so today we're going to be talking about
the core principles of investing my hope
is that some of these will stick in your
you'll bookmark this video and come back
to it if you're ever looking for a
refresher but I'm hoping that these will
stick in your mind and you'll remember
these things when you are looking at
investment opportunities but number one
is the fact that the market is a
pendulum many people do not realize this
but the market is basically a pendulum
that is always swinging either from one
side being pessimism to the other side
being optimism and neither of those two
are sustainable so you'll see times when
the market is in a form of pessimism so
that would be like a bear market or if
you're looking at a particular stock
when that stock is way down in value and
then we'll see times when the market is
in optimism when stocks are sky-high
when the market is sky-high we're in a
when we're in a bull market and also
when you're in a state of optimism like
that it's not sustainable either so
understand that we're in a constant
swing of pessimism and optimism whether
you look at an individual stock or
whether you look at an entire market
it's relatively the same you'll always
see those swings from pessimism to
optimism so what does this mean for you
as an investor why do we care because
you want to follow core principle number
two which is buy from the pessimists and
sell to the optimist so basically this
comes down to a very simple rule of
investing which is to buy low and sell
high so if you're buying at the point of
pessimism when the market is low when
we're in a bear market or when a
particular stock is down in value you
are buying when basically the price of
that is actually below the value now
we're going to talk pricing value in a
second here that's on this list as well
so we'll explain that in a second but
basically what you're going to be doing
is when stocks throughout an all-time
low or when your investment is scraping
the bottom that's been on your watchlist
that's the time to buy from the
pessimist people who believe Oh dark
days are coming the stock and go nowhere
but down this is people who are
basically following the market so
they're buying when it's going up and
they're selling when it's going down so
they're basically trying to cut their
losses which is a losing strategy
because your best bet is just to hold on
as long as you made good investments in
the first place but these people are
looking to just cut their losses because
they're afraid of losing even more money
they're basically following a terrible
strategy
which is loss aversion which generally
costs people a lot more money than just
holding onto those stocks for a little
while you're going to be buying from
those people who are following the
market the people who are trying to
avoid loss by cutting their losses
before they get worse and then what
you're going to be doing is when that
stock or when the market or whatever
when it's in the point of optimism
you're going to be selling so if you're
somebody who is basically selling stocks
you're buying and selling stocks and
you're looking to trade in and out of
stocks I'm not saying short-term trading
but you know buy them when they're low
and selling when they're high then this
is an acceptable strategy is to you know
buy low at this point of maximum
pessimism and then sell to the optimists
when you feel that the actual price
exceeds the value but if you're a
long-term investor you don't really care
about this pendulum swing you just
recognize that it's there and you just
hold on no matter what because you
understand that overall stocks increase
in value so if you're somebody who's
investing long term you don't really
care about this swing between pessimism
and optimism because you're in it for
the long term but if you're somebody
who's buying and then selling you're
going to buy when people are have
basically given up on that stock
entirely and you're going to sell when
everyone's getting in on it and you're
kind of like oh wow this stock is really
really way up in value the third core
investing principle is you make money
when you buy the stock not when you sell
the stock so what I mean by this guys is
that you basically when you buy that
stock you understand the actual value of
that share of ownership of that company
you understand what you feel that is
worth and what you think it will be
worth in years to come so that is why
you make money on the way in not on the
way out so when you buy a stock you're
basically deciding okay at this point
the actual price for the stock is well
below the value and I understand what
the value is of this part of ownership
of this company so I know basically what
I'm buying at and what I plan to sell
this at in the future so at that point
you've made your money because you've
done your research you know what that
actual piece of ownership and that
company is worth and you know what
you're going to sell for down the road
where most people just buy a stock and
they don't really have a strategy in
place or a plan they don't even
understand the value of that investment
or what it's even worth to have that
part of ownership of that company but
you as a smart investor you're going to
know the value of that investment you're
going to have an idea of what you're
going to sell for if you're somebody
who's selling in a in the short or mid
term and you're basically going to have
a price point in your mind
and you're going to have a buying point
when it gets to a point where you're
like all right this is what I'm
comfortable buying into that stock and
you have an idea in your head of how
much money you're going to make from
that investment as such you made your
money on the way in on the way out
number four is a big one understand that
excitement is not sustainable so when
you see a lot of excitement in the
market a lot of excitement surrounding a
particular stock or particular sector
understand that is very short-term and
it's not something that's sustainable
it's not an energy source that is
sustainable think about if you look at
like a child at a party or something
when you see them get that sugar high
