April Portfolio VS The 10 Investment Logics To Stay 100% Profitable in the Stock Market
Hello everyone! After recovered from the Covid-19, I found myself super tired and took one more week of rest. Now I am feeling better and time to kick myself to prepare more posts!
Here, I am go share my April portfolio. And Yep, my April portfolio is down and red!
Positions Details
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However, I never feeling frustuated and panic. Instead, as I am a long term investors and already done lot of researches on the company that I am holding, I am feeling excited instead! I will share how I select my stocks in future. Meanwhile:
Are you feeling fear or frustrated during this period?
Are you failing to sleep well during this volatile period?
Are you start to lose your confident in the stock market and start to doubt on yourself?
If your answer is YES to the above question, I have prepared a video to talk about my investment logics, and this video is for you :)
As usual, you could read the post here, but you are encouraged to watch the video at 2x speed, as it will save more time and it is animated :)
As usual, you could read the post here, but you are encouraged to watch the video at 2x speed, as it will save more time and it is animated :)
Similarly, please give me a like on the video, and subscribe my channel if you find the video is useful :)
Let's start!
Hello everyone! Year 2022 is not a good year in stock market. Nasdaq falls into the bear territory again, falls almost 22% YTD. SPX down almost 13% YTD.
1st Logic: Index is always going up.
Look on the SPX chart since year 1991. The index is always going up! Thus, market is long term up, short term volatile.
Look on the SPX chart since year 1991. The index is always going up! Thus, market is long term up, short term volatile.
This tells us that the time and patience are our friends. During these 30 years, there are many rounds of monetary tightening or loosening, inflation, oil crisis, war, financial crisis... But, at the end, the market is still going higher and higher.
The main 3 reasons for the index is always going up are because of:
- Population growth
- Inflation.
- Index balancing, where the index will replace a weaker company with a stronger one.
2nd Logic: Never time the market.
Time the market means we are trying to predict the bottom or the top of a market.
Time the market means we are trying to predict the bottom or the top of a market.
When we look on the chart, it is retrospective, and it looks like we can catch the bottom or sell the top with some indicators. The truth is not. If we factor in the emotion or psychology involved, most of the people will tend to buy when the market is at high because of greed, and sell at low because of fear.
Let’s look on the chart here.
The average annualized return of S&P500 from year 2001 to 2020 is 7.5%. Out of the 20 years or around 7300 days, if we time the market and missed the 10 best days, the return dropped half to 3.4%. What if we missed 20 top days? The return is only 0.1%.
3rdLogic. Avoid the herd mentality
Now we know the index, or the market will always go up. We also know that if we hold long enough and do not time the market, high chance we will be able to profit from the market. But, the marketis a place of manipulation and affected by psychology.
The typical buyer's decision is usually heavily influenced by the actions of our neighbours, relatives or even guru or Youtubers. So yes, Please do not just trust whatever I said, do your own research first. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. But this strategy is bound to backfire in the long run.
The famous example here is ARKK. There was a period where everyone was talking about Cathywood, ARK etfs such as ARKK, ARKW, ARKF. Youtubers were also keep talking about ARK.
Now, we know what happens to the ARK etfs.
Invest in the company that we know and understand is very important. If we just buy the companies based on herd mentality, we won’t be able to hold the stocks for long and easily sell low and buy high.
4th logic Never FOMO and PANIC SELL
Look on this photo, there are 3 stalls in this hawker center. If you are new to this place and would like to have a delicious lunch, which stall do you think it has a higher chance to serve a more delicious food?
Most people will choose A. This is because the queue is longer!
In stock market, it is similar. When we see a stock is keep going higher, our mentality will tell us to buy so we won’t left behind! Our mental will switch to a mode that this stock will keep going higher and higher. We have to buy it now! This is called FOMO- fear of missing out.
Similarly, when the stock is keep going down, our mental will tell us that it will keep tanking- FEAR will dominate us to sell the stocks. This is called PANIC sell.
FOMO and PANIC sell are the easiest way to lose in stock market- a typical behaviour to buy high and sell low.
5th Logic. Follow rule
How to avoid FOMO and PANIC sell? Follow the trading rules!
First, we need to identify our terms of trading and investing: Long term? Mid-term? Short term?
If long term, what is your buying points? If short term, what is your cut loss level? If we already decide on these buying and selling levels, we won’t be FOMO and Panic sell.
For example, as the market is very bearish, I will only add the stocks if the index or the stocks hit weekly chart of the key support levels.
6th Logic. Invest in the right stocks
Previously I mentioned about the index is always going up and we need to hold long term enough to ensure we can stay profitable. However, note that this is only applicable to index ETF, such as SPY and QQQ, or a company with a superb fundamental with consistent grow of revenue, net profit and operating cash flow. The intrinsic value should also not too high from its current price.
