Featured Image:You don't have to be this douchebag to be an investor, it's an open house and you're just as welcome in your pyjamas and fluffy socks.
If you’re looking to join the theme park and fairground carnival that is ‘investing’, welcome to our dissapointing behind-the-scenes party, there’s value American cheese slices and some cold frankfurters on the corner table, we’ll only be serving lite beer.
Us investors come in all shapes and sizes from hobbyists worried about tens and hundreds to the self-proclaimed pros laughing off thousands of daddy’s trust fund £s, to machines which suck the life and fun out of everything for us all, but we are all one community so, rule number one is, play nice(ish).
I estimate that 90% of the Facebook posts in the investing groups I frequent are just ‘Hi I’m new here, what stocks should I buy and how?’. Well, it’s a perfectly valid question, with perfectly valid answers, I’m going to have a go at summarising my personal reply with a pinch of flare and slightly less BS than most people offer.
Please take into consideration that I am not a financial advisor, nor a very experienced investor myself so, this is not formal ‘advice’ but, hopefully it’s just about enough to make your first few months of loss and confusion less crippling, maybe even fun.
YOU ARE GOING TO LOSE
he first thing you need to do is put your wallet back in your pocket and take a few steps back. Let’s just take it for granted that whatever you buy in your first month will end up being a flop so, you’re going to want to be sure about why you’re here in the first place and what you’re hoping to achieve. This is not Wolf of Wall Street territory; Jeeves is not going start wiping your backside with $100s quite yet (nor should you ever consider this).
Anybody who tells you making money is easy, guaranteed or ‘a no brainer’ is talking shite. You can tear up any posts, press or information that claim you will succeed. You probably will not succeed, in fact, I’ll be counting on your failure to make money somewhere down the line myself. You see, as lovely as our community is, we’re essentially competing with each other. There are a few ways to make money on a stock, but the most common is from somebody else losing it.
Most of my gains have come in the last 3 months, buying other people’s depressed stocks during the corona dip and then riding the artificial money printing wave back up. While I’m happy with my gains, those who sold me those stocks were probably in a terrible place, possibly having lost jobs with bills to pay and kids to feed during a global crisis.
So, remember rule number one: play nice(ish). Celebrate wins, but don’t gloat without being aware of how you made them and who you might have stepped on to get there.
Anyhow, back to my original point, you have put your wallet back in your pocket and taken a step back…
Before you load up your investing account, you need to decide what kind of investor you want to be. There’s loads of technical terms and slang for different types of investment, but if you’re just starting out, ignore them. They’re not useful or relevant to our level. Ignore people who just shout stock tickers instead of using company names and ignore the people who use the slang. Those guys are mentally ‘out for lunch’ and, we don’t need to bother them quite yet in our early career.
Start by deciding roughly how much time and money you have to lose. How much would you be able to laugh about losing completely, with that loss not having a major impact on your quality of life? That’s your beer-money and that’s all you should be spending until you know what you’re doing.
I started out putting €100/month into an account with the Trade Republic Ap and buying €20/50 of a few companies I liked. Once I had spanked the first few months deposits and had a rough idea of where to improve, what patterns to watch for and how to pick less terrible stocks… I started to play with bigger numbers… If I’d have put my entire savings into this mad venture in the beginning, full of the swagger and confidence, as I was… I’d now be bankrupt and back on my mother’s sofa. Take note, you should only ever gamble what you can afford to lose, especially if you’re here asking how to gamble!
WHAT KIND OF PERSON ARE YOU?
Your next question is a moral and philosophical one and only you can really answer it. You are presented with a plethora of options.
- WEAPONS – Potential profits: Huge – Moral Ranking: Hitler.
You could go and put $10k into warheads and watch your balance soar when Trump and Boris finally start slaughtering innocent children and raining down fire in Iran, like they’re itching to… But I’m not sure that’d make you a very nice person?
- OIL & GAS – Potential Profits: Moderate – Moral Ranking: Gadhafi.
