This is for anybody in a panic or worried.
I started off with cashing out my mutual fund for about $1500 back when I was 18, which was 25 years ago. I traded it on eTrade and made $600. I used to spend a lot time of watching stocks, consumed by it all. I was definitely making less in returns than the value of my time.
I made more money in stocks when I didn't focus on the details, as strange as that may sound. I made the less or even lost money the more I felt I was an expert. When I knew the lingo, terms, and things I don't even remember now.
Here is my takeaway.
By the time it is an actionable concern, it is almost always too late, start looking for the opportunity and hope you can get a piece. Otherwise, riding it out is likely the best thing you can do in most cases.
But, usually by the time people start to get worried, anybody more seasoned has already been out a while and made their next buys.
People log into their trading accounts 7 times more often when the market is down than when the market is stable or rising. Think about that for a moment. It's no wonder the bottom falls out, people scare themselves and sell.
That's why you sell near the peak, ideally, before the peak. They're easy to see, as long as you know there is a delay in the average investor.
Nobody can predict the market, they've never been able to do that. A million people try a million things and some of them happen to get it right that time. Then everybody follows them.
The only way to be consistent is to follow just a few stocks until you can predict everything they'll do. But stay a bird, look at the entire landscape. When you become a frog and can only see your immediate surroundings, you won't see what's coming.
Most investor-tainers are frogs. Like Jim Cramer.
When a husband who has stocks passes away, the widow tends to not touch the investments and leaves them alone. As it turns out, women has a slightly better ROI in the stock market largely driven by this. And it's because they just leave it alone. So, do you really want to consume yourself and your time with something that is more likely to do better if you do nothing?
Think long-term and human nature.
My current focus is the coming ripple effect. My wife needs a new car. I anticipate there will be ripples and it will finally be a good time to buy a new car later this summer.
Why late summer?
If a family is going to move, they move after school is out. Then they'll be busy with their new home and all of those expenses. If money is tight, car sales will finally dip.
We will still have a housing shortage.
More people working from home use more electricity. We continue to move to electric.
Electric is still a crapshoot. Things will keep going electric, but who will prevail? Well, the government has a heavy hand in that one, so keep that in mind.
Somebody has to make the electricity. I personally think Nuclear will make a come back since there are some very safe reactors that have been around a long time. So I buy up the companies that make the parts.
When COVID hit, I didn't just buy the tech stocks, I bought the suppliers to the equipment that make everything. While everybody was talking about Zoom, I would buying the companies that make Zoom possible.
I watch people. More people are growing gardens now. What impact will that have?
All the toys people bought in the last 2 years, the seado's, boats, airplanes (huge shortage there), all need to be insured. How are the insurance companies doing?
How will the used car companies be doing when the market slows down? They have higher margins but lower volume right now. The margins are not making up for the volume.
What happens when companies tight their belts when spending gets cut? Wages are really high right now.
I own a company. It's well known that the square root of the number of employees a company has do over 50% of the work that makes the company good. There's room for cuts!
When marketing companies start focusing on what companies need to market, that's a warning sign to me. I only market when I know there are customers to market too. But if I know my customers aren't buying, I'm not going to spend as much on marketing. What would I spent money if it is less likely to convert to a sale? Hint. I'm not.
So I won't be buying marketing companies. However, I will buy companies that are clever and skilled with their own social media marketing.
I have already bought the counter cyclic stocks. I've been through this twice now in my life. When the market is high, I get out and I buy Kroger, Wal-Mart, Dollar Tree, etc. I do this before the investortainers start talking about them. Why? Remember, by the time it's news, it's too late. Well, it's not too late to get in on the hedge, but they've already made some good moves by then.
How many commercial trucks do you see on the road? Assume most of them are B2B shipments. Pay attention to where you see them going. It's even better if you have more detailed data.
Look at Intel. The biggest manufacturing investment even, and it's being done in Ohio. Why Ohio? What can we learn from them? There are investments to be made here. Is it a good blend of technology and the industry for labor?
Is it because it's automotive alley and they anticipate the need for chips for the automotive industry? I bet that's a large part of it right there.
Defense stocks? We were talking about those in November when many of my friends believed Putin was going to invade Ukraine. We knew Stingers would be heavily needed.
Cheap drones will be needed too. And if drones see a huge military investment, then we can expect to see a huge investment in anti-drone technology too. What companies are doing that?
There's a housing shortage. How many firms are building “working wage” multi-family housing? A lot of those are not publicly traded. But you can find companies doing it and approach them about investment opportunities. It's not liquid like the market, but it's the long-term outlook there.
So, I just sit up in a perch and watch anymore. If you get emotional, you just have to recognize there is a reason for it. And what you should learn from it is how it happens and that it becomes an echo chamber for most retail investors.
I used to look for quick money. I used to day trade, and I did very well. What happens is once you have earned enough money, you become less interested in the risk you are much happier with a 10-20% return being consistent than a grand slam.
Learn from your emotions and your losses, and hopefully you'll hit some grand slams and then get to perch as a bird.
I can't speak for everybody, but I don't need to be a billionaire, I just need more than enough to have it not just grow but outgrow inflation as well. Remember, inflation is also exponential in growth.
Also, I do expect a return to office in a lot of places too. My youngest and most green employees are doing terrible compared to when we were in office. They're learning less, missing opportunities, missing a ton of stuff. I can here it now, instead of OK Boomer, it will be the name for Gen X or Millennials, and they'll say we were lucky because we worked in person and could learn from each other.
Give that one 3-5 years. It takes about 2 years for the idea to really spread, and we'll need about 2 years for recent grads to start hearing about how their friends who work in offices or on-site have more opportunities.
…And that means in 3 years it might be good to invest in the things that make a dense city run well. Which will have to be efficient with the tax base loss they have suffered.
If this was too long for you, well, you probably lack the patience needed to win. 😛
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