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Abstract

perty while in grad school. It was 2009 and every asset class was down, the economy’s future was totally uncertain. Based on my research, buying a property and keeping it as a long-term rental property was a good idea. But my friends didn’t think so. I remember getting mocked for making a “dumb” move at such a young age. Six years later, I sold the property for double what I paid for it. It made a nice graduation windfall to me.Investments take time to pay off. We all love hearing stories of people who make 300%+ returns in a matter of months. There are certainly ways to do that, but it takes time to develop a strategy and execute it consistently.Have a thesisGood investing starts with having a well-researched thesis and rationale for the placement. In today’s market, people are making investment decisions based on speculation and because the prices are rising. This is not a strategy.The best investment decisions I’ve made have come from having a well-thought-out investing plan and using capital to validate the idea.Lump Sums are ValuableInvesting is the key to growth. Inflation eats away at purchasing power, so growing the principal amount is crucial to overall portfolio growth. That said, lump-sum amounts come from selling positions and taking profits.Lump sums p

Options

resent a pivot opportunity. Because a large amount of capital gives you options, it should be regarded with care.Take a large (enough) positionTaking small positions in investment ideas doesn’t pay off. It simply is not worth it to just dip a toe in. In essence, go big or go home. I made the mistake on more than one occasion of only taking a small position on an investment. I had great gains, but because the investment was small, the true purchasing value of the returns was not large enough to make an impact on my life.There are economies of scale in investing, and the returns will only work if you take a significant enough position.Diversification is overratedDiversification sounds good because you aren’t putting all your eggs in one basket. It’s important to balance risk and compensate for short-term losses by balancing out your holdings.But here’s the rub: as an individual investor, you can only actively monitor so much.With a balanced portfolio across asset classes and employing a proper strategy for each asset class, the individual investor really can’t monitor more than a few positions. If your resources are small, you actually need LESS diversification, not more. It’s about taking 10 steps in one direction, not one step in 10 directions.</article></body>

How to Win Big Investing

Don’t play it too safe

Photo by Louis Hansel @shotsoflouis on Unsplash

How do some people win big with their investments?

Right now u/DeepF**ing Value is trending for the $GME run up and bitcoin millionaires are telling naysayers to “have fun staying poor”. It begs the question, how did they do it? Is it too late? What can I do for my portfolio?

I’m no expert, but I have been investing consistently for over a decade. I’ve had some big wins, but I’ve missed out on some as well.

After investing in income-producing real estate, swing trading penny stocks, value investing with long stock positions, and trading options, I’ve learned a lot. I’m still a “baby” investor. I consider my first 10 years in the market as a sort of a running start that led me to today when most of my peers are just now getting started.

Here’s what I’ve learned so far.

Investments can take a long time to pay off

I remember buying my first property while in grad school. It was 2009 and every asset class was down, the economy’s future was totally uncertain. Based on my research, buying a property and keeping it as a long-term rental property was a good idea. But my friends didn’t think so. I remember getting mocked for making a “dumb” move at such a young age. Six years later, I sold the property for double what I paid for it. It made a nice graduation windfall to me.

Investments take time to pay off. We all love hearing stories of people who make 300%+ returns in a matter of months. There are certainly ways to do that, but it takes time to develop a strategy and execute it consistently.

Have a thesis

Good investing starts with having a well-researched thesis and rationale for the placement. In today’s market, people are making investment decisions based on speculation and because the prices are rising. This is not a strategy.

The best investment decisions I’ve made have come from having a well-thought-out investing plan and using capital to validate the idea.

Lump Sums are Valuable

Investing is the key to growth. Inflation eats away at purchasing power, so growing the principal amount is crucial to overall portfolio growth. That said, lump-sum amounts come from selling positions and taking profits.

Lump sums present a pivot opportunity. Because a large amount of capital gives you options, it should be regarded with care.

Take a large (enough) position

Taking small positions in investment ideas doesn’t pay off. It simply is not worth it to just dip a toe in. In essence, go big or go home. I made the mistake on more than one occasion of only taking a small position on an investment. I had great gains, but because the investment was small, the true purchasing value of the returns was not large enough to make an impact on my life.

There are economies of scale in investing, and the returns will only work if you take a significant enough position.

Diversification is overrated

Diversification sounds good because you aren’t putting all your eggs in one basket. It’s important to balance risk and compensate for short-term losses by balancing out your holdings.

But here’s the rub: as an individual investor, you can only actively monitor so much.

With a balanced portfolio across asset classes and employing a proper strategy for each asset class, the individual investor really can’t monitor more than a few positions. If your resources are small, you actually need LESS diversification, not more. It’s about taking 10 steps in one direction, not one step in 10 directions.