Once You Stop Thinking Investing Is Hard, It’ll Be Easy
I’ve met a lot of people who find investing difficult. Well, maybe difficult isn’t the right word…
What I've noticed is that some people tend to be hesitant about investing. And rightfully so! You’re investing hard-earned money, so you don’t want to lose it.
Not to mention how Wall Street and big investors often make it seem like investing is too confusing for the average person.
And for some, it is too confusing. But that’s just because they've never learned how to invest properly. Staying alert and being willing to learn is what makes successful investors… successful.
Those types of investors will go to the ends of the earth to stay in the “know” and to learn from the best.
But even the most successful investors still need to learn moneymaking strategies.
A few months ago, Charles asked me to look over the manuscript for his new book, Hitting Wall Street’s “Fat Pitch”: Secrets from a 35 Year Stock Market Insider.
Working with Charles over the past two years has taught me a lot about investing.
But there was one thing that I hadn't been focusing on. And yet, it eventually made the biggest difference in my investing. And this is it…
Before Investing a Nickel of Your Money, Write Out a Checklist
A checklist is a shortcut. It helps you to focus on the things that are important. You'll want to cover each part of the checklist before you move onto the next item. Doing this will ensure that you cover all the items on the checklist.
Warren Buffett, one of the most successful investors ever, has a checklist that he finds crucial when it comes to buying into companies. For his checklist, he asks himself a few questions about the company:
- Can I understand it?
- Does it have some kind of sustainable, long-term competitive advantage?
- How is the management in terms of its ability and honesty?
- What’s the price?
And if the company can get through the checklist, Buffett will buy it!
Weeding Out the Terrible Investments
For any investment you look it, your checklist will force you to say "yes" or "no" to each question. A checklist allows you to focus on what’s actually important when investing.
I use a checklist like Buffett's. I mean, he must be doing something right. And by following the checklist, I’m able to weed out terrible businesses and instead invest in the strong ones. It helps me to focus on what’s truly important rather than get distracted by any complexities or even my emotions...
Keep Your Emotions in Check
A checklist works because it simplifies everything and allows you to focus on why you should buy a company. It reduces the background noise.
All your newsfeeds are spewing stories about companies. All that information can be time-consuming and overwhelming. And that could cause you to lose focus on what’s actually important and what you should be looking out for. So, that’s where a checklist would come in...
Keep your checklist simple. Charles' checklist is simple and concise. It consists of two questions:
- Is the business financially sound?
- Is it selling at a bargain price?
Don’t make it harder for yourself and don’t overcomplicate it. I don’t need to tell you that there’s a lot of information out there. And don’t let your emotions get the best of you.
It’s human nature to get a little caught up in our emotions. But when it comes to investing, you don’t want to do that.
Don’t get depressed when stock prices fall. And you definitely don’t want to swear off buying stocks until the market becomes “stable.”
Times of "instability" are actually some of the best times to buy stocks. You'll get the best bargains on quality companies when stock prices fall...
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Keep Your Checklist Simple to Get the Most From Your Investments
Charles keeps his checklist simple. And it’s something that I’ve started to incorporate into my own investing because it makes so much sense.
Investing in a financially sound company is obvious. It’s important to know that a company will be around tomorrow, pays its bills on time, and has cash in the bank.
If an investment passes every aspect of that question, we'll then need to find out if it's selling at a bargain price.
The price that you buy at has the biggest impact on your return. If you pay too high of a price, it’ll take a long time for the fundamentals of the business to catch up. And your investment could also start to flatline in the years to come.
No one wants to see their money slip through their fingers. If you’re not following a checklist when it comes to investing, you’re at a disadvantage.
I’ve learned this and so much more from Charles’ book, Hitting Wall Street’s “Fat Pitch.” I highly recommend reading it if you want to take your investments and returns to the next level.
Until next time,
Park Avenue Digest