3 weeks Stock Market Thesis: Please review and give any insights. Reddit      

Investing in the markets is easier said in theory than in practice. That’s why there are winners and losers on either side of a trade. I have created different investment models that in a nutshell boil down to a set of key principles which I’ll elaborate on below…

(1) The primary objective for stock market is for companies to raise money. That is the primary goal for a company to go public. As investors we put up the capital and take on risk associated with allocating the capital behind a company for future returns. We expect to the company to deliver value greater than the monetary amount we put in.

(2) as investors, we have the duty to ourselves to understand the business, this might sound a bit cliche but it’s crucial for allocating capital behind a company. It makes us (the person allocating capital) more confident on our decision because we have the knowledge to defend our thesis.

(3) The approach others have towards a stock or a company. You can have a very profitable business but if the businesses day to day operations involve something immoral, people will less likely buy it. As STOCK investors, we need others to buy the stock in order for us to make money. Wall Street primary principles for stocks to rise is the anticipation of earnings. It’s usually the most powerful catalyst to make a stock rise or fall. However, there are so many more moving parts to it now. Take a look at Tesla for example, many might argue that it’s overvalued based on conventional metrics. Other day it’s undervalued because of what they will produce in the future. Either way, one of those thesis is right and the other wrong. But even if the company is overvalued, it doesn’t take away the fact that people still pay for the price it’s at today and the ones that have made the money on Tesla stock, are those that have stayed long.

(4) the perception we have when approaching the markets or any particular company. If you are a person that has had a very bad experience on an AIRBNB you will most likely be biased against the company/stock. However If your a person that has had an excellent experience, you might look at Airbnb on a different perspective. Whatever your experience is it doesn’t take away the fact that the company is a great disrupters and will probably do great things in the future. What I’m trying to say here is that removing biases can help you make very educated investment decisions. It doesn’t matter if your MAC computer runs out of battery too fast and you dislike it, Apple has, is and probably will still yield excellent returns for years to come simply because it’s a good executer and people/institutions buy the stock.

(5) There are many moving parts. The media moves markets. It’s the funnel of Wall Street and occasionally they are very biased. I see it as a pendulum that moves from side to side. Even professionals are wrong more often than not. I have realized that if you do your core research, focus on understanding what your doing and build a strong thesis to back your investment decision on, you will do fine. Many people buy and sell stock because of hear say, they serve their purpose which is making the markets liquid, but they usually loose money because they are in and out of a company or trade so fast. The great quote that says “if you can keep your head on while everyone around you is loosing theirs” is an excellent quote I keep in mind on times of turmoil.

(6) taking it serious. I know,i know sometimes the markets are fun. But when we are allocating capital, whether it’s $100-$1,000,000, we should take it serious. A serious investor makes serious gains. But your allocating capital, and it’s important to take it serious enough to the degree where you can calculate your risk/reward very effectively. Securities investing and trading is hard. Regardless of what people say… it’s hard. I see so many people on different media sites that are just repulsive. They have no foundation for building a model that is backed by data and evidence to support a trade or investment and it’s misleading other people.

(7) maintaining your psychology in check. Humans are splurged with emotions, specially when money is involved. So before making a trade some of the things I ask myself are (A) am I being biased? (B) is this trade built on wishful thinking premises? (C) do I have a strong platform to defend my thesis and stance on allocating capital behind a company. (D) what is my opportunity cost? Will this trade make me more money than another trade? If so how much more and what’s the risk associated.

I like doing these things because I love the comments I receive. I get to see different perspectives and opinions people might have and that’s a great thing. I welcome your criticism and inputs greatly.

Ofcourse this is not financial advice, I’m just sharing some of my core principles to get different perspectives from different investors. This is simply just my opinion.

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