this is exactly what happens in the
market you see them going crazy running
around in circles and playing and you
know wow that kid has had so much energy
and then 20 seconds later just like that
you'll see them laying flat on the floor
so understand that that excitement is
very similar to the excitement of a
child it's just not sustainable so if
you're someone who invests and basically
trade based off of hype and excitement
if that's your strategy that's your
strategy but don't consider that to be
something that is sustainable I don't
recommend most people invest based off
of hyper excitement but some people
that's just what they want to do they
want that level of risk and that's not
my strategy by any means but if it's
yours at least understand that that
excitement is not something that is
sustainable for the long term number
five is understanding that price is not
equal to value so this is a mistake that
a lot of people make when they look at a
stock and they're looking at the price
of the stock they feel but that is what
that actual part of the ownership of
that company is worth and that is
exactly not the case basically what it
comes down to its supply and demand
which is going to be another one that
we're going to hit on here so these two
kind of tie together but understand that
when you're looking at a particular
stock and you see that stock price that
stock price has nothing to do with the
actual value or the intrinsic value of
that investment a lot of people don't
realize that and they think that the
price of a stock basically because it
fluctuates so much they think the value
of that company fluctuates as well I
mean if you follow a stock price you'll
see it go up a couple pennies down a
couple pennies every couple seconds on
the actual market that doesn't mean the
value of that company is changing that
erratically the value of the company
does change over long amounts of time
but in the short term like that the
value of that investment does not change
it's just the price that changes based
on supply and demand
so as an
you want to understand the actual value
of the ownership of that company and
then have a set price in mind of what
you want to pay so that way you
understand that you're looking at the
value of that investment and not so much
the price so you understand that when
the value exceeds the price that's a
good time to buy and when the price
exceeds the value that's a good time to
sell number six understand that you know
as many of us try to eliminate risk you
can never fully eliminate the risk of
being wrong so just understand that no
matter how good you are as an investor
no matter how intelligent your strategy
is no matter how much you've researched
or studied a particular stock or
whatever it is there's no way to
eliminate the risk that you could be
wrong
so always keep that in the back of your
mind when you're trying to calculate
your risk to reward or anything like
that understand there's always a risk
that you could be wrong about your
decision number seven understand that a
share of a company is an actual piece of
that company a lot of people have
disassociated the fact that when you
invest in a company you're actually
investing in part of the ownership of
that company so you own a piece of all
their assets you own a piece of all
their earnings you basically are now a
part owner of that company even if the
fraction of a fraction of a percent you
still own a small piece of that company
where most people they just think of a
stock at the ticker symbol or something
that you know strolls by on the
television when really you should think
of it as a part ownership of that
company and what I mean by this is take
pride in your ownership so when you
invest in stocks invest in a company
that you were actually proud to own so
if you went up to somebody and said I'm
a part owner of this company you would
be proud to say that you're part owner
of that company that's basically going
to help you make more investments that
are going to be ones that you're going
to hold for the long term because if
you're just investing based on whatever
stock is hot you have no interest in
that company you're not going to have
any kind of pride of ownership in being
a part owner of that company so you want
to make sure you understand that when
you buy into a stock you're actually
buying into part ownership of that
company and you're going to want to
participate in things like voting when
they send around voting tabloids and you
have to vote on company decisions you
want to be educated about that and you
want to basically just at the end the
day be a proud owner of that company and
not just a somebody who's trading the
share price so that's a big difference
between successful investors and
unsuccessful and
is understanding that when you invest in
a company you are a part owner of that
company number eight is that value does
not determine the price per share this
ties in a lot with price is not equal to
value basically guys understand that the
value of a company largely does not
change in the short term but the price
change is very much in the short term so
understand that price is just basically
determined by supply and demand
so when there's an overall feeling of
pessimism surrounding a particular stock
there's going to be an overwhelming
supply of shares going to the market
because people are saying oh gosh this
is now a bad investment why don't I sell
so everybody's going to go ahead and
sell that stock and when there's a large
supply of that stock hitting the market
it's going to drive the price down on
the other side of things when all of a
sudden people are excited about a
certain company and they think this is
going to be a great investment everyone
rushes in to buy and as a result they're
drying up that supply of share is that's
going to drive the price up because
there's more of a demand so that's what
changes the share price while the value
of the underlying investment does not
change its just that share price that
changes okay number nine is stick to
your core values no matter what now I'm
not telling you guys that all 15 of
these are going to be your core values I
wanted to share with you guys what my
