How the Exact Same Stock Will Produce Winners and Losers

Let me reveal right up front what most inexperienced stock investors fall for:  the buy recommendation.  Whether it’s from a time-tested, reputable service like The Motley Fool, a financial advisor, or from a friend – or a friend of a friend – people who know little to nothing about stocks and the market and investing can get excited as a school kid whenever they catch wind of the next “big” thing to invest in.  Why?  Because they easily get caught up in thinking that it’s a sure-fire guarantee of not only money, but BIG money.  (Believe me, I write this from experience.)

It’s as though they believe the person or entity recommending that particular stock used a special investing-only crystal ball or some other sort of mystical power to be able to predict the future.

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Gambling in Stocks or Investing in Companies?

Several years ago I was in a training seminar and the speaker, who was an engineer with an attitude, an edge about him, was talking about the properties of concrete.  At one point he got very passionate as he explained how you should never call it “cement”.  In fact, he got pretty irate as he lamented how uninformed people call it cement, emphasizing how cement is only one of the ingredients of concrete and not concrete itself.  He said that this would be the same as calling a cookie “flour” when flour is only one of the ingredients of a cookie and not a cookie itself.

The same idea can be applied to all the investment gurus and everyday people out there who use the word “stocks” nearly all the time as their way of referring to companies that trade shares on stock exchanges.  So as not to be labeled a hypocrite, I freely admit that I do this often throughout this blog without first thinking.

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Taking the Emotion out of Investing

Even though this is a blog about stock investing, the principles in many of these posts relate and can translate to success in any form of investing in other areas of life:  education, relationships, and so on.  Really, what point is there to becoming a successful stock investor if you can’t also learn things that make the rest of your life better and of those around you?  Although stock investing can be fun and very rewarding once you learn about and understand it, which also involves getting over any myths and hang-ups you might have about it, there are far more important things to life!

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Did You Ride Out the Financial Storm?

A lot has happened since my last post in early October 2015.  Less than a month later, my dad passed away after a 3-year struggle with cancer, but I had been fortunate enough to be able to spend a lot of time with him in those final months.  (As an aside, if a person does not choose to do a lot of reflecting during times like that, trying to ignore the reality of death, then I would argue that he’s missing out on some monumental life lessons.)  So yes, I had to ride out a personal storm, but I also learned and was reminded a lot about life in general.

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Learning to Become a Bored Investor

I’ll admit that I’m about to bare my investing soul about one of my last great remaining weaknesses as an investor:  impatience.  May you benefit from what I’m about to share.  I write this in the shadow of selling my position in Google (GOOGL, GOOG) a few weeks ago after 1 1/2 years of very little activity which, as I’ve mentioned in other posts, hardly qualifies as the minimum 3 to 5 years that a person should hold a stock for.  What happened?  It spiked over 25% within a week of me selling it.

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