Thursday, 15 August 2019

The Biggest Lie In Investing That You Believe In | TEDx Talk

"Be greedy when others are fearful."  Warren Buffett

"The way to MAKE MONEY is to buy when blood is running in the streets."  John D. Rockefeller.

So, how to PROFIT from a or the next crisis?

If a hurricane storm (OR FINANCIAL STORM) was heading your way, what would you do?



There are 2 types of information:
1.  Information for the MASSES, and
2.  Information for the CLASSES.

Here is the lie:  "The economy is doing better, so the stock market should do better, too."


There is NO CORRELATION between the economy and the Stock Market!

Warren Buffett does NOT waste time thinking about the economy when investing:

  • GDP
  • Unemployment,
  • interest rates,
  • housing numbers,
  • bankruptcies.

Peter Lynch says:  "If you spend 13 minutes thinking about economic forecasts, you have wasted 10 minutes."

Stock Market vs. Economy

In year 2009, there were a lot of negative news around and everybody hated stocks and dumping them.  There was blood in the street.  But at that time, the insiders (the classes) were buying.  At the peak of unemployment in 2009, the stock prices gone up 60%.

What is REALLY going on?

There are about 20 funds that do 80% of World's trading.
They have between $50 - $100 billion under management.
They employ smartest individuals to figure out what the economic trends will be (e.g. unemployment).
Example:  if these Funds believe that in 3 month, job figures will improve, they will decide to buy (& vice versa).

What to buy?

We only want QUALITY STOCKS.

Would you rather buy a BENTLEY at a 75% discount to a KIA at the same discount?


= Quality Stocks

1.  Solid earnings growth
2   Undervalued
3.  Cash rich
4.  Low Debt
5.  Growing sales.

Examples: Apple, Microsoft, Intel, Coca Cola, Walmart, Rolls Royce, Caterpillar

So WHEN do we buy them?

We want to buy our stocks when NOBODY wants them.

When are stocks hated, feared and unpopular ...?

Recall what John D. Rockefeller said, "The way to MAKE MONEY is to buy when blood is running in the streets."


To invest successfully, you must do the psychologically impossible ...

And this is the hardest part.

BUY .. when everyone is afraid.

SELL .. when others are excited with greed.

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