Six Money-Making Lessons From 12 Years of Investing

Today I celebrate 12 years as a Stock investor. Aside from a 401(K), I have been managing my own personal portfolio of investmens for over a decade and counting. 

My first stock

I found out about investing for the first time a semester before I graduated from college. This incredible “discovery” completely shifted my perspective on what is truly possible when it comes to building wealth.

Here are some of the many lessons I’ve learned over the years:

#1 Learn to look at investing as if you are buying an actual company, not just a “stock”.

Learning to look at investing as if you are buying an actual business will do two things:

1. Protect you from putting your hard-earned money in junk.

-and-

2. Keep you interested in keeping up with any news or developments regarding the companies in your portfolio. 

One of my absolute favorite things about being an investor is walking into a business or buying a product or service from a company where I own stock and thinking to myself:

“Wow, I own a piece of this company.”

BOSS

Trust me, it is an empowering feeling. Even if you own one single share you’ll still feel the vibrations of wealth. MINDSET IS EVERYTHING.

 

#2 Success Leaves a Blueprint.

In taking a close look at my investment portfolio, my most profitable investments have very specific characteristics in common. Here are some of them: 

  • Companies that have a proven track record of profitability and healthy financials.
  • Companies that are very unique in the products/services they offer and have very few competitors (if any!).
  • The business model, the way in which the company generates revenue, is easy to understand.
  • Companies with strong brand names that are internationally recognized, have pricing power, and a strong “cult-like” following among consumers. 
  • Are strong leaders in their respective industries (often the #1 leader) and have been for quite some time.

If you’re currently investing, I encourage you to take a look at the “winners” in your portfolio – what do they have in common?

 

# 3 Learn to be strategic during market downturns.

As I’ve repeated time and time again in my social media pages: “Panicking is not an investing strategy.”

Instead of panicking, strategies that have served me very well during “market downturns” include:

Option A: Doing absolutely nothing.

When I know that the stock market is having one of those “crazy downturn” days or weeks, I do not log into my investment accounts. I keep myself busy doing other things. I learned this lesson very early on in my investing journey.

There is really no point in looking at how much your portfolio has “dropped in value” on any given day. Remember you haven’t lost any money unless you go ahead and click “sell.”

And remember this – Never make investment decisions based on emotion. You might regret it soon after. 

Option B: Take advantage of “sales”.

During market downturns, many high-quality stocks and funds drop in price quite significantly. Those can be perfect times to pick up some amazing investments at deep discounts. It is something I’ve done multiple times.

As my investing mentor once said:

“Be fearful when others are greedy and greedy only when others are fearful.”

– Warren Buffett

If you look closely, there are always opportunities in the middle of turmoil.

#3 Patience is a virtue in a lot of things in life. Investing included.

When you put your money in high-quality companies, being patient with business cycles and random stock fluctuations can pay off tremendously over time.

The stock market is random and unpredictable in the short term but incredibly rewarding in the long term.  

Warren Buffett Quote 2

With that said, I feel is important to acknowledge that not all companies recover after suffering through certain business challenges. Investing is not an “exact science”.

However, from my experience, most high quality investments always recover. 

Important: The keyword here is QUALITY. If you are putting your money in speculative investments, are trying to “play” the stock market, and are making poor investments to start with, being patient won’t make a difference. 

 

#4 Is okay to let go.

Although I am very long term with my investments, there are times where I’ve realized I made the wrong decisions. When that happens, I sell and move on. 

Screen Shot 2020-05-01 at 1.09.06 PM

And that brings me to this: If your CORE reason for why you bought an investment changes or if you realize you had the story all wrong – is okay to let go!

Mistakes happen. It is better to admit to yourself that you made an erroneous decision and move on. Sometimes this is easier said than done and our ego gets in the way of our profits. It gets easier with time.

 

#5 Adding to winners (when warranted) can be a highly profitable investing strategy.

Saving the best for last :).

One of THE BEST investing lessons I have learned (by far!) throughout my journey is adding to winners.

I always give credit where credit is due. I learned about this for the first time back in 2018 while listening to the “Rule Breaker Investing” Podcast hosted by David Gardner (Co-founder of the Motley Fool).

David Gardner | Add to Winners

Here’s an example of what I mean by “Adding to Winners”:

Let’s say you bought a stock for $75 and then you see it run up to $150. You still believe the company is solid and has the potential to continue growing and thriving for many years to come.

If your original thesis for buying that stock in the first place hasn’t changed, it might be a good idea to consider buying more shares.

Let me be honest: In the beginning, this doesn’t feel good at all! Buying stock in a company that has already doubled (or tripled!) in your portfolio might feel scary.

However, I can tell you from experience that most of my winners have kept on winning.

Keep in mind that this doesn’t apply to all companies. Random downturns can happen to any stock at any time. You have to be strategic with this approach.

However, when you do it right, you’ll be VERY glad you did.

And that’s all folks. I can go on and on with the lessons but I would be here all day :). I will continue to share more as time goes by.

I hope you enjoyed this post. Let me know in the comments if you have any questions.

By the way – we want to hear from you!!

If you’re already investing – whether it’s been 2 days or 20 years – I’ve loved to know what has been your best and not so good experiences. If you’d like to be featured in a future post, complete this quick questionaire. 

your best and worst investing experiences!

Until next time! Cheers to Health & Profits.

-Mabel$

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Upcoming Courses & Resources:

Ready, Set Invest: A Crash Course on Being Ready to Invest – This is a best-seller (2-hour class) all about how to be PREPARED to invest. To get information about the July 2020 edition of this workshop, click here.

Understanding Your Investing Options: Starter Guide for Beginner Investors: New to investing and not sure where or how to begin?! This guide is for you! Check out details here.

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