You could buy some dirt cheap oil stocks right now on the gamble that when we start travelling again and burning fuel, they’ll recover, but then you’d be investing directly into the enablers of climate change and, again, I don’t think that makes you a heavenworthy soul.
- GREEN ENERGY – Potential Profits: Minor – Moral Ranking: Linda McCartney
You could invest directly into the iShares Global Clean Energy ETF and boast about it with your corduroy clad friends in a plant based retro organic cupcake shop in Soho while sipping an asparagus milk frappé, which may make you ethically a nice person, but still not a likeable one!
Humans are terrible creatures so, I’m going to assume most of you leapt at option one and stopped reading. To those who have remained, remember paragraph five where I told you not to trust anybody who says making money is easy… I was employing a novel example of the moral investment dilemma there, not encouraging anybody to sponsor a war.
Those twits with their smarmy grins and slim-fitted blue suits walking around London and talking about their millions made in trading probably did it by holding stocks in weapons, holding companies with questionably sourced diamonds or holding something dirty and waiting for a political cue to hammer their prices up before selling it along to the panicking masses.
Those twits, are not who I aspire to be as a human, or an investor. I would like to sleep at night and not be embarrassed to tell my girlfriend where I’ve put our savings. She would leave me in seconds if I bought weapons, oil or any of the abusive food/pharmaceutical companies that plague the USA and rightly so. We’d rather be poor and happy on the right side of science and history, than rich and soulless supporting the decimation of the planet.
You weren’t expecting investing to be such a morally nonsensical area when you joined the free app were you, but our investments do have impacts and you need to be comfortable with those in your own headspace.
PLAY TO YOUR OWN STRENGTHS
Once we’ve ironed out the moral conundrums, let’s look at some options to suit you…
Do you like gardening? You’ve probably spent quite time in garden centres; how about Formula One? You’ve probably seen the sponsorship numbers from Mercedes and Aston Martin; are you an exercise nut? You’ve probably chosen a gym you like.
You’re already skilled in some things without even realising it, If you’ve spent hours wandering the aisles at B&Q (That’s Canadian Tyre/Home Depot to our North American cousins) you will know how busy they are, how their service is changing and whether they’re likely to perform well as a business in the coming months. You can invest in B&Q and stay easily informed without changing you schedule. You can invest into sports cars, into your gym chain, into the company you work for (although, beware of having insider knowledge etc.) and into things you already understand.
Major stocks like market chains don’t provide much fun or variability, but they’re a good place to start learning, to figure out what the buttons do and whether you can be bothered to carry on.
WHATS YOUR TIME WORTH?
Now you own 1/10000000000 of Porsche, Mcdonalds or Tesco. Wahoo, you’re in the game now! Realistically, let’s say that share might go up, or down 10%, but most major labels just kind of hang around and exist for the most part. If you want to gain an advantage here, you’re going to need to spend time looking at the company’s earnings reports, looking at market trends and conjuring future prophecies from your crystal ball.
You’ll want to start working out how things will look in a week, a month or a decade for the company you’re interested in; will there be a drought in the USA causing grain prices in Europe to rise, increasing prices of flour and thus cutting margins for Cornish Pasties? Will Trump fart out a nasty tweet about how black people shouldn’t drive convertibles and cause a rush of proud African Americans to buy convertibles with their middle fingers raised back at him?
The more research we do, the better placed we are to buy and sell our stocks and decide on targets for earnings, but also, the more time we’ve invested into the knowledge. Often, I find I could make more money just doing a normal job in those hours, than I can from the stock over a year. So you need to work out what a sensible balance is for the returns (or losses) you might make.
So, You’ve done your research, you’ve bought your stock and you understand the app or platform you’re using now (or at least its basic functions). You could sit back and relax, major company’s will fluctuate and ebb and flow, but you can top up, invest more, diversify industries, sell or enjoy them at a leisurely pace on your own time. That’s just a viable an investment strategy as any other and your comfort is worth more than any currency.
