Pursuing your body goals and your investing target may share similar problems. No, it’s not the technique or the knowledge. It is misinformation and belief about…that misinformation. These two compose the building block of basic investing mistakes.
Chapter 1: Thousands of crunch, thousands of sit up for abs…olutely nothing.
The information overload with no quality is an element of the basic investing mistakes.
Some of us may have seen some YouTube recommendations to get rid the belly fat. Some of that recommendations are clickbait like follows:
Do this for a six-pack. Then you find a flutter kick exercise with 45 seconds of workout and 15 seconds of rest. Or something like, do this morning routine to remove belly fat. When you click that sexy girl with no belly fat thumbnail, you get HIIT (High-Intensity Interval Training) video.
None of these videos will help.
The best exercise to remove your proud belly is a spoon drop. Or reduce your intake of food.
And do progressive overload. Reduce your calorie slowly and gradually.
The problem of our belly fat or obesity is not the activity, It is your hot dog, burger, cakes, cookies, the calories. Even a near-death exercise will not overcome this situation.
Wait, what does all of this do with investing?
The Same Problem: The gurus, the media.
Answering what we know, not the question.
Most investing media address the problem with the intention to sell the content. You must ever read the title like this:
10 great stocks for quarantine. Then you find names like Zoom, Spotify, and the gangs.
14 Best stock for a greener earth.
6 Best Electric Vehicle stock but Tesla.
6 investment ideas to hedge against inflation.
Just like doing 100 crunches a day is not wrong, that recommendation is not wrong too. Problem is, that it does not address the basic problem of investing.
The heart of investing is finding the company (1) that compounds its earnings or cash flow in the long run. Very long.
Not get benefit just in quarantine. Not get benefits just from inflation. Or rising commodity prices, or mass adoption of EVs.
Just because inflation suddenly becomes an issue, you make an article about inflation and connect with some stock?
- Include management and not paid too much for that stock price.
Chapter 2: Fake and Flex.
To worse the situation, the influencer used steroids to impress the audience. You see they have no excess disgusting fat, they are fit, they are beast. Their muscle definition is catching your eyes.
And you want to become like them. You follow every word, every piece of advice.
Do 100 crunches for a six-pack, and do 10 squats for toned legs. Do certain sets of curl to trim your fat arm.
But, without you knowing, you never reach it.
Not because you can’t but because all is a lie.
Investing is the same.
Just because someone rides Lamborghini Aventador and tells you about battery stock, it doesn’t mean that he gets all his wealth from that investing activity.
He could get that supercar from his father who is a broker. Someone who you pay for your stock transaction.
Or he could borrow from someone. We do not really know.
Imagine this guy telling you to invest in stocks A, B, C
Some of us may be interested.
Well, it doesn’t matter. Thing is.
You may never get Aventador. Or another fancy car.
That reality is nonexistent.
So, the basic investing mistake? The unrealistic goal with the unrealistic method.
- This is why we always include an analysis of the competitive edge of the company. Any single conversation should end there. Your investment should be able to survive against inflation, rising fuel, or any other threat.
Chapter 3: The Most Undervalued Skill
Patience could overcome the basic investing mistakes
So, the hard truth is, your investing goal may be The pursuit of your body goals, and investing needs the same underrated skill: patience.
You may arrive at your destination longer than you expected.
You may gain muscle and get rid of your unwanted fat longer and harder.
But that is how it works.
If you need quick gain, join Greg Douchete and buy some steroids.
If you need quick money, bet Real Madrid for the Champions League
Or Brazil for World Cup.
Or make some only fans.
Another similarity is both are boring.
You count calories, do your morning run, lift your barbell, and squat. Again and again.
Same boring and plain meals. Yolk, whey, oat.
Sleep. Sleep a lot.
So do the investing.
Reading the financial statements. Analyze the competitive edge, find anomalies, waiting for a bargain price or a little dip. Do nothing almost the time.
Sleep. Sleep again.
That is how athletes work. Countless free throws, countless free kicks.
That is how investor works.
Read, read, listen.
Chapter 3: The correct answer
Conclusion on the basic investing mistakes.
So, what do we do now?
Focus on the long run, and you will find that most of the media just blow temporal advice and commentaries.
Let them be.
It is their job. It is not funny if you visit CNBC and find only 3 articles. Impossible. They are paid to fulfill the column, to announce to the world a message.
Your job is different.
Your job is much simpler
Find the company with that superior characteristic.
In the long, long run.
Not in inflation only.
Not in rising gas prices
A company that can’t be killed.