core Investing values were and maybe you
pick a few of these and you have a few
other ones you've heard from someone
else or you've read in the book
somewhere but whatever your values are
as an investor or whatever your values
are in life you're going to stick to
those values so I mean a lot of people
have certain values in society certain
things that they do and things that are
very important is that maybe you are
somebody who likes to attend church once
a week and no matter what that's what
you do and you'll be there whether it's
pouring rain outside or no matter what
happened the day before this is
something that you do because it means a
lot to you and something you will do no
matter what I want you to look at your
investing values look at them the same
way as you would look at that where this
is something you do no matter what so no
matter how exciting an investment is no
matter what everyone else is doing
you're going to stick to your values as
an investor so whatever values you
decide on hold yourself to those values
because that's what's going to help you
protect yourself and not overextend
yourself or basically take on too much
of risk so whatever you decide or you're
investing values write them down
somewhere refresh your mind
refresh your memory every time you make
an investment
make sure even do a checklist make sure
you are following every single one of
your investing values to make sure
you're not making a decision based on
excitement or anything like that
number 10 core investing principle is to
ignore Wall Street noise and do your own
thinking so this is a tough one for a
lot of people but I think once I explain
this this will kind of clear things up
as to why we see so much noise on Wall
Street so basically guys Wall Street
wins when we are active so when we're
out there trading in and out of stocks
we're basically racking up Commission
costs for brokers so if somebody out
there on Wall Street is able to make an
article that motivates us to be active
whether it's buying a particular stock
or selling a particular stock that's
when the brokers are actually making
money so you got to understand that it's
in the best interest of Wall Street for
us to be active traders as such you'll
see the same exact publisher writing
something good about a stock one day and
bad about a stock the next day I don't
know if you guys follow any of those
flights like seeking alpha you'll see
sometimes even on the same day they'll
write something good about a stock and
then something bad about a stock in the
next hour or two usually there are
different authors but it's like man they
don't care at all they're just kind of
throwing out whatever they can just to
generate some excitement so you want to
ignore the Wall Street news in fact I
wouldn't even recommend reading the news
on your stock because you're going to
basically invest in the value of that
company you're going to learn about that
company you're going to understand the
value of it and basically you're going
to understand their business and where
their business is going in the future
once you understand those things guys
these short term opinions of Wall Street
analysts don't matter so the only thing
that is going to happen when you read
these articles is you're going to start
questioning yourself you're going to
start second-guessing yourself and
basically understand that they're trying
to get you to be an active trader
they're trying to get you to sell and
buy and you know move stuff around
because that's when they win is when we
trade and they make money off those
Commission costs so I would highly
encourage you guys to ignore the Wall
Street noise out there and understand
that it's just noise my biggest
investment is Advanced Micro Devices and
it's so funny because if you go on there
anytime that they're having a good day
and they're up multiple percentage
points it's like every single major
analyst out there is writing some
articles
about how AMD is just a fantastic
investment how there's crazy upside
potential and then as soon as they go
down you'll see all kinds of articles
about how obviously this rally is not
sustainable on their basically their
growth is already factored into their
share price and it's so funny because
they just go from one side to another
they don't care they're just trying to
generate basically activity so filter
out that Wall Street noise or just
ignore it and invest based on value and
don't pay attention to the short-term
movements of a stock you know number
eleven is be patient this is a big one
guys because so many people especially
on my channel I get all kinds of
comments people they're like hey how do
I get a 50% return this year how do I
get one hundred percent return those are
not returns that you're going to see in
a healthy market and the only way you
get those returns is with high-risk
investments and if you're making a
high-risk investment you are certainly
not following these other core
principles of investing so understand
that you know even seeing a eight nine
ten percent return over many many years
you're going to you're going to make a
lot of money guys as long as you're
consistently seeing good returns you
don't need a 50% return every year to
become a millionaire I mean if you could
actually do that in a sustainable way
you know that would be great but the
truth is you really can't you have to be
making high-risk bets in order to see
those kinds of returns so understand
that you need to be patient with your
investments and understand that
investing is a marathon not a sprint so
it comes it goes down to that old story
they would teach you in school about you
know the rabbit versus the turtle where
you know the rabbit was so fast and then
ended up basically the turtle past them
because the rabbit ended up taking a
break in it's very much like that where
slow and steady is going to win the race
with investing so don't worry about what
anyone else is doing if you have friends
who are trading or you have family
members who are trading and they're
talking about fantastic returns they're
getting on speculative investments so
you know I'm very that's good for you
