Tom Nash
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Warren Buffett, Peter Lynch and Benjamin Graham Taught Me This Lesson...
🕑 Added 2023-11-27 08:57:18 +0000 UTCMy top 3 investors of all time are: Warren Buffett, Peter Lynch and Benjamin Graham. Buffett is one of the most successful investors in history. Lynch is known for his annual average return of 30% for a decade and a half., and Graham is referred to as the "father" of value investing.
Warren Buffett once said that It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Peter Lynch famously said: "know what you own, and know why you own it". Benjamin Graham is known for saying that "in the short run, the market is a voting machine, but in the long run, it is a weighing machine".
These 3 quotes share a common theme of emphasizing the importance of understanding the fundamentals of an investment. Buffett shows the importance of investing in high-quality companies at reasonable prices. Lynch talks about the importance of investor knowledge and understanding. Graham's quote highlights the difference between the market's short-term fluctuations and the long-term intrinsic value of investments.
3 elements of the same strategy - long term value investing by focusing on companies with strong fundamentals, understanding your investments, and adopting a long-term perspective. Over time, this approach ensures a successful investment journey, but if that is the case, and that is so simple, why do most investors lose money in the stock market?
The data suggests that between 70% and 90% of retail investors lose money in the stock market. The question is why do most people lose money, while the market keeps going up over the long term? if we understand why, my hope is that we will not be in that 70%-90% group, so here are my own thoughts on why this keeps on happening to good people:
1) NO Plan: during the bull run of the pandemic, retail traders lost over $1 billion by aimlessly following hot stocks and hype, without having a clear plan.
2) Knife vs. Gun Fight: retail investors are generally at a disadvantage compared to financial professionals who do this for a living, have better data and better tools and way more playing money. This gap often leads to losses for retail investors to lose.
3) Emotional Trading: Decisions driven by fear, greed, or other emotions.
4) Overtrading: Frequent buying and selling of stocks.
5) Timing the Market: Attempting to predict market highs and lows.
6) Not Reviewing Investments Regularly: Failing to monitor and adjust the portfolio as needed.
7) Neglecting Research: Not conducting thorough research before investing.
8) NO Patience: Selling investments prematurely instead of waiting for long-term growth.
9) Short-Term MINDSET: Concentrating on short-term gains rather than long-term growth.
10) Poor Risk Management: Failing to manage risk appropriately.
I would like to make a fun game with everyone here in the community, myself included, share with us in the comments bellow, a story about how one or more of the above mistakes impacted your investing, and how you overcame it and cleaned up your act.
If you share, you will help others, this is a safe space, nobody is getting laughed at for sharing mistakes.
Tom
Comments
Rod
My journey of investing on my own started with the tech bubble back in the 2000's ,i got caught in the hype and lost 30k ,so i was burn't pretty bad and then focused on rental properties, then covid hit and I caught the bug again ,i manged to come out of it a little less un scaved and I am putting more of a effort on learning a better investing plan this time around . Only this time I want to be able to help my son make some better decions than I did.
Vernon Coghlan
I never made any of those mistakes once, however I did make them at least 3 or 5 times.
Generico Fakero
We all made these mistakes at some point
Bryan Wheeler
Ha! I am guilty of every damn one of these! I have been more seriously investing in the market for about 4 years now. Slowly learning and correcting through education and awareness. Tom's channel has helped keep me honest and patient as a long term investor, books like "Psychology of money" by Morgan Housel explained short term mindset and emotional trading and how to adjust. Currently I am examining several positions to see if they are still worthy of being in my portfolio after realizing my "no plan, fomo, no research, timing the market, short term mindset" approach wasn't ideal! haha! I appreciate this chance to read others thoughts too, nice to know I am not alone in my journey!
Generico Fakero
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Generico Fakero
Very good lesson learned there
Karthik Iderapalli
When I first started in nov 2020 I got caught up in some of the momentum and hype of āstay-at-homeā/growth stocks (like pins, etsy,tdoc) and as it was a bull-market everything was rallying and so was difficult to seperate the actual longterm winners from losers. Also I was overweight on the bet that pandemic stocks would last as behaviours of people had changed. Getting caught up in the momentum and bull market made me neglect fundamentals such as valuation and as we know these stocks came tumbling down. Also I could have done more research and understanding of the business instead of succumbing to hype and greed as later i changed my mind about the growth and returns projections for these stocks.
Lex
3. Emotional Trading. Prior to the pandemic, I was a Tesla investor and I owned, across two accounts, 170 shares of Tesla. (I was talking to Greg about this and looked back in my accounts to see how much I had). When the pandemic hit, and the market tanked, I panic sold EVERYTHING, not just Tesla stock, but everything. Had I not been emotional and simply held onto everything that I owned at the time, I would be in a significantly better position than I am now. How did this change my mindset? I cheer when Tesla (or other companies that I own) stock prices go down, so I can acquire more. My outlook is significantly longer and forward looking.
