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Deal Addict
Oct 21, 2014
1571 posts
1993 upvotes
Burlington, ON
deepthi2016 wrote: Stock market tends to be a risky.
People lose money if you don't watch the market / over-confident that price of the stocks will increase in the future
Any fool-proof strategies for making money??
For most people who aren't willing to put in the time and energy to research individual stocks, the best course of action is to buy and hold an index, and reinvest the distributions from it. The power of compounding will get you where you need to go.
Deal Fanatic
User avatar
Dec 14, 2010
6419 posts
7760 upvotes
My wealth grew significantly thanks to the companies that are on my portfolio, through stategies like trading and investing. Many individuals built a fortune investing or trading properly, and unless you have your own successful business, investing / trading is the only way to build a fortune nowadays. Saving is not enough, you have to grow what you save beyond inflation.

Time in the market and temperament is the recipe to build wealth with stocks, including the whole stock market. There are tons of strategies for such, from active trading to passive investing.

The stock market is not "risky". Prices oscillates daily, but that doesn't reflect the health of the companies at all times. A stock that goes up does not necessairly reflect a good business and a stock that goes down does not necessairly reflect a bad business.

The more you think business alike, and the better you can separate emotions when making decisions, the more successful you'll be.

Anyone with discipline to not panic and that stay invested for a long time will succeed - just plot the index value at any point in history and see their total performance overtime.

"On an interview with Charles Munger in 2012:

Q: How worried are you by the declines in the share price of Berkshire Hathaway?

A: Zero. This is the third time Warren and I have seen our holdings in Berkshire go down top tick to bottom tick 50%. I think it is in the nature of long term shareholding with the normal vicissitudes and whirly outcomes in markets that the long term holder has the quoted value of his stock go down by, say 50%. I think you can argue that if you're not willing to react with equanimity to a market price decline of 50% two or three times a century, you are not fit to be a common shareholder and you deserve the mediocre result your going to get, compared to the people who do have the temperament who can be more philosophical about these market fluctuations."




I strongly disagree that "people lose money if they don't watch the market". Passive investors spend zero time watching the market. Active investors study and pattern with a business, not the market, and one doesn't need to watch the business daily, nor keep following its price, to be successful.

Fool-proof recipe is temperament and patience. Read on Couch Potato for passive investing or classical investing books to learn to evaluate individual businesses and the thought process required. Check the many investing threads of this forum for ideas. Practice makes it perfect. Don't fret on losses - there will be losses because investing is a business and losses are part of the business once in a while.

"Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.“ " - Warren Buffett


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

Trading strategy based on Graham principles.
Deal Addict
Nov 9, 2013
4080 posts
3957 upvotes
Edmonton, AB
deepthi2016 wrote: Stock market tends to be a risky.
People lose money if you don't watch the market / over-confident that price of the stocks will increase in the future
Any fool-proof strategies for making money??
The key is to only buy stocks that go up.
Keep calm and go long
Deal Addict
May 18, 2015
1630 posts
633 upvotes
Ottawa,Ont
deepthi2016 wrote: Stock market tends to be a risky.
People lose money if you don't watch the market / over-confident that price of the stocks will increase in the future
Any fool-proof strategies for making money??
The people who truly make a fortune (5M+) are people who heavily invested in one or a few companies. I had a chance to get in on TWEED before the IPO and I passed...epic fail. but that was my one shot
Newbie
User avatar
Sep 15, 2016
20 posts
15 upvotes
Stop thinking or reaching for those shooting stars. Come down to earth, read, learn, establish goals and work to achieve those goals. Don't worry about what others have done or achieved, what do you want and what are you willing to do to achieve it. There is no free gifts or money trees.
Deal Fanatic
User avatar
Dec 14, 2010
6419 posts
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nikels21 wrote: The people who truly make a fortune (5M+) are people who heavily invested in one or a few companies. I had a chance to get in on TWEED before the IPO and I passed...epic fail. but that was my one shot
That's not the only way. Many successful investors (with way more than $5MM) advocate diversification. The methodologies from Sir John Templeton or David Swensen or Gretchen Tai are a few practical examples on how one can achieve success with diversification.


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

Trading strategy based on Graham principles.
Deal Addict
May 18, 2015
1630 posts
633 upvotes
Ottawa,Ont
rodbarc wrote: That's not the only way. Many successful investors (with way more than $5MM) advocate diversification. The methodologies from Sir John Templeton or David Swensen or Gretchen Tai are a few practical examples on how one can achieve success with diversification.