If you want to go deeper… You can raise on the river card and tackle the junior market. I can only tell you what I’ve done from here on in, not what you should do, this is not a good space for many.
For me the fun is in the risk. I roughly divide my investment between major companies (50%), juniors (40%) and purely novel plays (10%). That means I’m holding about 60% of my total investment at constant risk of complete meltdown… But also in place to make larger returns, because the junior/venture ‘meat grinder’ end of the market is where us small and insignificant tadpoles can really make/lose some Wonga.
Following the suggested steps above I chose an environmentally and ethically positive attitude to the companies I invest in and I play to my strengths as a geologist, by investing in mining companies. These have to convince me that they’re clean operators, caring for their communities and natural environment, before I’ll touch them.
The major/producing companies, where I keep the bulk of my money, have a smaller margin for returns, but also for loss. I bought some during the corona dip so, have made 30-80% on them, but this is very unusual. For a company to fit into this category for me, they need to have cash in the bank and/or physical metal production and/or royalty/cash payments. Essentially they need to be a viable company, not a wild goose chase. I currently hold: Agnico Eagle, First Quantum, EMX Royalty Corp, Anaconda Mining, Boliden, Argonaut Gold and Matsa Resources. Some of these have paying dividends as well.
My higher risk exploration plays are where I’m hoping for big % returns if/when deposits are discovered and go to development, I’ve sold a lot of my stocks in the mid-level category recently post-covid-market-recovery with mixed ±30% returns. I think this summer is going to destroy a lot of junior companies and, I want to keep my money a little safer until I’ve found the right projects to back. Looking around the industry today, there are not a lot of companies I actually want to invest in to explore. I still hold and support: Riverside Resources, Nevada Exploration, Mawson Resources and AMEX Exploration
In the bargain bin I decided to take on small amounts of laughable risk stocks outside of my regular rules and expertise, where I’m predicting miracles: Lloyds Bank, Lufthansa, Exro Technology, NuLegacy Gold.
- I believe Lloyds will recover its price marginally simply on weight of other idiots buying it while cheap and promoting it to retail groups (certainly not bought on its actual merit or quality).
- I think Lufthansa are the best airline in Europe (I will only fly with Lufthansa group and Star alliance routes these days) and when flights restart people will want thorough cleanliness and quality. Budget airlines like British Airways, Ryanair, Vueling, Wizz etc can’t offer that, but LH has done consistently on every flight I’ve ever taken with them, my investment here is more as a show of support over others.
- Exro Technology I bought as my good friend Andrew O’Donnell (Supercharged Stocks) suggested I do so and, he’s normally right.
- NuLegacy I bought for €0.02 during the corona dip and couldn’t really go any lower. It’s at €0.05 today and I’m thinking I might squeeze €0.10 out of it and sell, if they manage to drill some holes at Red Hill. 5* is not a bad return for a stab in the dark
I also keep a personal savings % of every month’s salary in the iShares Global Clean Energy ETF, so I can wear socialist sloganified t-shirts and prance about virtue signalling about my own great ethics. I’m vain and shallow, just like everybody else deep down.
If you can be bothered to collect a list like this and follow their markets tightly, then you will enjoy this dirty echelon of the market. But again… Is your potential return worth your time spent researching 15 companies on different markets and time zones? Would you be better off just doing some overtime at work and putting it in the bank or burying it in the garden?
Only you can decide what works for you. Whatever you do, make sure you’re enjoying it. If you only ever gamble what you can afford to lose, you won’t ever really lose. Some people like to spend their money on fancy dresses, fast cars and whitewashed city houses… I want to use what I’ve worked hard for to make more money, so I can stop working a few years earlier. To me, my time is more valuable than any material or brick. But, you set your goals and (as the adverts roll in the UK)
‘When the fun stops, stop’.
Join our European Investor Network Facebook page for more connections and investment ideas: