.
Second, understand that investing is predicting the future. That's non-trivial, and humans are prone to manipulation. Way way way before fake news, and stock operators, there were snake oil salesmen. If someone is selling you the opportunity of a lifetime, two items to know: what do you know about human nature; why share the opportunity. You always need to do your own homework. And, clean your room. Discipline in all things.
What future do you need to predict? From big picture, to fine detail: National economies GDP growth and inflation; asset classes which perform well and poorly under those circumstances; what specific things to buy and sell, and when, in the marketplace. There exists a market for individuals to purchase these predictions, as well as ways to get them 'for free' (ignoring that your time is a finite, limited resource). Keep in mind that not making the wrong investment is money protective. Don't do money destroying things. Like TSLA, perhaps, or penny pot stocks.
I'm only going to write about 'long only' practice. It's doable to go long / short, or just short. Too much to write about.
Given those predictions, you need to actually buy (get long) the asset. In order of ease of execution: All at once, periodically over time, at extreme positions in the price of the stock (buy low sell high). There's a number of techniques and methodologies to do those things. Time will pass, and Ms. Market will prove your predictions right, wrong or indifferent. Mr. Buffett claims he always acquires with an eye toward holding forever. But, even he sells sometimes, and you will too. The same tactics (all at once, over time, at extreme price) all work.
This piece is long enough. If you'd like to discuss this, call or message or comment. Thanks for reading !!
rr
First, know what's important and what the goal of the portfolio should be. Warren Buffett's number one goal is: Don't lose money. Another always useful goal is to be cognizant of tax consequences and investment expenses. Tax advantaged accounts are a gift to compounding investment returns. Minimizing your expenses puts money in your pocket. Know what you're paying for, and why. Lastly, realize that there are historical returns, positive and negative, and that those will accrue to your money as well. If you accept those numbers, you'll be less prone to panic, buy / sell with abandon, or do other money destroying things.
These things are hard to do, and they need to be done continually. Good luck.
Second, understand that investing is predicting the future. That's non-trivial, and humans are prone to manipulation. Way way way before fake news, and stock operators, there were snake oil salesmen. If someone is selling you the opportunity of a lifetime, two items to know: what do you know about human nature; why share the opportunity. You always need to do your own homework. And, clean your room. Discipline in all things.
What future do you need to predict? From big picture, to fine detail: National economies GDP growth and inflation; asset classes which perform well and poorly under those circumstances; what specific things to buy and sell, and when, in the marketplace. There exists a market for individuals to purchase these predictions, as well as ways to get them 'for free' (ignoring that your time is a finite, limited resource). Keep in mind that not making the wrong investment is money protective. Don't do money destroying things. Like TSLA, perhaps, or penny pot stocks.
I'm only going to write about 'long only' practice. It's doable to go long / short, or just short. Too much to write about.
Given those predictions, you need to actually buy (get long) the asset. In order of ease of execution: All at once, periodically over time, at extreme positions in the price of the stock (buy low sell high). There's a number of techniques and methodologies to do those things. Time will pass, and Ms. Market will prove your predictions right, wrong or indifferent. Mr. Buffett claims he always acquires with an eye toward holding forever. But, even he sells sometimes, and you will too. The same tactics (all at once, over time, at extreme price) all work.
This piece is long enough. If you'd like to discuss this, call or message or comment. Thanks for reading !!
rr
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