Investing: Strategy & Resources
Strategy
Before you even begin to analyze economies, sectors and/or companies, it is wise to establish why you want to invest your money. Determining why you want to invest will help you determine how you want to invest.
The “why” component will acclimate you with your individual risk profile. Upon determining “why”, make sure you are investing for reasons that reflect a risk profile that will allow you enough peace of mind to sleep at night.
For example, do you want to invest because:
Next, analyze the economies, sectors and/or companies you are interested in. Define, from your perspective, what the investment is by finishing statements related to your investment strategies, philosophies, values, etc.
Some examples of this, from a macro-approach, may include:
Some examples of this, from a micro-approach, may include:
Once you have defined your prospective investment, in as much detail as you see fit, it is time to determine how you wish to involve, or not involve, your money.
For example:
AS YOU INVEST, ALWAYS REMEMBER:
As you spend your money, remember to forgive yourself for investments that actualize losses, and do not burden yourself with expectations of actualized gains.
Despite a conscious effort, actualized losses may happen, and (assuming you invested relative to your risk tolerance) THAT’S O.K.! The sooner you forgive your former losses, the sooner you can better focus on making sound investment decisions, right now. Until you own a time travel machine, free yourself (through forgiveness) from a past you cannot change.
Conversely, despite a conscious effort, you may not consistently actualize future gains, and THAT’S O.K. too! If you release yourself from expectations, then you can better focus on making sound investment decisions, right now. Until you own a crystal ball, free yourself (through abandoning expectations) from a future you cannot perfectly predict.
Focus your valuable energy towards being the best investor you can be, right NOW.
The “why” component will acclimate you with your individual risk profile. Upon determining “why”, make sure you are investing for reasons that reflect a risk profile that will allow you enough peace of mind to sleep at night.
For example, do you want to invest because:
- Your uncle told you about a particular company that is a surefire way to get rich?
- Please note that Maven Light does NOT condone insider trading due to the unfair advantage it creates, which contributes to its illegal nature.
- You want to be able to retire at a certain age?
- You want to be able to send your children to a specific school?
- You want to be able to purchase your dream car, by this time, next year?
- You are trying to preserve the buying power of your cash by hedging against inflation?
- You really believe in a particular industry or company?
- Maybe you just have a hunch?
Next, analyze the economies, sectors and/or companies you are interested in. Define, from your perspective, what the investment is by finishing statements related to your investment strategies, philosophies, values, etc.
Some examples of this, from a macro-approach, may include:
- Inflation is____________________________________________________________.
- GDP is_______________________________________________________________.
- Political factors are_____________________________________________________.
- Consumer sentiment is___________________________________________________.
- Unemployment is_______________________________________________________.
- Strength of this country’s currency is________________________________________.
Some examples of this, from a micro-approach, may include:
- Acme Company’s trading price, relative to book value is__________________________.
- Acme Company’s trading price, relative to earnings is____________________________.
- Acme Company’s industry is________________________________________________.
- Acme Company’s competitors are____________________________________________.
- Acme Company’s strategy is_________________________________________________.
- Acme Company’s level of corporate social responsibility is________________________.
- Regulations Acme Company is subject to are____________________________________.
- Barriers to entry in Acme Company’s industry are________________________________.
- Acme Company’s board of directors is_________________________________________.
- Acme Company’s management is_____________________________________________.
Once you have defined your prospective investment, in as much detail as you see fit, it is time to determine how you wish to involve, or not involve, your money.
For example:
- If your analysis left you with positive convictions, consider purchasing some shares, or even call options, of the given investment vehicle.
- If your analysis left you with negative convictions, consider not involving your money, hedging or selling positions you may already own, or even participating in a short-sale or put options of the given investment vehicle.
AS YOU INVEST, ALWAYS REMEMBER:
As you spend your money, remember to forgive yourself for investments that actualize losses, and do not burden yourself with expectations of actualized gains.
Despite a conscious effort, actualized losses may happen, and (assuming you invested relative to your risk tolerance) THAT’S O.K.! The sooner you forgive your former losses, the sooner you can better focus on making sound investment decisions, right now. Until you own a time travel machine, free yourself (through forgiveness) from a past you cannot change.
Conversely, despite a conscious effort, you may not consistently actualize future gains, and THAT’S O.K. too! If you release yourself from expectations, then you can better focus on making sound investment decisions, right now. Until you own a crystal ball, free yourself (through abandoning expectations) from a future you cannot perfectly predict.
Focus your valuable energy towards being the best investor you can be, right NOW.
Resources
There are TONS of investment resources at your disposal. Ultimately you will have to focus on the resources that work best for your style and strategy. Here are a few of my personal favorites:
Book: “A Random Walk Down Wall Street” by Burton Malkiel. In all four years of college, as a finance major, none of my lectures/textbooks did as great a job at teaching practical finance as this book does. It truly is a time tested strategy for successful investing.
Encyclopedia: www.investopedia.com. Investopedia is a wealth of finance knowledge. It is a particularly great resource to use when you are unsure of particular words or concepts in finance, thus are looking for definitions and examples to help you better understand financial lingo and practices.
Research: www.yahoofinance.com. YahooFinance is a great website for security research. They offer ratios, charts, news, analysis and many other pieces of information to help you quantitatively and qualitatively evaluate investments.
Fund Company: Vanguard. Vanguard offers a wide-range of exchange traded funds (ETFs), at competitive expense structures, to meet your investment needs. Their website makes it easy to search for specific ETFs that meet your criteria. Vanguard also offers competitively priced mutual funds and index funds.
DISCLAIMER: Please know that Maven Light only recommends products/companies that it genuinely believes in.
Book: “A Random Walk Down Wall Street” by Burton Malkiel. In all four years of college, as a finance major, none of my lectures/textbooks did as great a job at teaching practical finance as this book does. It truly is a time tested strategy for successful investing.
Encyclopedia: www.investopedia.com. Investopedia is a wealth of finance knowledge. It is a particularly great resource to use when you are unsure of particular words or concepts in finance, thus are looking for definitions and examples to help you better understand financial lingo and practices.
Research: www.yahoofinance.com. YahooFinance is a great website for security research. They offer ratios, charts, news, analysis and many other pieces of information to help you quantitatively and qualitatively evaluate investments.
Fund Company: Vanguard. Vanguard offers a wide-range of exchange traded funds (ETFs), at competitive expense structures, to meet your investment needs. Their website makes it easy to search for specific ETFs that meet your criteria. Vanguard also offers competitively priced mutual funds and index funds.
DISCLAIMER: Please know that Maven Light only recommends products/companies that it genuinely believes in.
