I really have a hard time convincing myself to post in the investment sub-forum, as it just gets to be too emotional of a subject. At work, there are three subjects I refuse to discuss: Politics, Religion, and Investing.
But I'm going to bite the bullet, and just post one time. Take it or leave it, this is my opinion on investing, and is the strategy I've used since I bought my very first shares of stock in 1985.
Buy and hold.
If you look at the vast majority of successful growth companies, you'll find that the investors that came out on top were the ones that recognized the company's potential, bought the stock, and HELD ONTO IT until the company exited the growth stage. Yes, there are exceptions to this rule, but the MAJORITY of the time it holds true.
The saddest investors are the ones that tried to time the market along the way. When you buy a stock and hold it LONG TERM, you have a long time to be "right." When you day trade and/or short term trade, your time window to be right is very short. Are you willing to risk your long term financial stability on your short term stock price forecasting skills? I'm not. Attempting to absolutely maximize your return on investment by "buying the lows, selling the highs" with a growth stock is a fool's errand.
Adding to your position during price drops (as long as nothing negative in the stock's fundamentals has changed) is fine, but selling your whole lot on a "high" and waiting to buy back in during a "low" is not a good idea.
Dollar cost averaging (purchasing stock over a period of time) and long term stock holding are proven wealth builders. Short term and day trading are not. Sure, there are pros out there that are able to do well with day/short term trading, but for the average guy (and even pros like Warren Buffet) long term buy and hold will end up being a far better wealth builder than short term trading.
I have a great deal of confidence in Tesla's stock price to go up LONG TERM. But I have zero confidence in my ability to forecast short term price fluctuations.
IMO, attempting to buy the lows and sell the highs in a growth stock is a fools errand. Attempting to "maximize" your return on investment this way is just NOT a proven way for the average guy to make a good return. There will ALWAYS be money left on the table. Be happy with what you got, put an X in the win column, and move on. You will simply NEVER be able to squeeze every potential penny out of a stock. That being the case, do what guys like Warren Buffet and Peter Lynch do: Buy and hold. Add to your position when the stock pulls back, but NEVER sell. Don't sell until the company finally exits its growth stage.
I purchased my initial TSLA stock in the middle of August, 2019, a few days after I took delivery of my car. I had been following the company for years, and had put YEARS worth of research in the company. Purchasing the product was the final straw; I KNEW I was looking at the future with this car. Why the bold "future"? Because that's when I'm going to sell my TSLA stock. Way, way, way into the future. I put 30 grand into my initial TSLA purchase, and I'm still adding to my position every Thursday of every week. I don't even bother to look at the stock price until after the trade goes through. Why? Because I don't care what the price is right now. I'm not going to care what the stock price is until years from now. Why? Because I have ZERO faith in my ability to look into a crystal ball and see what the price of the stock will be tomorrow, next week, next month, next year. But I DO have faith that ten years from now, the stock is going to be higher than it is right now. And that's all that matters.
I really apologize for quoting my own post... that just seems amazingly tacky. But I just thought I'd gently dip a toe in these waters, and maybe add a few thoughts to the quoted post. Hopefully, the sharks won't rip that toe off and go for the leg.
I just wanted to jump a bit deeper into the whole buy-and-hold philosophy, at least from my point of view. The first step in buy-and-hold is finding a company that is worth your investment dollars.
So what makes for a good growth stock? Tesla is a perfect case study. A person comes up with a fantastic, paradigm shifting product, and starts a company. The product is good, well received, and has the potential to be an actual paradigm shifting product, such that the market finds itself in a "reset to zero" position.
What's a "reset to zero?" Imagine it's the industrial revolution. You have a horse drawn carriage business. You make the absolute best carriages in the business. People can't buy them fast enough. You're making a fortune. Then someone comes along and invents the automobile. How is your carriage business going to survive? In its current form, it isn't. You've found yourself in a paradigm "reset to zero" shift.
The BEV is going to do to the ICE engine what the automobile did to the horse drawn carriage. Finding a company that recognizes this, takes advantage of it, and manages to execute the design and production of the new product is going to be a force to be reckoned with. If the current automobile manufacturers (also known as the horse drawn carriage makers of today) don't adapt, they won't survive. Adequately covering just this subject alone would require at least a hundred pages of text, so that's as far as we're gonna peek down that rabbit hole for now.
Please forgive the pun, but it's time to shift gears. Now that we've identified the company that has our interest, let's talk a bit about why the market analysts (both the bulls and the bears) shouldn't be listened to. You'll find just as many professional analysts that say you should short the stock as there are that say you should buy it. Well, maybe not 50/50, but the point is still made. The ONLY ANALYSIS THAT MATTERS IS YOUR OWN. YOU are perfectly capable of doing your own research and making your own decisions. Research the company. Investigate the management. Analyze how they plan on executing their business plan. Critique the product. Ask questions: Do people love the product? Is the product well made? Are they able to make a decent margin on the product? Are there additional revenue streams that they are taking advantage of? Do their quarterly reports show that they are spending money in the appropriate areas, while keeping costs in line? What are their plans for the future? How are they managing problems that come up (an example of this would be charging infrastructure)? Are the plans that they have made for growing the company reasonable? What competition will they face? How could this affect them? What makes this product a paradigm shifter? This whole process is called fundamental stock analysis. And the most qualified person to decide where your money goes is
you; all of this information is publicly available, and YOU will care a lot more about how your dollars are invested than some analyst. Take your time. Learn. Ask questions. Mull it over. Give it some brain time. Make a company EARN your investment dollars through your research before you ever buy even a single share. This is what I did with Tesla. I even bought the product itself. For me, buying the product answered the last of my research questions, and convinced me to buy the stock.
Professional stock analysts often "analyze" thousands of different companies in a year. Do they really have the time to put in the research that they should before they offer their "professional" advice on said stock? No.... no they don't. A perfect example of this is the analysts that pigeon hole Tesla into the automotive sector. I don't have enough hands to facepalm adequately at these guys. That's like putting automobile manufacturers in the horse drawn carriage manufacturer's class. Another example is how so many "professional" stock analysts say that Tesla's current P/E BY ITSELF makes it tremendously over-valued. Have these guys never analyzed a growth company before?
If you are going to listen to the "professional" analysts, you owe it to yourself to analyze the analyst. Does what they say make sense? Are they assigning numbers that are appropriate to the company? Are they comparing the company to competitors in a way that has some sense of logic to it? If you find yourself saying "no" to these questions, you've probably found an analyst that you should completely ignore. The TL;DR of this: Don't go blindly listening to "professional" analysts. Scrutinize what they say in the same way you would the company you're considering investing in. Yes, it is possible to find analysts that are worth listening to. It's fine to listen to a guy that makes sense. The whole point is that you should critique analysts just as highly as you critique a company you're thinking of investing in.
And as a closing thought to this wall of text...Don't go blindly taking investment advice off the internet. Run everything you read through your own logic checker located between your ears.
Just a bit of quick background on where this is coming from. I've been a long term buy-and-hold investor since 1985. And yes, I realize there are other valid strategies for investing in the stock market.... this just happens to be mine.
I could continue with my take on buy-and-hold, but I figure I'd just throw this up and see how hard the sharks bite, and also to see if anyone even finds it of value before I continue. So please feel free to disagree/like, etc. But for now, I'm gonna go wash my car.
