TomB's Investing 101

Here's my take on long term investing. For other types of investing, seek someone who understands and that person isn't me.

A guide to long term investment:

1) Be patient.
2) Find a well run company in a business you understand, buy a substantial amount of it, and hold it for the long term.
3) Do not "sell yourself" on the idea of buying a company because it's been a long time and you haven't found something suitable.
4) Repeat step 2.


Things to keep in mind:

1) People who are more successful than you probably are not.
2) People who are smarter than you probably are not.
3) You are responsible for your portfolio so take the authority over it.
4) Having an office on Wall Street is zero advantage in the investment space over a retail investor.
5) Successful investors are readers. It's universal.
6) Believe in yourself and do not allow others to cause you to distrust your ability.
7) What you don't do is irrelevant. All that matters is what you do. That stock you "almost" bought that went up like a rocket is taking up space that could be occupied by productive thought.
8) With the exception of index investing, if you copy someone else's technique verbatim, you are unlikely to do well.
9) It is important that you believe in what you are doing or you will sell at the first negative inflection and that is a certain loss.


Types of investing:

1) Buying companies -> Requires a lot of reading, following, analysis. It is not particularly risky if you deeply understand the company.
2) Value investing -> Requires an ability to place a value on a company and compare that number to what the market has valued the company. If your value is higher than market, you have found value.
3) Index investing -> Broad based indices will connect your wealth to the economy.
4) Trading -> There are many types of trading. I will pay you the respect of not describing something I don't believe in but I will mention it exists and tends to be part of everyone's journey.



The Journey:

It comes down to figuring out what you know, trying to stay away from the things you don't know, and evolving a system that you believe in. There is huge value in reading other people's techniques and take what you can but it's really unlikely these will suit you perfectly, over a long period of time.

You need to think for yourself. To do that, you need to believe in yourself. From what I can tell, believing in yourself requires an understanding of the legions of charlatans, many of whom are intelligent, but few or none have figured out what they think or, at least, say they have. The smartest people tend to not run their keyboards explaining to others how crazy smart they are.

Going to seminars, I've noticed something similar. I live in a farming community. Seminars are universally stratified by presenters and others from the investment firm at the front of the room. These folks will explain to you how much they have done for legions of people but always with vagaries and non-specifics. Sitting immediately behind and beside these folks is a group of people who are keen to explain to the presenters how smart they are and how they are making wild returns.

Sitting toward the back are a group of heavy set couples, all wearing plaid. These are the farmers who have taught themselves to invest. With few exceptions, every one of these be-flannelled individuals could buy and sell the entire two front rows. This a the group who are humble, polite, reserved, and deeply successful.


Who do you want to follow:

1) The folks explaining how smart they are, how quickly they have gotten rich, and how you should do what they do?
2) The group of kind hearted people who actually have gotten rich in a business that hasn't been all that profitable and has been ruthless to so many but see no need to wave their money around.


You now have all of my knowledge. For hot tips and certain get rich schemes, read elsewhere on this site and others.