Not sure what to choose? Then just go with ETF. It will never be wrong. Do not underestimate the power of compounding with ETF.
If we start with capital of 5000, and invest $500 monthly, as the average return of S&P500 of the last 20 years were around 7.5%, after 20 years, the money will be compounded to $281k!
If we invest $1000 monthly instead, we will be able to compound the money to $540 k in 20 years!
7th Logic. Diversification.
If we want to aim for higher return, individual stocks are better option than the ETF. However, more research is required to identify a good company. In addition, diversification is important. We do not put all the eggs into one basket, right? Each stock has its own cycle. If we put too much money on a stock, if the stock does not perform well, our return is far behind the market.
Note that ETF itself, such as SPY, are already diversified into the best 500 companies.
8th logic. Invest with surplus fund.
Invest with surplus fund is important to make sure we do not desperate to liquidate our portfolio. To me, I will first clear all my short term debt, then allocate 1 year to 1.5 years of emergency fund, buy insurance to protect my wealth. Then, the extra money I will invest in stock market. Thus, whenever the market is correcting or crash, I won’t be feeling fear. In addition, if something bad happens to me, my current cash reserve is enough to cover all, or most of them. I do not need to liquidate my portfolio, especially during this down period.
Invest with surplus fund is important to make sure we do not desperate to liquidate our portfolio. To me, I will first clear all my short term debt, then allocate 1 year to 1.5 years of emergency fund, buy insurance to protect my wealth. Then, the extra money I will invest in stock market. Thus, whenever the market is correcting or crash, I won’t be feeling fear. In addition, if something bad happens to me, my current cash reserve is enough to cover all, or most of them. I do not need to liquidate my portfolio, especially during this down period.
9th-Never show hand.
I never show hand or use all my money to buy the stocks. I always keep a healthy cash flow like 10-20%, while maintaining a consistent flow of cash flow from my salary to ensure I can react with the market. If the market continues to drop and reach the next critical support, I will just buy and accumulate more stocks.
I never show hand or use all my money to buy the stocks. I always keep a healthy cash flow like 10-20%, while maintaining a consistent flow of cash flow from my salary to ensure I can react with the market. If the market continues to drop and reach the next critical support, I will just buy and accumulate more stocks.
10th Logic. Never give up.
Many people give up when they lose money in stock market. However, we should learn from the mistake, or get used to the market cycle (bear and bull), be patience and compound our money consistently.
If we give up half way, everything is really wasted and we won’t be able to enjoy the up-coming bullish cycle.
Many people give up when they lose money in stock market. However, we should learn from the mistake, or get used to the market cycle (bear and bull), be patience and compound our money consistently.
If we give up half way, everything is really wasted and we won’t be able to enjoy the up-coming bullish cycle.
The logics 1-10 are enough for us to 100% profit in the stock market. But…Warren buffet shared that: There seems to be some perverse human characteristic that likes to make easy things difficult.
Such as trying to catch the bottom, use a lot of indicators, or any other weird and funny things.
I know during these 5 months, the red does not make us feel good. By following the 10 logics that I shared here, there is no way we could not profit from the stock markets. Be patience, and wish the market is with us. The history tells us that, it is just soon or later the market will recover, and go to new high. Each correction or crash, eventually will bring us higher profit at the end.
If you gain any insight form my video, please click into my video and give me a like to motivate me more :)
https://youtu.be/xi3xHcauaUs
https://youtu.be/xi3xHcauaUs
That is all I would like to share for today. Thank you and see you in the next video.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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learn investing in my YouTube channel at "JM investment journal"
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BullyMoo : thanks for the video
Meta Moo : Self-explanatory charts and detailed case studies. Thank you for your wonderful sharing! Hope our portfolio all be green in May
Milk The Cow : Grazt on ur recovery
.
NANA123 : thanks for sharing the real position details
very professional, i will learn more from you
styleomileo : Great sharing for all, whether for novice or experts. I fully agree with the principles outlined and all investors should pay heed. There are too many short term traders punting the stocks like casino, so good to revisit this article once in a while.
JM investorOP NANA123: I used to have XLE and SLB but sold them last month.
I used to have Unity and sold them at $190
Both oil and speculative stock I entered for mid term
those remain are for my long term to hold for at least 10 years
JM investorOP styleomileo: thank you! yeah there are lot of people are treating the market as casino now
JM investorOP Meta Moo: thank you to kick my to start my first post of the month
NANA123 JM investorOP: add these tickers to my watchlist immediately
JM investorOP NANA123: for xle, slb and unity, their cycles are over and not suitable for long term hold
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