The Investor Diary Entry #8: January 28, 2023
I was raised on the principle of never to come near stock investments as the stock market was built to suck the money out of small investors. To tell you the truth, the stories that we hear and the cases that we see on daily basis of how small investors end up in the stock market can make you really pause on the conspiracy theory, especially if one does not know how does stock investment work.
The main reason why I never got near to knowing how does stock investment work, is because in my early days it needed a lot of capital for one to invest in the stock market especially that the country that I live in did not have access to world markets, and back in the day the internet was not a household item.
Stock Investment Today
Today it is much easier to invest regardless of your nationality (to a certain extent) in any market that you like. You can also invest in fractional stocks which was not the case in the recent past.
The cost of investing was also high for many people including myself. Stock investment today is affordable and the fees for buying in into positions is a fraction of what it used to be.
Personally today, I would like to study companies in markets such as Indonesia, Vietnam, Thailand, Malaysia and other similar countries. I still don’t know how to get to know companies in those countries and how evaluate them.
Personally I use a certain software to evaluate companies, but this software works only for companies listed in the USA. I tried to study some Chinese companies that are not listed in the US, but it was a currency conversion nightmare for me, as some financial reports where available in the USDollar and other documents where in the Chinese currency (Yuan).
Does Stock Investment Work?
Well, for me the answer to this question is very simple. I am someone who got used to saving money. The way I used to save money was to create a saving account that is different from the account that use for my income and expenses.
I saved for years, and years. Guess what.. I lost all my money for two main reasons; the first is much more important than the second. The first reason was because of inflation. The value of money diminished over the years.
The second reason is that I lost my job back in 2008 and since then I did not get back to employment. Instead, I decided to run a freelance life. The truth is that the life of a freelancer is much more beautiful than that of an employee. On the other hand, my income did not cover all my expenses. I covered the difference with my savings.
2020 was fatal. I had a contract at the time that ended in September of that year, and since then all my revenue streams evaporated.
I calculated if I have taken on a small sum of my saved money and threw it in the stock market – yes threw it, I would have made millions by the time my savings evaporated. I said “threw it” because I literally did throw my money when I left it to diminish and evaporate in inflation.
How Does Stock Investment Work?
The first thing that you need to do before putting a single penny is educate yourself. This education is very important. Do you know the term “educated decision?” This is exactly why you need to educate yourself, so that you can make decisions regarding your investment methodology, investment strategy, investment style, and many other investment decisions that you will need to do, and no one can help you because each one of us is a different case than the other.
Listening to other people’s advices on how to invest and where to invest is a waste of time. You can listen to those, once you have educated yourself about the world of investment -or if you want – the world of stock investment in particular.
After this education, then you can listen to this and that as part of learning from the experts phase of your education. This is, for you to get different ideas from different experts to create your own path.
One simple decision that you would want to make is whether you would want to be a passive investor or an active investor. How can you make such an investment decision if you don’t know what each one means.
You would want to decide whether you are looking to increase your wealth or create an income for yourself. This answer can make a whole difference in what you would need to learn.
Factors To Consider In Stock Investment
After you educate yourself, decide on the basic things to begin your investment journey, then you would want to choose the factors that will enable you to decide how and where to invest your money.
The factors are your check points. Whenever you face an investment opportunity you would want to check the opportunity against the factors that you chose when you want to make an investment.
Conclusion
Personally I do not care if the stock market is built as part of a conspiracy. If the stock market can increase my wealth, then I will teach myself how to increase my wealth through the stock market.
If I couldn’t teach myself how to increase my wealth through the stock market, then it is not that stock investment does not work. It simply means that I was not able to learn how to invest.
The answer to the title of this blog can only be answered by you (the reader). No one can answer it for you. The way to answer it is by educating yourself and learning the ins and outs of this field.
The Investor
Saturday 28 January 2023
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second as a place that I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
For a more detailed information on my affiliate disclosure please refer to the Full Affiliate Disclosure page, and if you are interested in building your own online business you can check this post here.
Furthermore, this site is in no way or form is giving any financial or investing advice, nor it is encouraging or discouraging people to buy or sell any financial instrument. This is a personal diary in which I track my own progress and share for informational, educational and entertainment purposes.
Investing in stocks has been a proven way to make a lot of money and sadly it is also a proven way to lose a lot of money that is why I feel this article is super important. It has everything one needs to know before going into stock investing and it explains it so well. Thank you so much for this and I feel many people need to look at this piece.
Thanks Colly, Yes I felt the necessity of stressing the importance of education before starting investing, because I made that mistake myself twice.. once when I tried in the early 2000s to get into Forex trading, and then next time when I started my investing journey.
I know that many people who get introduced to either of the worlds; trading and/or investing dive right into it, and many lose a lot of money in the process of learning.
In my opinion, stock investments can be a great way to grow your wealth over time. However, it’s important to understand how it works and to do your research before you start investing. The basic idea is that you buy shares of a company that you believe will perform well in the future. As the company grows and becomes more successful, the value of your shares should also increase. Of course, there are risks involved – if the company doesn’t do well or the economy takes a downturn, you could lose money. That’s why it’s important to diversify your portfolio and not put all of your eggs in one basket. Overall, I think stock investing can be a rewarding way to build long-term wealth if done wisely. What are some strategies that others have used successfully?
