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  • Back when the pandemic wasn't even a thing.

  • Timothy Springer understood the danger of viruses and the damage they could cause.

  • So a decade ago, when he came across a biotech company in Massachusetts called Moderna, he

  • decided to invest in it.

  • The company focused on developing drugs and finding new methods to create vaccines.

  • It wasn't as exciting as electric cars or online shopping, but as a biology professor,

  • he understood the importance of vaccines, so when the pandemic hit the world, the valuation

  • of Moderna skyrocketed, and his 3.5% stake in the company now quals to 2.1 billion dollars.

  • That is probably one of the best investments ever

  • But how do you find such companies way before

  • they get popular?

  • How do you find investments that can turn you into a billionaire?

  • One book that can help us to answer these questions is the intelligent investor.

  • In fact Warren Buffett has said multiples times that this book had the biggest impact

  • on his investing philosophy.

  • By applying the rules and the principles of the intelligent investor, Warren Buffett went

  • from nothing to 90 billion dollars.

  • So lets find out the five most important lessons out of this book.

  • 
 


  • Discover patterns

  • Before you buy a single stock or throw a dime into the stock market, it's not enough to

  • look at the stock's history.

  • What's more important is to look at the history of the stock market itself.

  • No matter how great a certain company is, every stock is driven by regular stock market

  • ups and downs.

  • Amazon has clearly been one of the greatest companies out there, but in the 2000s, when

  • the dot com bubble burst, amazon's stock price fell from 107 dollars to a little over $7

  • in less than two years.

  • Even if you have made your fundamental analysis and purchased amazon stocks, you would have

  • lost 90% of your investment in just two years.

  • But if you had understood stock markets' overall history, you could have predicted the crash

  • as many other professional investors did and could have saved a fortune.

  • Of course, amazon got back on its knees and turned out to be widely successful, but most

  • companies didn't.

  • In 2008, the exact same thing happened with mortgage securities.

  • At the end of 2017, cryptocurrencies had their astronomical rise and a dramatic dip.

  • In fact, we made an entire video warning everyone not to invest at the peak and wait until prices

  • crash.

  • As an intelligent investor, you should not speculate but rather understand stock markets

  • history and discover patterns to find out what is the best time invest.

  • 
 2.

  • Chose an investing strategy that fits you 

  • Apple is one of the companies that made a lot of investors millionaires and even billionaires.

  • But if you would have invested a thousand dollars in Apple in June 2008, how much do

  • you think you would have made by January 2009?

  • Negative 50 percent.

  • If you weren't risk-tolerant, you would have sold your stake, afraid you might lose more

  • if you do not exist, but if you have kept it, it would have increased by 3650 percent

  • by December 2020.

  • Economic crashes like 2008 or 1929 are a fact of life and happen from time to time.

  • Thus you need to ensure that you can take a big hit and survive.

  • This means that you should have a diverse stock portfolio so your investments don't

  • all get hit at once.

  • If you are too emotional, then consider investing in low risk securities such as government

  • bonds or ETFs.

  • If you think you can handle stock markets daily ups and downs, then you might be able

  • to take slightly higher risks and invest in tech companies for example and expect higher

  • returns.

  • Once you've found a stock that you've determined to be safe and sound, you'll

  • want to set your investments on autopilot.

  • Start by committing yourself to a certain amount of money, like $50, which you will

  • invest every month.

  •   3.

  • Don't trust the crowd or the market.

  • If the stock market was a human, he would

  • be the most emotional person on the planet, let's call him Mr. Market.

  • Mr. Market is easily influenced, and this causes him to have major mood swings.

  • You can see this in practice in the way the market always swings back and forth between

  • unsustainable optimism to unjustified pessimism.

  • As a result, when the market is too optimistic about future growth, stock prices rise and

  • become too expensive.

  • On the other hand, sometimes the market is too pessimistic about the future like it was

  • in February 2020, and might push you to sell at the wrong time forcing to make significant

  • losses.

  • When Apple came out with iPhone XR, a lot of people were unsatisfied with this phone,

  • so the stock price dropped, but a few months later, when Apple reported good revenue for

  • the quarter, the stock price jumped back.

  • In fact, it has grown significantly since then.

  • As an intelligent investor, you need to be a realist and stop yourself from following

  • the crowd and ignore the mood swings of Mr. Market.

  • The market normally undervalues the stocks of companies which are either temporarily

  • unpopular or are suffering economic losses.

  • Berkshire Hathaway's stock price dropped by 30 percent in February like the rest of

  • the market but didn't recover instantly like the rest because it had huge stakes in airlines

  • but once it sold its airline stocks and made a few other good invemsnets and reported good

  • profits by September, the stock price jumped back.

