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Threeways i have massively changed my stock market investing style here in 2018 i have made some very big changes this year in every single year i think it’s always important to tweak a couple things here tweak a couple things there and get better and better in whatever you’re doing in life especially stock market investing there are always improvements we can make
Out there there’s no such thing as the perfect investor the perfect anything okay it’s always about getting better 2018 has been a year i have massively changed three very core things to my investing philosophy okay now some of the things have stayed the same okay looking at companies for the long-term the next three to five years valuing balance sheets looking at
The company from a lot of different ways looking at risk factors all those type of things have not changed okay but there are three things that will have a change in a big way with me as a personal stock market investor here in 2018 i think this is something that will benefit me for decades to come these three big changes i think it’s always important to listen to
You know other people’s mistakes that i have made or anybody has made out there and kind of realize okay they made some mistakes there maybe i can and i can avoid those mistake by by figuring out something that they have figured out guys so i hope you really enjoy the state let’s just get right into this guys so the first thing the first big mistake and the first
Big thing i should say i’ve changed is i would go super heavy into two or three stocks okay so imagine you have a you know a hundred percent of your portfolio in cash all right and so what i would go ahead and do is with that 100 percent of my portfolio in cash then i would go ahead and put that in that money let’s say 55 percent in my favorite stock okay stock
A and then stock b might end up getting you know thirty five percent or something like that so now we’re in 90 percent of the portfolio is just in two stocks alone okay 90 percent of portfolios in two stocks and then if i had another stock i might put like 10 percent in that maybe i’d put 5 percent of that and then 5 percent in a four stock but needless to say i
Got away with this for a long time where i would just go super super heavy into two stocks and you look like a genius when it when it continues to work out but the problem is you’re always going to end up having a big investment of yours go bad it happens to every big m it happens to every investor out there ever in history okay every investor ever in history has
Always had stocks mess up for them okay and sometimes very very large investments all right so with that being told you don’t want to ever put too many eggs in one basket because guess what eventually one of those baskets is going to be bad if you’re in this game for decades and decades eventually you’re gonna just in pick a bad one okay it’s just gonna happen to
The everybody okay it happens to everybody realizing that if you have if you’re bad one you’ve got fifty fifty five percent of your money fifty percent of your money sixty percent of your money in that one stocking it loses let’s say 50 percent of its value your portfolio is just decimated in a massive massive way because you just took a massive loss on that okay
Rather than if you were more diversified so now i take a much more diversified stance on things okay so in my portfolios now i’ll have a stock a i’ll have a stock bse a d and e and f a g i mean i have i now i have in pretty much every single portfolio at least seven plus stocks okay some of my portfolio i think that’s just showed a portfolio off recently on in the
Here on the youtube channel and i think that one has nine stocks in it okay so basically what i will do is i will not go any heavier than about 25% of my portfolio into my biggest investment okay that’s about the maximum level however i don’t even really like being up there anymore i like to stay maybe around 20 percent or somewhere around there as far as my stock
A okay and then this one maybe 15% and then maybe 10% 10% and kind of going down from there okay meaning you’ve got a more diversified portfolio because think about it guys you own two or three stocks you got everything in those two or three stocks and especially if you’ve got a lot of money ready you’re putting just a huge risk on it because you’re not diversified
You’ve got so much so many you know shares all in one or two stocks it literally doesn’t make sense it’s just a bad bad thing like i said when it’s going good and you’re picking them really good stocks it’s it looks like you’re a genius they’re like oh i just stuffed all this money in this one stock but when that one comes around in it will happen to everyone out
There i hate it i hate to say that too but you know but it’s just the truth it’s gonna happen to everybody many times in your investing career throughout the you know decades if you actually plan on being in this game for a long long time it will happen to everybody warren buffett i don’t care who you are you don’t go this route guys go a more diversified route
It’s a much safer option for you rather than they’re always there always a lot of stocks that are good deals then when i look at the stock market there are at least five stocks right now i would love to buy okay at least five stocks probably you know ten maybe fifteen stocks out there okay there are thousands of stocks if you cannot find a good value anywhere
You just got to look some more okay however if you think every single stocks a good value that’s taking it too far okay so so pick and choose your battles but make sure you’re staying diversify guys that was just something i got away with for a long time it came back to bite me and i realized in 2018 dude diversify up a bit this is crazy all right the next one
Has to do with management management was something i always looked at but i always viewed the management team meaning the executives specifically really the ceo of the company i always kind of put that on a back burner okay if there was a management team i didn’t like if i didn’t really you know feel them after that just wasn’t a good vibe there i might bypass
