The intelligent investor focus on the new decade 2020 – 2030
The intelligent investor focus on today’s stock market trends is not what it used to be before the post-Covid era.
The intelligent investor must follow the rules of the stock market now more then ever. Research the market and follow your own set of guidelines.
Whether you are the intelligent investor with a complex understanding of the markets or a beginner who is just started learning about investing, there is little doubt that you have not have heard of mister Warren Buffet. Warren Buffet represents a level of success that very few people ever reach. Most of us know Buffet as the richest man in the world but this days that position is changing on a monthly basis. Many of us do not stop to think that he has build his great fortune only from investing. He became who he is today by nothing more than diligent study and intelligent principles of investing. He has not invented anything new, nor hasn’t he built any specific business. Granted he wasn’t poor to begin with, he used his net-worth to grow in this investing universe and he mastered it. Nobody on this planed can say they never heard about him. He has become a legend and a power of nature. You all should learn from him if you want to succeed investing.
Despite what most people think, being a good investor is not about how smart you are but actually it’s all about learning how to tame your emotions and always do your own research.
Here is an example of my own investing guidelines for those of you that start fresh in this industry:
- Your main goal should be Not to lose money!!! You must understand the distinction between ‘investing’ and ‘speculating’. The intelligent investor must understand that most so-called investors are actually speculators of the stock market. The more you learn using demo investing, the more you will minimize the extent to which you can become a speculator and gamble your money instead of investing it.
- The intelligent investor never gambles and never speculates on the news. The intelligent investor never copies using copy trading. It’s your money so use your own mind power to project your gains and be proud of your investments.
- If you go ALL IN thinking you will get rich fast and quick, you will most likely lose all your net-worth ever quicker.
- Technically speaking, trailing P/E should be less than 16 and P/E * P/B should be less or equal to 23.
- Don’t hit that buy button just because the company’s stock looks affordable and cheap priced. Instead look for EPS growth to be greater then 30% over the course of the last 5 years. This the intelligent investor’s indicator that he found a stable and sound business operation that deserves investing in their stock.
- Look for a current ratio (current assets / current liabilities) greater than 2. This is a signal that the company is financially secure and you are safer to invest in.
- The intelligent investor mostly prefers companies with high dividends and with gradual increase in dividend growth.
- The intelligent investor doesn’t invest in companies that have negative earnings-per-share in the last 5 years.
- The intelligent investor way is the way to investing success
- Market crashes should be considered the best of investing opportunities. You can short sell all stocks and ride the market wave down to the bottom. This is how you make money investing in the downfall of the stock-market. In to a falling stock market, the intelligent investor is terrified when the market has gone up to fast, to high. The intelligent investor will resist the urge to press that buy button when the market is way up breaking the graphic upward.
- Market-timing is the key for intelligent investing. Dollar-cost-averaging is how is best to invest today. The intelligent investor increasingly invests in companies that look objectively undervalued when the market falls down. Also in the opposite direction the intelligent investor divests investments slowly with the market going up.
- Deciding to Buy a stock is the most important investing decision. The intelligent investor should look for the price\value discrepancies when the market price of a particular stock is equal or less than its actual value. This is the exact opportunity that you must recognize and identify in order to make an intelligent stock purchase.
- When to sell the stock? Well if you identify that the market price and the intrinsic value are close together then you should set your stop loss or better yet your take profit and be prepared to sell.
- You should always looks at individual companies as if they are separate articles in an encyclopedia. If in your perspective your individual stocks become overvalued, you should not just be investing or divesting simply because the market goes up or down. The intelligent investor always looks at individual companies and has a separate investment plan for each asset in his portfolio.
So in conclusion my advice would be to determine a company’s true value doing your diligent market research. You must be prepared to do the research before you get ready to press that buy button. After your diligent market research you will be confident enough and proud to buy the shares of a company as much as you can afford. An intelligent investor will then be prepared to wait until the market realizes it is undervalued and pushed up its price by their progress and Public relations.
If the investor buys the stock of those companies that are trading undervalued, even if their business suffers from a crisis, the investor has a safety net already set thanks to the prior diligent research. So this is how you build your investing margin of safety and this is how you will own in your diamond hands the key to investing success.
I hope this article will be of great help to our readers and find themselves drinking their morning coffee in excitement of the upcoming market opening. Each time the stock market opens you are empowered to use your hard earned investor skills and money to grow your portfolios and expand your net-worth exponentially. Good luck to you all intelligent investors out there.
Check out our Glossary of investing terms. It will help you during your diligent stock market research.