Financial literacy? - Sometime around 10/20



Hello Reader,

 

 

Disclaimer: Actual trying to get to know the good, is not a low energy pursuit. It’s not high energy but its deffo, not low energy. 

 

TL;DR:Read this. This is the less risky route.

 

There are three types of investing. Value/fundamental investing ( seeing where something is under or overvalued. Then we either short it (betting it will go down) or longing/call it (betting it will go up). Technical investing/forex etc (babypips.com is a good shout ) this is the fancy charts you think of when you think stocks. The red and green bars on a chart and analysing those. I spent a month or so of a riveting summer holiday going through the exercise on babypips. I had a general understanding of it, though it's not my cup of tea as it feels like financial astrology (people make money off of it though so hats off to them).

 

Then there’s sentimental investing (other people say this stock goes up, therefore it goes up!) This is moved by anything that moves the heart. Does the CEO collapse on stage? That dude is a loser, send that stock to the deep red. This is investing to the average retail trader. Due to our good friend COVID-19, 20% of all trades are now done by retail traders. Which are the "little people" like you and me. This is double the amount pre covid and means there's a lot more "dumb money" in circulation. This is arguably great. Short term, this could make you rich, but I can guarantee that it’s CONSIDERABLY more likely to leave you broke. (Getting lost in the madness of the crowds: dotcom bubble, tulip craze, 08 housing crash).

Then a hidden potential fourth. Using machine learning/AI to identify patterns although this is for the big brain guys and gals/Robo-funds/quantitative hedge funds.

 

Fundamental analysis is the biggest driver of market returns as most investing is fundamental. If you were to gain a very solid understanding of fundamental analysis, then you would see the BIGGEST returns. Solid due diligence (finance term for research) is where the TRUE hidden gems lay (Think warren buffet).

 

Note: We are in a bull market. A massive bull market. Everyone and their mum is making money off of stocks right now. My barber that can just about read was talking to me about how he is bullish on TESLA the other day. That's never a good sign. Many other ways to make money lmao.Dollar-cost average, and keep a healthy risk appetite. 

 

I would recommend a course on financial reporting (Cash flow statements, balance sheet and income statements). Blitzing through a course on options/greeks, and please please please do general readings about the philosophies of big boy investors. I’m paraphrasing what I’ve read very poorly and in my own words.

 

 

“Your no.1 vehicle for wealth should be your job” -Martin Shkreli.

 

Note: He is the poster boy for Toxic WSB Pharma bro, but he is smart and has a kind of entertaining short youtube series that I do recommend. He’s deffo getting bummed in white-collar prison tho.

 

1. Try to work for a company you would like to have shares in. It makes you more motivated to do the work. Plus you can buy shares at a discount. If the companies valuation skyrockets your wages will as well. Rising tides raise all ships!

2. Dollar-cost average (DCA) like a dirty bastard. “Time in the market beats timing the market” is the age-old adage. You can’t predict shit. The stock market is a type 2 chaotic system. You’d have to be near-omnipotent to predict market trends well in advance of institutional traders. (Think how the guy from the big short was being investigated by the CIA/FBI, because it was legit that boogz what he predicted).

3. Make money, put it in stocks… not small sums. Split savings in 2/3 into stocks or whatever and then the rest to save for emergencies and shit (for young people but if you're reading this odds are you aren't over 30). Luckily or unluckily, the societal pressure for us to buy our own houses is like rock bottom. We can afford to be more aggressive with our shit because even if it's wiped out we don’t pay rent 😭 Homeless and chill.

 

If you’re genuine about using this as a vehicle for retirement, take it seriously.

 

So many of us go to school to get an => education => job => money

 

The stock market is one of the biggest amplifiers of wealth (with the lowest barrier to entry) outside of work. Dump your savings in an ETF. Fuckin hell. 0 IQ required. 

 

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Fantastic reading and listening list

 

I've read a few of them and they're kind of boring-ish. I used to read them on the bus to work and tell myself they're good for me

 

I've read a few of them and they're kind of boring-ish. I used to read em on the bus to work and tell myself they're good for me. Quite insightful in terms of understanding the economic workings n whatnot. Sometimes they prattle on about the same stuff but it's pretty good. 

 

Books have been the most useful thing for me. The WSB Reddit is 90% bull shit memes and people insulting each other but now and then someone says something useful. usually a high-quality DD or just a financial concept or a trend they've noticed. You have an a-ha moment and do some independent research around it.

 

Simply Wall St, breaks down company’s inter and intra-industry performance and displays most of the important numbers you need to know

 

investopedia Read random finance articles and then whenever you come across a word you don't understand looks it up on here and try to read around a few applications to commit it to memory, kind of like learning a new language but more technical

Reddit For memes. Plus, they do solid memes about good stocks. If you made an index for the most spoken about stocks in this sub and plot against the time you beat the market (a good thing) (DJIA/S&P 500 is usually alluded to as the market).

 

Most of the people on WSB best use leverage (borrowed money) and trade using options/CFD (trading financial contracts as opposed to actual assets). It's kind of confusing but it's one of the ones where you keep reading even if you don't understand and eventually you do.

 

 

But yeah that was a few years of vaguely following finance and a bit of dedicated study condensed. Not sure if it’s gonna be very helpful but I hope it is.

 

Note: mentioned Tesla earlier. I'm bullish. EV is the future. Solid-state batteries are coming and Li-on formulae are being refined, energy will be cheaper, greener and cleaner than ever. Exciting times. Fun fact 100 years ago most cars were EVs.

 

Note: Crypto… I'm kind of bullish? 2 notes to this. 1. Blockchain, 2. currency 3. Economics?

 

1. Blockchain is a distributed ledger. A decentralised, immutable store of information. Very useful in certain places, arguable even revolutionary. (Think storing non-sensitive government records to keep track of the flow of money 😵 goodbye tax evasion) (other implications which are scary as it can be used in others ways). That being said it is severely overhyped. Not much value is being generated with it right now.

 

2. as an alternate currency, it sucks. A good currency should have 3 factors. The medium of exchange, store of value, measure of value. Crypto completely fail as a store of value, not a great measure of value due to fluctuation, and the bitcoin hash only support 500k exchanges meaning it will be limited (and require 2nd layer solutions to be adopted as a currency).

 

3. Keeping a small amount of BTC wouldn’t hurt :) :) 

 

All of this being said, I still kinda know jack.