Keen to start trading & investing? Here’s 10 useful hacks [Thread]
1. Portfolio allocation often outweighs security selection
Simplified: focus on choosing the right neighbourhood instead of the best house
Choosing the right mix of stocks, bonds, crypto, property, cash is more more important than obsessing over stock picking
Simplified: focus on choosing the right neighbourhood instead of the best house
Choosing the right mix of stocks, bonds, crypto, property, cash is more more important than obsessing over stock picking
There’s a famous piece of research (BHB study) that sparked endless debate showing 93.6% of portfolio returns are down to the right mix of WHERE you invest instead of WHAT you invest in.
For instance if you missed the crypto or US tech wave, your returns look very different
For instance if you missed the crypto or US tech wave, your returns look very different
2. Diversification isn’t always what it looks like
Buying ETFs might seem like it’s lower risk but are they really?
The top 5 US stocks account for over 20% of the entire US market. In SA, we have the same issue - a handful of the largest stocks move the entire market.
Buying ETFs might seem like it’s lower risk but are they really?
The top 5 US stocks account for over 20% of the entire US market. In SA, we have the same issue - a handful of the largest stocks move the entire market.
Mathematically concentration risk happens when the indexes/ ETFs you buy are market cap weighted
Take a crypto ETF. It’s almost entirely dependent on the performance of BTC & ETH.
Worse when there’s a high degree of correlation between crypto pairs.
Take a crypto ETF. It’s almost entirely dependent on the performance of BTC & ETH.
Worse when there’s a high degree of correlation between crypto pairs.
For all my finance bros/ huns who LOVE the technical stuff
Index constituent weightings determine whether you’re hedged out or you inevitably end up paying up for amplified/ leveraged beta
@_Bayes_Theorem (Bobby Axelrod) is the best person to have this convo with if you’re keen
Index constituent weightings determine whether you’re hedged out or you inevitably end up paying up for amplified/ leveraged beta
@_Bayes_Theorem (Bobby Axelrod) is the best person to have this convo with if you’re keen
3. Decide on your strategy (yield vs growth)
Total returns = Capital Gain + Dividend Yield
Capital gain = how much the stonk goes up from the time you bought it
Dividend yield = the share of profits you get from investing
Total returns = Capital Gain + Dividend Yield
Capital gain = how much the stonk goes up from the time you bought it
Dividend yield = the share of profits you get from investing
You might see folks posting dividend screenshots on the TL & think WOW!
That’s just one part of the equation. That’s also before tax. The best part? Stock prices usually drop by the amount of the dividend.
Fancy finance term: ex-dividend
That’s just one part of the equation. That’s also before tax. The best part? Stock prices usually drop by the amount of the dividend.
Fancy finance term: ex-dividend
4. Have a system
Here’s my go-to system (I should really charge for this)
OCM
One night Stands
Casual Dating Stocks
Marriage Stocks
Most of my returns over the last 2 years have come from one night stands, then again - tends to happen when you’re this good looking
Here’s my go-to system (I should really charge for this)
OCM
One night Stands
Casual Dating Stocks
Marriage Stocks
Most of my returns over the last 2 years have come from one night stands, then again - tends to happen when you’re this good looking
One night stands = ultra short term plays, think meme stocks, high risk altcoins, NFT drops, degenerate pumps
I allocate 5-10% of my portfolio here & am on every Reddit, Discord, Telegram channel known to man
You have a small window to smash these trades. Get in. Get out.
I allocate 5-10% of my portfolio here & am on every Reddit, Discord, Telegram channel known to man
You have a small window to smash these trades. Get in. Get out.
Casual dating = short/ medium term plays, think COVID rebound stocks, stay at home stocks, commodity linked plays
These are really easy to spot. The hack? Is it the company or the market?
If it’s company specific, stay cautious. If it’s the market, there’s an opportunity.
These are really easy to spot. The hack? Is it the company or the market?
If it’s company specific, stay cautious. If it’s the market, there’s an opportunity.
A great example is hotel, leisure, airlines & hospitality over COVID.
Some companies were trading at levels which assumed we would never get on a plane in 30 years... wayyyyy too overblown.
The perfect casual dating play
Some companies were trading at levels which assumed we would never get on a plane in 30 years... wayyyyy too overblown.
