While many view the stock market as a virtual Las Vegas filled with selfish bastards trying to make a quick buck, I have to come to appreciate learning about hundreds of companies and make strategic discussions about investing in a few of them.
Allow me to explain.
Many people are glamoured by these fools on Wall Street that sell stocks in milliseconds and pocket thousands of dollars. And if you follow these fools trying to make a fast buck by continuously trying to buy and sell you will fail. You will fail hard. Because tomorrow you may pocket 10 grand but the day after you may lose half of it while attempting to do it all again. Maybe you don’t do it on a millisecond basis like the quants on Wall Street but you do it daily or monthly. And to those of you that fall into this trap, I have news for you…you are as big as fools as the folks on Wall Street. Because you’re not making strategic investments on companies, you are trying to play poker by going all-in in every round.
Let’s take a look at the celebrity investor Warren Buffet. Does he try to flip stocks in milliseconds? Is that how he is one of the richest people in the world? No he doesn’t. He buys shares of a company with the intention of keeping them forever. He buys shares of a company because he believes the company is going to do well not the stock price. Yes, at the end of the day a stock price of a company is determined by the number of puts and calls. But that fluctuation you see is all the fools trading with each other. Some will win today and some will lose and for that they are fools.
As a young investor, I have read a lot about Warren Buffet but did not really internalize this strategy till I noticed patterns in some of the companies I was researching.
Take a look at these companies. They may not be the sexiest companies doing ground breaking things or going up 300% everyday but every year they are steadily growing and every year their stock price is rising despite all the fools on Wall Street playing in the kids playground.
Disney. If you purchased shares of Disney 20 years ago, you would have made a return of 312%.
Apple. If you purchased shares of Apple 20 years ago, you would have made a return of 5600%.
Public Storage. If you purchased shares of Public Storage 20 years ago, you would have made a return of 1600%.
IBM. If you purchased shares of IBM 20 years ago, you would have made a return of 1000%.
The next time you go invest in stocks, don’t play poker. Invest with intelligence and don’t be fooled by the fools of Wall Street.