I'm glad for you but I hope that you are
following your core investing values and
understand that when markets turn you're
going to see probably a nasty correction
so the biggest thing with speculative
investments and for those of you who
don't know what that is that would be
like investing in penny stocks trading
on margin on buying options contracts
buying futures contracts those are
speculative investments basically there
based on information that is perceived
into the future not what we're seeing
today that's kind of a very simple way
of explaining that but understand
largely that speculative investments can
take away the wealth just as fast as
they generate it so someone who doubles
their money overnight in a penny stock
can lose that money just as quickly if
not quicker so that's why I recommend
being patient and understanding that
investing is a marathon and not a sprint
number 12 be confident when you invest
this largely comes down to being an
informed investor and learning as much
as you can about a particular investment
before you buy into it so that way when
somebody comes up and talks to you about
your investment and they're like oh why
are you invested in that company you can
have a basically you can defend your
investment to them but I also want to
encourage you to to consider the
opinions of qualified people so if
somebody is contradicting your opinion
and they really have thought it through
consider what they're saying consider
maybe they looked at something you
didn't but definitely have some
confidence when you invest because that
basically means you fully understand
your investment and you learn as much as
you could about that companies to the
point where you can actually defend it
and say no this is why I think they're
going to be doing better in the future
this is why I like this company number
13 is do not behave like the market does
guys this is very important you have to
understand that as this market is always
swinging between points of pessimism and
optimism
it's very moody okay the market is a
very moody and emotional thing and you
need to go into the market with a sense
of confidence and basically take your
emotions right out of it I made this
comparison in one of my other videos
about it's like being in a relationship
with someone so if two people in a
relationship are very moody and very
emotional that's going to be a very bad
relationship because they're going to be
constantly clashing and it's probably
not going to last very long but if you
if you have one person in a relationship
or at least at every point in time one
person is very stable while the other
person may be emotional that's going to
be a relationship that will last a long
time that's the same way you need to
look at the stock market guys if you're
being emotional in making emotional
decisions while the market is being
emotional you're going to be in for a
rough time but if you make basically
good decisions
without using emotion no matter what
then you're going to have
our luck with the market and you
basically had your core values in your
core strategy no matter what happens
with the market that you will see good
results over time number fourteen make
rational decisions and this ties in a
lot with number thirteen as well but
this basically guys means that you want
to make decisions based on rational
thinking not emotional thinking so make
sure you do understand the difference
between a rational decision and an
emotional decision and make sure every
decision you make in investing is a
rational decision based on thoughts
based on research and not a decision
based on emotion because understand that
our protective mechanisms are actual
human emotions are they're very useful
to us in society but they are useless to
us when it comes to investing they are
actually detrimental to our success as
an investor so understand whatever your
mind is telling you to do whatever your
emotions are telling you to do they're
telling you in most cases to do the
wrong thing so when your stock goes down
in value and that loss aversion is
triggered understand that you're going
to say no wait a second this is just the
pendulum swinging to that side of
pessimism I'm going to I'm going to hold
on to this so make rational decisions
and basically throw your emotions out
the window when it comes to investing
debt because all that's going to do is a
hurt you in the long run is if you're
making emotional decisions and number 15
my final one is plan your trades off
market hours so this is a tough one but
I do recommend this guys I would
recommend when you're going to buy into
a certain stock have a price point in
mind before the market opens and if it
doesn't reach it and it doesn't reach it
because that basically means guys that
you understand the value of that stock
and you understand the price you're
willing to pay basically when you're
looking at the amount you're going to
risk so that's why I recommend only
making your trades write them down on
paper and say look if that stock falls
to this price here I'm going to buy it
and don't buy it unless it falls to that
price this is tough for a lot of people
because this takes a lot of discipline
but this is a great way to make sure
that you're following your core values
is to basically make your trades
off-hours and you know you could even
set them to automatically buy at that
price and if it doesn't hit that price
then you know what you'll wait for
another opportunity that basically means
that you are being very disciplined with
your investments which is a very good
strategy anyways guys that's pretty much
all I got for this video these are the
core principles of investing in my
I want you guys to drop me a comment
below if there's anything that you would
like to add to this list or to other
people who are looking to learn more
about investing drop your core investing
values in the comments section below
if you guys enjoyed this video please
drop a like and if you are new to my
channel please consider subscribing to
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always I thank you guys for watching
this video
you
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