The principles of money

We are bombarded every minute of the day with investing news.  This can range from ideas of looming recessions to the latest stock, making new millionaires.  If you are not rooted as an investor, you will be swayed by ideas of anybody with a microphone and opinion.

FOMO (Fear of Missing Out) is Real 

Many of my worst investments came from trying to jump on a bandwagon not knowing who is on it or where it is going.  After seeing it skyrocket, I tried to replicate it in my own portfolio.  And often, I end up buying at the high and watching the asset decrease in value.  That is not investing, that is called speculation.  

Starbox Group Holdings Ltd. (STBX)

In 2022, Asian companies were IPOing and skyrocketing over 100% in the same day.  It was not making news coverage, I thought I had discovered a little-known trend.  There were reddit post discussing how many of these companies were Chinese entities hiding money in the US market.  I saw it as an opportunity to make a quick buck.  I watched a few companies IPO and noticed a pattern.  They would IPO, skyrocket, trading would be halted a few times and then it would fall dramatically by the end of the day.  I decided to play my hand at it to see if I could get in and out by the end of the day. 

I looked at the IPO calendar and chose Starbox Group Holding Ltd. (STBX) which was IPOing soon. At market open, STBX skyrocketed, and I couldn’t get my trade in.  A few hours later I was able to get my trade in and it immediately started to lose value.  I immediately exited my position losing $2,000. That was the trade that turned me into a long-term investor.  I was no longer willing to lose money so stupidly.  I later learned that it was impossible to get in at opening because they were no shares available to buy.  Once the individuals began dumping their shares for others to buy it was too late. A wee bit of research would have told me I was doomed from the start, but I was blinded by greed.

Believe in Your Thesis

Before investing your money, you need to know what you are investing in.  This includes how the company makes money and how they plan to keep making money.  If you choose to invest you need to check back periodically to make sure they are doing what they said they are going to do. Note if anything about the company has changed. If so, does your thesis still hold true?  In 2018, I had a thesis that marijuana would be the next up and coming sector to make new millionaires.  I believed Canadian growers would lead the way in global adoption. After doing some research I created a thesis that Canopy Growth Company (CGC) would be the market leader in the growth and distribution of marijuana in Canada. They had the money, facilities, and leadership to make it happen. I invested in 100 shares around $6 and watched the stock climb as high as $50.  This was due to official country wide legalization, an ownership stake by Constellation Brand and a partnership with Martha Stewart. 

Legalization rollout was riddled with red tape, muddy laws, and disorganization. The company’s sales weren’t growing quarter over quarter as they expected, and the CEO was eventually fired.  The company was losing money fast.  Based off the current market conditions it was clear that the company’s future was in jeopardy.  My view on the company had changed and so did my thesis.  I decided to exit my full position and netted a 400% ROI.   

Do Your Own Research

Developing a thesis and finding an entry price takes ridiculous patience. You may be waiting for months or years to get in at a price that you believe is fair value.  FOMO is one of the quickest ways to lose your investment.  When you FOMO, you are more likely to buy at the high when everyone else has heard about the same news event.  And sell low, when early investors are cashing out their profits as you and other new investors are piling in.  It is a losing game.  Instead, do your own research and find a company and price you feel would be a great value.  You will never time the bottom of a stock price so let the price you pay for a company be one that allows you to sleep at night.