3 principles of stock investing for dummies!
1st principle is , Don't lose money !
2nd principle is , stick to 1st principle
3rd principle, never use any other principles
1. To ensure that you don't lose money , ask this question . Is the company u r investing into making money ? Key is growth!
They can have the beautiful figures and pictures to show u a rosy future, but cutting off all the innovative n creative ideas , where is the evidence of growth ?
When is this growth translated to actual money earnings ?
The previous recession due to internet bubbles had given us the reality check that potential does not necessarily translate to earnings. Bubbles gave u a dream ...don't put ur $ in a dream ! Don't put ur hard earn money in a tomorrow that u do not know if it will arrive. If there is ever a 'if', then don't take out ur dollar. The winning part is decided before u come out w a dollar. And until u know beyond any doubt that it is a sure winner, don't touch ur wallet.
Most ppl fail at this 1st step. 99 per cent of investors fail here. They feel and they think e odds are in their favour. It's a happy day to buy some shares. Tom bought some and Dick is going in too. Many reasons for doing what NOT to do.
Well, the sobering will come and it ain't just a dollar short.
This is point one. If u can do this , u r way ahead to making a win.
2. Will it continue to make money? Sustainability of earnings .
So finding a golden goose to lay golden eggs is only half the work done. Is there gonna be more golden eggs to come ?
Competition can come in tomorrow or snatch away ur golden eggs in a viral tweet or TikTok. Laying waste to ur dreams . So how resilient is ur company to fight off all the adversities and competition against e kids of the block ? Can u hold your ground ?
Can ur Goose continue to lay the golden eggs ?
Ah yes,. What happens if big boys were to bring the competition to ur doorstep? Which brings me to the 3rd point:-
3. How long will it continue making this growth ?
Can the business be scaled to beat off the big boys ?
Now my posting will have no value if I do not give an example of a company to invest in , isn't it ?
Hint :- Tesla,
1. Tesla has many good ideas but this year, 2021, 2nd quarter, they started making money. After more than a decade of could be, should be and wannabe, they finally made money. So , tick one, checked.
2. Will they continue despite the competition from xpeng, li auto and others. Tesla's sales is more than all their sales combined. Their production will just increase from here, leaving the competition biting a trail of dust. They will be more productive and more streamlined from here. The gigapress gives them an advantage which multiplies w each production.
The amount of connections and pipings the competitors have to contend with to produce a car is VERY intensive compared to Tesla's single casting. There is NO ONE competitor using a gigacast.
Why ? No technology to produce the right alloy required for the casting. So Tesla is the fastest kid off the casting block and the rest, don't even have a casting block to start off with. Or maybe they do, the several small ones and then, they have to make the connections to link the smaller blocks together. Slowing them even further.
So with each casting , Tesla will multiply their gain and advantage .
That leaves me to point 3,
3. Competition from Big boys . Yeah, Bezos is supporting Rivian . Their ipo last week is before they even have any truck in production !!! They r just chipping off from Tesla. A good copy cat at best....let's see them start production first. Whereas Tesla have to keep their eyes on the production on hand to meet 750k vehicle s this year.
Not to mention the Michaels and shorties that's just pouncing on every opportunity to make a quick buck or 2.
Well, Tesla just upped the game . They filed for selling of electricity. This already pushed the price of Tesla upward last week.
This week , Elon Musk sent an email to all employees saying that Cathie Wood's projection of $3000 per share is actually realistic. Shhhh.....
I rest my case.
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