Rod
I completely agree diversification is key for everyone. I was just saying that the people who go from nothing to extremely rich is generally because of one holding. As in portfolio value is massive (100x...maybe more depending on length of holding) relative to actual contribution amount.
Banned
Jul 18, 2016
2014 posts
781 upvotes
nikels21 wrote: I completely agree diversification is key for everyone. I was just saying that the people who go from nothing to extremely rich is generally because of one holding. As in portfolio value is massive (100x...maybe more depending on length of holding) relative to actual contribution amount.
Diversification is a favourite word used. My understanding is that the benefit of diversification is stability of growth for long term investors. i.e stable compounding growth over the long term tends to produce a better result for a larger number of people. However, I was just listening to BNN today, and an interesting note was made about NASDAQ and the new trend to buy into index funds and ETFs. One would think that buying the index is the ultimate in diversification, but actually it isn't since the vast majority of the value of the index and its growth is restricted to only 5 companies. So, this kind of supports your point that real wealth is established by selecting a few lucky stocks. However, good luck with achieving this. You might be the lucky few percent that achieve this, but you're probably better off relying on stable growth over the long term.
Deal Addict
May 18, 2015
1630 posts
633 upvotes
Ottawa,Ont
bewiseman wrote: Diversification is a favourite word used. My understanding is that the benefit of diversification is stability of growth for long term investors. i.e stable compounding growth over the long term tends to produce a better result for a larger number of people. However, I was just listening to BNN today, and an interesting note was made about NASDAQ and the new trend to buy into index funds and ETFs. One would think that buying the index is the ultimate in diversification, but actually it isn't since the vast majority of the value of the index and its growth is restricted to only 5 companies. So, this kind of supports your point that real wealth is established by selecting a few lucky stocks. However, good luck with achieving this. You might be the lucky few percent that achieve this, but you're probably better off relying on stable growth over the long term.
Haha yea I do not plan on doing that myself. My plan is a maxed out RRSP in VTI, Maxed out TFSA in XEF,VEE and my non-registered is a DGI portfolio of mostly canadian companies similar to Rods. Although my Bio/Pharmaceuticals are american (JJ,pfizer,GILD). So yes there is some overlap between my non-registered and VTI...but hey I enjoy attempting to pick some of my own stocks.
Penalty Box
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Jul 11, 2008
4368 posts
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Away from RFD idiots
nikels21 wrote: I completely agree diversification is key for everyone. I was just saying that the people who go from nothing to extremely rich is generally because of one holding. As in portfolio value is massive (100x...maybe more depending on length of holding) relative to actual contribution amount.
that's true.

you can't be rich by playing it safe (i.e. diversification) with a small amount . If you're already rich, and want to stay rich, diversification is the way to go.

we're talking 100x, 200x returns, not 10%,20%.
..
Banned
Jul 18, 2016
2014 posts
781 upvotes
ruchir wrote: like HCG
Make sure you're not standing on your head while viewing the graph of the stock you intend to purchase. :)
Deal Addict
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Apr 23, 2009
1733 posts
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That's right!!! But how else do you find a stock that only goes up? Winking Face
bewiseman wrote: Make sure you're not standing on your head while viewing the graph of the stock you intend to purchase. :)
Member
May 13, 2015
243 posts
223 upvotes
Manotick, ON
rodbarc wrote: That's not the only way. Many successful investors (with way more than $5MM) advocate diversification. The methodologies from Sir John Templeton or David Swensen or Gretchen Tai are a few practical examples on how one can achieve success with diversification.


Rod
what about billionaires or Forbes 100 list? Did they make their fortunes through diversification?
Deal Addict
Nov 9, 2013
4080 posts
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Edmonton, AB
ruchir wrote: like HCG
Haha touche! I guess I should follow my own advice.
Keep calm and go long
Banned
Jul 18, 2016
2014 posts
781 upvotes
ruchir wrote: That's right!!! But how else do you find a stock that only goes up? Winking Face
Hmmm. Use iPhone/iPad. Set Portrait Orientation Lock to On. Turn iPhone/iPad upside where needed. This is probably a much more comfortable solution than standing on your head.
Member
Dec 14, 2009
211 posts
89 upvotes
Markham
For most people who don't want to study/research individual stocks, you should buy the index (Etfs like VOO:US and XIU:CN), and then continue to periodically purchase more (every month, or quarter or 6 months, etc). The problem I see is that people want the 'get rich fast' outcome and will eventually stop their strategy and probably sell out before they ever realize the potential of this simple strategy (which could often contain 1-5 years of losing or breakeven stretches).

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