Thank you very much for your comment. Yes, the world of investment is rewarding when we know what we are doing, and not just listening to our relatives or friends on what and how to invest. Educating ourselves is very important as the first step towards answering basic questions such as what kind of investor are you, what investment strategy would you be following, the amount of investable money a person has, and many other basic questions that need initial know-how.
I am currently an active value investor. I am now targeting small-cap companies in emerging industries which is affecting my value strategy, and some of the decisions might become speculative.
Today I had an interesting meeting that might change some things in the way I am investing. I still need to think about the information that I received today.
Such a readable topic. I am a freelancer same as you. Sometimes it is hard to cover all the expenses. Same as you I think the best way is to invest money in stocks. Your emphasis on the importance of education before making investment decisions is commendable. It shows that you understand the value of making informed and educated decisions, which is essential for successful investing. Keep up the good work!
Thank you Liam, Investing is like any other line of business. I don’t know why people tend to deal with it as if they are going to a casino. As freelancers, we know that to become a freelancer in any area, you must train yourself in many areas even if you have a technical understanding of the topic.
Being on your own is totally different from being part of an organization. Even investors working in investment banking, and venture capitalists, if they are going to make it on their own, there is a lot of preparation to be made before they make that move.
Investment is something great to learn for everybody, and it has great benefits, but individuals need to learn it before jumping into it.
The article begins by explaining the basics of stock investment, breaking down the key concepts and terms that beginners need to understand. It covers topics such as shares, dividends, stock exchanges, and the role of brokers in facilitating stock trading.
What impressed me about the article was its clear and concise explanations of the different investment strategies and approaches available to investors. It explores concepts like value investing, growth investing, and diversification, allowing readers to gain a deeper understanding of the various methods for building a stock portfolio.
I appreciated the inclusion of real-life examples and case studies, which helped illustrate how stock investment works in practice. This made it easier for me to grasp the concepts and envision how I could apply them to my own investment journey.
Furthermore, the article addresses potential risks and challenges associated with stock investment, such as market volatility and the importance of conducting thorough research before making investment decisions. It promotes a balanced approach to investing, emphasizing the need for a long-term perspective and the ability to withstand market fluctuations.
Overall, “How Does Stock Investment Work?” is a comprehensive and well-structured guide for beginners looking to enter the world of stock investing. The article’s clear explanations, practical examples, and emphasis on risk management make it a valuable resource for individuals seeking to grow their wealth through stock market participation. Whether you’re new to investing or looking to enhance your knowledge, this article provides a solid foundation to start your stock investment journey.
I would like to thank you deeply for such a detailed description of what you saw in this article. They say the best way to learn something is by explaining it to another person. This is the main objective of this diary, I am explaining things so that I can hear and read myself for my own development and for the development of any person who might land on this diary.
Again, I thank you very much for – what I want to call – a review of this article.
Great article on stock investment! The author provides valuable insights and shares personal experiences that many readers can relate to. It’s refreshing to see the emphasis on education and making informed decisions in the world of stock investment.
The author’s realization about the need to educate oneself before investing is crucial. It’s true that blindly following others’ advice can be risky, as each investor’s circumstances and goals are unique. Taking the time to understand investment methodologies, strategies, and styles is a solid foundation for success.
The article rightly points out the importance of deciding between passive and active investing. This decision can significantly impact one’s investment approach and outcomes. It would be beneficial to explore further the advantages and disadvantages of each approach to help readers make informed choices aligned with their objectives.
Additionally, the author’s mention of considering factors when evaluating investment opportunities is a key aspect. These factors act as checkpoints, guiding investors to make well-informed decisions. It would be helpful to delve deeper into the specific factors to consider and how to analyze them effectively.
Furthermore, the article’s reminder that the answer to whether stock investment works lies within each individual reader is empowering. It encourages self-reliance and emphasizes that success in investing is a result of personal dedication, continuous learning, and adaptability.
In conclusion, this article serves as a valuable starting point for anyone interested in stock investment. By stressing the importance of education, individual decision-making, and the evaluation of key factors, the author provides readers with a solid framework for navigating the complex world of stock investing.
Cheers
M.T. Wolf
Thank you Mike very much for this detailed analysis of the article.. I have written a separate article about being an active investor and I hope I have described the differences with being a passive investor successfully. I will get back to see if I have linked to that article as you are right that this needs further explanation for the reader of the diary.
I also agree with you that an article needs to be dedicated to the factors to consider when evaluating a company, or at least what I use personally as factors. Every investor eventually looks at different factors.
I thank you again for your great comment.
There is no question you can make money in the stock market. Your suggestion of training and education is a must to have a chance to make money. I have taken different training to learn about the stock market over the years and it is still a difficult way to make money. It is a risk/reward scenario that you just have to make a personal decision regarding if it is for you. Thanks and good luck. Brian
Thank you Brian very much for your comment. It is for sure something that one needs to be passionate about if one wants to be an active investor. If not become a passive investor, but the whole idea is to make sure that the money we are saving is growing somewhere and not being eaten up by inflation while sitting in bank account.
Very important comment Brian, thanks