  • If you would have trusted the crowd, you probably have avoided Berkshire Hathaway, but if you

  • were an intelligent investor, you would have jumped in and invested.

  • In fact, I invested in Berkshire back then and posted on my Patreon why investing in

  • Berkshire back then was a good investment and those who listened to my advice made a

  • lot of money.

  • In fact, I also predicted that Diney's stock would signifncayly rise, and I listed all

  • the reasons why that will happen on my Patreon page back in September.

  • And guess what happened a few months later, the stock price rose by 33 percent for the

  • exact reasons that I have told my patreons, If you want to join my Patreon page and be

  • the first to know about my future investments, you will find the link in the description.

  • https://www.cnbc.com/2020/12/11/disney-stock-had-its-best-day-since-march-jumping-14percent-to-a-record.html https://variety.com/2020/digital/news/disney-stock-all-time-high-investor-day-streaming-1234851639/

  • 
 4.

  • Learn How to analyze stocks

  • It's easy to assume that investing is complicated when you look at all these complicated charts

  • but Investing at its essence is simple.

  • You have to find out the value of a certain company and compare it to the price that its

  • traded in the market.

  • If it's traded at a lower price, then its a good investment since it's undervalued,

  • and if it's higher, then it's a bad investment since the stock is overvalued because at some

  • point in the future, the price will rise or drop to is real value.

  • The challenge is to learn to analyze the stock.

  • for example, there is price to earnings ratio, which we have covered in a previous video,

  • how much you will be paying for each dollar that the company earns if you buy that stock

  • or price to book ratio, to compare a firm's market capitalization to its book value to

  • find out how much the company is going to earn if it sold all of its assets and paid

  • off its debts.

  • Or debt to equity ratio to find out to what degree the company is financing its operations

  • through debt versus its own funds.

  • If the company is debt-free, then its not

  • taking full advantage out of its resources.

  • Tesla, for example, has the technology to build electric cars, but it can only build

  • a limited number of cars since it has only a certain amount of cash, but it can borrow

  • money at a very low rate of 2 or 3 percent and have rate of return of 10 or 15 percent

  • on that borrowed money by building and selling more cars.

  • So, if it's not ding that, its clearly missing an opportunity.

  • But there is just so much demand in the market, so if it borrows too much, it might not be

  • able to sell enough cars to make interest payments and might default on its loan.

  • But it's not enough to look at the financial statements; the management that runs the company

  • is equally important.

  • How the company is planning to double or triple its valuation is one of the factors you should

  • be looking at.

  • So before buying a stock, you have to analyze it from top to bottom

  • 
 


  • 
 5.

  • Number 5, Know when to exist.


  • The nature of any business is to rise and fall.

  • Even Jeff Bezos said that he expects amazon one day to fail.

  • The world is constantly changing.

  • Just because a certain company has dominated an industry today doesn't mean it's going

  • to stay there forever, so you have to know when to sell your stocks.


  • Should you sell Just because the stock increased by 10 or 20 percent, should you exist and

  • realize your gains?

  • Not really?


  • As soon as you realize that one of the companies in your portfolio is overrated and its stock

  • prices is growing without any relation to its true value, then it's better to sell before

  • it crashes.

  • Warren Buffett invested half a billion dollars in Petrochina when it had a valuation of 30

  • billion dollars and wasn't popular yet.

  • The stock price surged a few years later, when oil prices rose.

  • First, it crossed 100 billion dollars, then 200, then 300, and crossed a trillion-dollar

  • valuation.

  • But Warren Buffett sold his stake when the company crossed a valuation of 275 billion

  • dollars.

  • Many have criticised him for selling too early, but Warren Buffett did the right thing.

  • Since the stock price was rising for no intrinsic reasons, it was overvalued and would crash

  • at any moment.

  • And like every other investor, Warren Buffett didn't know when that crash will happen, so

  • he sold his take.

  • The stock price, of course crashed once it crossed the trillion-dollar mark and is now

  • traded at just 112 billion dollars.  

  • You don't have to follow each of your stocks every single day but you have to keep in mind

  • that whenever one of the companies you have invested in dramatically rises for no real

  • reason, then it's better to sell before it crashes.

  • And finally if you want to start investing with 4 free stocks, you can do that by just

  • signing up to webull by using the link in the description and depositing 100 bucks.

  • 2 of these stocks can be valued as much as 1600 dollars.

  • Consider it as your Christmas gift.

  • And now its time e to give it a thumbs up and if you are new around and want to know

  • more about the stock market, then his that subscribe button and the bell besides it.

  • And if you want to know more about my investments, then checkout my Patreon page.

  • Thanks for watching and until next time.

Back when the pandemic wasn't even a thing.

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From $0 to $1.2 Million in 2021 | The Intelligent Investor

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    Summer posted on 2020/12/28
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