It and i might just say well look at what the p/e is at right now well look at what the income statement look what the profits are at i would put the management team on really like a backburner all right in the back of the backburner back there all right this is something i i value a lot more now okay if there’s a management team i don’t like it and if i don’t
See them just really having a long-term vision if i don’t see them them taking the care to that business they really should you know when i go ahead and say i say you’d that stocks not for me okay i don’t care what the peas i don’t care if it’s at 8 p i don’t care if they make tons of profits i don’t care if they’re bound she happens to be really good if it’s a
Ceo management team there and i listen these conference calls and i’m like i’m not really feeling these guys that i don’t think they have the focus there if it’s not a management team i like i’m not investing in it i will not invest in it or if it happens to me a management team i bought into and then things start to change and it’s things just get worse i’ll sell
Out of that stock if we regardless if i’m up or down that stock it has gotten that important to me because what i’ve learned is a management team can come to burn you worse than ever okay a bad management team can literally sink your investment for you they can literally sink it all right a great management team can take that stock up you know hundreds of percent
Over the years a bad management team can decimate a company i’ve seen it time and time again guys we’re a great company or a good company will just get decimated by a management team or you know you might put too much of too too much you know i guess emphasis in a ceo in in so much hope that they could turn things around with that company and then it doesn’t happen
And it’s just a bad thing guys so management i value this so much more than i ever have in the past and the last thing is multiple growth vectors what do i mean by this this is a very very important thing i think everybody should really open up your ears this one because it’s something i really realized when i look at the stocks that have really outperformed the
Market in a dramatic way outperform the german market in dramatic ways since i started investing what i’ve come to see is a lot of stocks that have what i call multiple growth vectors for that business ok so imagine you have a business you know and it just does one thing over here it’s a one trick pony it really has one lane that stays in and that’s good sometimes
Because it has one one main focus but what i’ve found the companies that really succeed in a massive way or ones that have this thing working for them but can also focus on this thing over here and have this succeed without this dropping off and then they start another growth vector in that succeeds all right these type of businesses are where you can get massive
Gains from the multiple growth vectors one so when i look at businesses now when i’m looking and doing my research into businesses this is something i’m valuing more and more going forward so now you know when i think about stocks a facebook i think about they have multiple growth vectors for that company when i think about something like alibaba like i’ve been
Buying into many many growth vectors for that company alright doesn’t mean i’ll just invest in companies that have multiple growth vectors but when i start to look out more and more into the space i look at a company like intuit and what they’ve done over the years they have multiple growth vectors going for them a company like that not only can it can produce
A lot more revenue and profits down the road as long as i can execute but on top of that they have the story which is a story is so important in the stock market the story management tells to investors fund managers hedge fund mutual fund managers that gets people excited because they say well it’s got that growth vector over there and then it’s got this thing
Over here it’s got because it’s real easy to just poke at a company like let’s let’s say for instance what a company i own that has only one growth vector is toll brothers okay toll brothers is a really easy stock for short sellers or anybody to poke at and say if housing gets weak there they’re screwed okay really easy however on the flip side something like an
Alibaba or facebook you could point this thing you can say well facebook’s getting weak the phrase i’m talking about facebook the platform right but then yeah the long’s can say well oh oh we also have instagram over here we also have whatsapp which isn’t really even monetized yet we also have messenger which is going to be a massive growth engine for us we have
All these other things over here acos we have all this cash that we can buy other companies with in the future there’s multiple growth vectors so it tells the story guys it’s so important it’s so important so this is something i’m valuing more and more as i as i invest in the stock market it’s looking at these companies with multiple growth vectors and viewing
Them adam you know in understanding i’ll have to pay a steeper piece sometimes for these companies and that’s okay in the end that’s okay i’ll pay up for some of these companies that have many different growth vectors because they got the story and it’s going to help them produce a lot more profits and revenue in the future but the trick is you’ve got to make
Sure they’re executing okay so there are some companies that are like oh y’all we’re going to do this and that and they don’t execute on anything there are certain companies they can execute on a lot of different things and those are the special companies i hope you guys really enjoyed this today these are three massive changes i make i made this year with my stock
Market investing style let me know what you think down there in that comment section i hope you guys learn from this i hope this was a very very valuable content for you guys hit a thumbs up if you enjoyed this day make sure to follow me on instagram if you love stock market news thank you for watching and have a great day
Transcribed from video
3 ways i changed my STOCK MARKET INVESTING STYLE in 2018 By Financial Education
