This is what I learned after one year and a couple of months investing on the stock market. I have learned a lot from my first, second experience until now on the market.
The biggest mistake that I made when purchasing ownership in a company was buying stock without learning about the company, especially for my first investment. I bought the stock hoping it will go up and I failed terribly. The stock crumbled down. In fact, I lost 48% of my book value. Regardless of my loss, now when I find an interesting company, I research about the company even if I don’t buy the stock.
“The dumbest reason in the world to buy a stock is because it’s going up.”
I have learned only to invest in an excellent company and for the long-term. Why in the long-term? Because an excellent company will always go up, from the technology industry to the waste industry.
I find it hard to be informed about a company announcement, what the market is saying about the company. To be more informed, I use stock apps as a news feed for the company I follow. This is very useful for me, I personally use Yahoo! Finance.
I have acknowledged being patient because there will be days and even weeks where you are losing money. The key is just to be patient and it will eventually go up. Of course, it applies only if you invest in an excellent company.
I have been able to learn if the market will react in a way that I will be losing or gaining money on a day. For example, during the election day, when Trump was winning, the market went down because of the news that Trump was winning. On the other hand, when Trump has been elected president, the market went up and nowadays is high almost at all time. During the quarter earning, if analyst expects that a company will not perform as the predicted, there will most likely have a sellout. This is a good time to buy a stock at discount prices before it gets back up if you believe that the company will perform in the long-term.
When one of my companies was being acquired, I have learned that a company acquisition is a long process. Indeed, it takes months for the acquisition and any news can affect the company stock prices. In my case, I had to vote for the acquisition.
I learned that I can reinvest dividend every quarter even though the number of shares will not be a lot, in the long run, it will grow. That’s the beauty of compounding.
I have learned utilizing fundamental analysis is better that technical analysis. This is if you want to own a company because technical analysis is entirely unconcerned about the companies from which they are buying stock.
For next year, what I want to do is to diversify more my portfolio. I would like to own 15 to 25 companies, both grown and income companies. I want to read more books about the stock market and especially The intelligent investor by Benjamin Graham, the father of value investing.
If you are willing to learn about investing, I recommend Investment 101 by Michelle Chang. I have written a review about the book just click on this.