To The Moon

Welcome to our new column: Learn to Invest

This column will be published every Friday, including Tigers' personal investment experiences, basic knowledge & tips for new investors, and finally some insights on the recent macro trends. Hope it will be helpful for you to learn more about investing! 

Also, feel free to share your opinion in the comment section to let us know what you think.

Personal Investment Experiences:

A retired stockbroker reveals to me why most retail investors lose money

Tigers: @MarketObserv

A few years ago, a retired stockbroker revealed to me that most of his retail customers lost money. I asked him why. He was in a good position to know the answer since he had access to the buy/sell transactions of his clients.

This was what he told me.

They patiently held on to losing stocks and impatiently sold winning stocks.

...

Why we trade or invest differently? And the best returns is not money, but ...

Tigers: @KYHBKO

With each of us having differences in values, personality, upbringing, learning, risk-reward tolerance, investing time-horizon and areas of expertise, we will end up interpreting the same data differently. This can lead us to make different decisions, considerations, strategies, capital allocation and also how we plan to enter and exit the market.

There is not one "investing" rulebook. So long you make money, all is well. However, I have learnt that eventually, the most important commodity is not money but rather TIME. Thus, I am investing to afford more time to be with people and do things I like.

...

Investment 101 & Tips for beginners 

Cult of personality – the trader vs the investor

Tiger: @Optionskiwi

The difference between trading and investing can be reflected in someone’s personality. Not to stereotype, but the trader is similar to a rock star feeding off the cheers of the audience, whereas the investor is happier with their lot, and focussed on living a reasonably stress-free life.

Perhaps a more accurate representation of the distinction between a trader and an investor comes when a person’s risk profile is analysed.

Risk and reward are inextricably linked when it comes to investing. Risk tolerance is your ability and willingness to lose some, or all, of your original investment in exchange for greater potential returns.

So, knowing your risk profile is key as it helps to balance the allocation of assets in your investment portfolio.

...

Profitability Ratios - What Gives?

Tigers: @SG 88

Generally there are 4 categories of ratio analysis:

• Profitability
• Liquidity
• Solvency
• Valuation 

Profitability remains one of the key elements in deciding investment factor simply because if a business does not generate profit in its business operations, sooner than later the company woud need to request for external funding via equity or leverage on loans.

Net Profit Margin measure net income against revenue, basically it's a measurement of how much of net income generated from every $1 of revenue. The higher the better since its the net returns that the company can either reinvest back into the business or rewards the shareholders.

...

Why you absolutely need to use Stop Losses

Tigers: @rat boy

5 – You can benefit from margin calls

Margin calls are another tool that traders use to their advantage. These calls allow you to borrow money from a broker to increase the size of your position. Your broker charges interest on this loan. As an investor, you can make money by borrowing funds and selling short contracts. Since you can borrow up to 50% of the total value of your position, you can maximize your potential profits.

6 – You can get rid of useless positions

Some traders have positions where their gains outweigh their losses. While this is great news, it means that there is still room for improvement. Stop losses can help you eliminate unwanted positions. By closing out these positions, you can free up capital and continue focusing on your primary goals.

...

Thoughts on Recent Macro Trends

The influence of liquidity

Tigers: @Robert J. T

Liquidity is much less visible than inflation or a recession. Europe is probably already in the middle of a recession and next week we will hear whether there will be a technical recession in the United States. After the contraction in the first quarter, there is hardly any growth in the second quarter. If there is also a contraction in the second quarter, then according to the definition (two consecutive quarters of contraction) there is a recession. That recession is then not much more than a press release and not deep enough to fight inflation either. Yet there is a striking consensus that inflation rates will fall over the next two years. There are several possible explanations for this. It may be that they are not measuring properly and that those surveyed do not really believe that inflation will fall. It could also be that everyone is convinced that inflation is related to supply-side distortions. Of course, it may be that they expect a severe recession, but we do not see that reflected in stock market prices or earnings expectations. It may be that they expect only a small increase in unemployment to be enough to bring wage growth under control, but it may also be that market participants have not had any experience with inflation over the past 40 years. In that case, there could be a cognitive bias whereby the more recent experiences (the past 40 years) are best remembered (simply because we lack the collective memory of the previous generation).

...

Inflation: Back to that 70s show?

Tigers: @Chris23

As investors it is important to recognise changes in patterns and robustly adapt to challenges. I believe that inflation is likely to remain stubborn and therefore require the Fed to continue to raise interest rates in their attempts to curb inflation. Therefore, it would be sensible to invest in value over growth as companies with strong cash flows and profits are likely to be able to survive a recession compared to those without.

...

Millions of thanks to these authors for sharing your thoughts and insights with us! ✨✨✨

If you want to share your personal investment experience and insights on macro trends, or offer any tips and basic knowledge for investors, please tag me @TigerStars and I will be happy to include you and your post here next time!!!