Investors vs Gamblers
DISCLOSURE: THIS POST MAY CONTAIN AFFILIATE LINKS, MEANING I GET A COMMISSION IF YOU DECIDE TO MAKE A PURCHASE THROUGH MY LINKS, AT NO COST TO YOU. PLEASE READ MY DISCLOSURE FOR MORE INFO.
Don’t be an idiot. If you have ever found yourself:
* Screaming at your portfolio
* Wondering why the hottest stocks are not making you any money
* Losing capital over emotion-based decisions
…this article is for you.
Picture this. You finally decide to bite the bullet and start investing for your future. You find yourself up against an ocean of stocks. And, as most people do, you jump into the most popular few. Only to find your money cut in half.
That is the story of most retail investors in 2020/2021.
I want you to be better. But first, let’s see where it all goes south.
Where People Fail
Opening a brokerage account is easy. And so is pressing the “buy” button.
The difficult part is choosing the right investment. Why? Because there are 65,206 stocks worldwide.
You’re obligated to filter them somehow. In reality, the simplest approach to selecting stocks
often relies on emotions and perception. Pro tip: study behavioral finance.
Here are a few examples (I’m sure you’ll recognize yourself in a few):
* You see people in line for Starbucks
* You hear your barber talking about GameStop
* You see Beyond Meat patties appear in your grocery store
* You find a fun show on Netflix
* You like your cousin’s Tesla
* You enjoy drinking Coca-Cola
These are just a few examples that make us think the underlying company is a good investment.
But in reality, buying stocks based on perception is nothing more than gambling. And gamblers rarely make money.
Let me propose an alternative.
What Smart Investors Do
Information = money.
I know it is cliché, but you need to do your research. You’d be stressing this, too, if you had seen what I saw.
Momentum chasing, hype fueling, and 100x ROI-dreaming actions are measured in dollars lost (not gained).
So, pick up that annual report, read the press releases, study the fundamental numbers, and don’t give in to pressure.
Investing is not gambling. Sure, when you invest, you're taking a chance because no one can predict the future. But as an investor, you do your due diligence upfront. You dig into the details of where you're putting your money. And the underlying theme of investing entails letting your money work for you in a way that's productive.
With gambling, you're purely putting your money in a position where it's left to chance, without much thought or upfront research involved. Sure, you can make money gambling, but the odds are always stacked against you while the House always wins.
So, the biggest contrast between Investors and Gamblers is information (i.e., due diligence, research, knowledge & expertise in a certain area, insight).
Since you made it this far, I have a gift for you.
10 Sources of Information for Research
SEC Filings: Official financial reports filed by companies with the U.S. Securities and Exchange Commission, including annual reports (Form 10-K) and quarterly reports (Form 10-Q).
Stock Screeners: Online tools that filter stocks based on criteria like market capitalization, industry, and valuation ratios to identify potential investments.
Financial News: Reputable financial news websites and publications like CNBC, Bloomberg, and The Wall Street Journal provide up-to-date market news and analysis.
Company Websites: The investor relations section of a company's website offers official financial statements, presentations, and earnings call transcripts.
Analyst Reports: Research from professional analysts and brokerage firms provides insights, ratings, and price targets for specific stocks.
Stock Exchanges: Exchange websites like NYSE and NASDAQ provide company profiles, historical data, and trading information.
Investment Forums: Platforms like Reddit's r/Stocks or StockTwits offer discussions, news, and opinions from individual investors.
Social Media: Follow influential finance accounts and hashtags on platforms like Twitter, and LinkedIn for real-time updates and discussions. Be careful with this.
Books: Authoritative books on stock market investing, like "The Intelligent Investor" by Benjamin Graham, provide valuable knowledge and strategies.
Educational Websites: Online resources like Investopedia and Seeking Alpha offer tutorials, articles, and stock analysis tools to enhance your investment knowledge.
Before you go, I have one final message.
Choose Your Hard
Think of it this way. Losing money is hard. Spending hours knowing the business is hard too.
Which do you prefer?
Let me share a quote that helps me materialize my thoughts.
"When the going gets tough, some people choose to leap towards what's easy, missing the
opportunity to grow and persevere." - John C. Maxwell
Don’t leap towards what’s easy.
To get my best work, feel free to join the world’s most powerful stock market newsletter for
wealth, stability, and happiness.
Information provided on this site is based on my own personal experience, research, and analysis, and it is not to be construed as professional advice. Please conduct your own research before making any investment decisions. I am not a professional financial advisor, stockbroker, or planner, nor am I a CPA or a CFP. The contents of this site and the resources provided are for informational and entertainment purposes only and do not constitute financial, accounting, or legal advice. The author is not liable for any losses or damages related to actions or failure to act related to the content on this website.