The perfect casual dating play
Marriage stocks = elite blue chips with constant year on year growth, high barriers to entry, highly cash generative
These are the stocks/ crypto/ assets you never sell. They multiply over time & may not give you 50% a year BUT they de-risk you.
Being de-risked is crucial
These are the stocks/ crypto/ assets you never sell. They multiply over time & may not give you 50% a year BUT they de-risk you.
Being de-risked is crucial
5. Have trust issues with research
Investment banks will tell you there’s systems in place to ensure research is independent & they’re not trying to sell you shit
Someone is always selling you shit. Worse, there’s always a skew and incentive to pump out BUY ratings
Be on guard
Investment banks will tell you there’s systems in place to ensure research is independent & they’re not trying to sell you shit
Someone is always selling you shit. Worse, there’s always a skew and incentive to pump out BUY ratings
Be on guard
6. Take money off the table!
ESPECIALLY with one night stands, you’re up 500% the longer you’re in the market, the higher your chances of getting fucked up
The pain of regret is worse than the pain from FOMO. Set a target price, stock to it.
ESPECIALLY with one night stands, you’re up 500% the longer you’re in the market, the higher your chances of getting fucked up
The pain of regret is worse than the pain from FOMO. Set a target price, stock to it.
This is a fucking difficult thing to execute. If you’re struggling, take the stock off your watchlist when you exit and don’t look at it again.
With marriage stinks, dips are a great time to buy and add to your position.
As a rule I never buy the dip on meme stonks.
With marriage stinks, dips are a great time to buy and add to your position.
As a rule I never buy the dip on meme stonks.
7. Respect your marriage
No seriously. This is where time in the market is more important than timing the market
If you try going to the strip club enough, some days you’re going to miss your kid’s graduation. The best way to capture the best days is to make sure you’re present
No seriously. This is where time in the market is more important than timing the market
If you try going to the strip club enough, some days you’re going to miss your kid’s graduation. The best way to capture the best days is to make sure you’re present
8. If you like the product, don’t assume it’s a great company
It’s not about what you like, it’s about what the market likes. Search: Keynesian beauty contest
Never hesitate to shoot bad investments in the head. You can’t do that when you’re emotionally involved.
Stay cold.
It’s not about what you like, it’s about what the market likes. Search: Keynesian beauty contest
Never hesitate to shoot bad investments in the head. You can’t do that when you’re emotionally involved.
Stay cold.
9. Leverage will kill you
On a long enough timeline with enough leverage you will blow yourself up - it’s inevitable
There’s a fine line between trading and outright gambling
You don’t control the outcome but you control your risk
Don’t be the market’s bitch
On a long enough timeline with enough leverage you will blow yourself up - it’s inevitable
There’s a fine line between trading and outright gambling
You don’t control the outcome but you control your risk
Don’t be the market’s bitch
10. Making money consistently is more important one big play
This is a marathon, not a sprint. Always have dry powder for opportunities when they come. Nothing is worse than seeing a great play & watching it unfold from the sidelines.
Cash/ liquidity is king
This is a marathon, not a sprint. Always have dry powder for opportunities when they come. Nothing is worse than seeing a great play & watching it unfold from the sidelines.
Cash/ liquidity is king
Bonus tip: always check the fees... ties back to point #7
Getting in and out of positions is like opening the oven door every 2 minutes, the cake isn’t going to fucking bake
Marriage stocks especially need time... one night stands, not so much
Getting in and out of positions is like opening the oven door every 2 minutes, the cake isn’t going to fucking bake
Marriage stocks especially need time... one night stands, not so much
I’ve been trading since I was 16 & it’s opened the most incredible doors for me personally & professionally. I owe a lot to the markets... but know there’s so much more to life than watching tickers flash up on a screen.
Making bank from stocks is just a tool, never the end goal
Making bank from stocks is just a tool, never the end goal
Shout-out for making it to the end! I know some of this stuff is kinda dry & gets a bit technical but I’m here to make it easier for you
We run a free telegram channel where we talk mostly about stocks, one night stands (& football). Feel free to join!
t.me/BankerX
We run a free telegram channel where we talk mostly about stocks, one night stands (& football). Feel free to join!
t.me/BankerX
What would you like more content on?
Additional trading thread #1 - why size matters
https://twitter.com/iamkoshiek/status/1433350647852814339
Trading thread #2 - avoiding the regret of terrible one night stands
https://twitter.com/iamkoshiek/status/1360258388521811971
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