WHY SHOULD I NOT TAKE INVESTING ADVICE FROM MY FRIENDS?
Following your friend’s advice is probably the easiest way to lose money.
When I first started investing, the first stock I ever invested in was one that was recommended by my dear friend. It was for a company that compressed metal together, and he told me that Warren Buffett’s disciple invested in it.
That way it was a sure fire, there was no way this could be a bad investment. At the time, the stock price was dropping by 80 or 90% and it was almost unbelievable how cheap it was.
This was a great opportunity, and even if the company went bankrupt, you would still make money.
At least, this is what he told me. What actually happened was two weeks after I bought into the stock, the manufacturing plant caught on fire, the company went bankrupt, and I lost all my money.
That is an important lesson to learn when following your friend’s advice. It is very easy to trust your friend and project that trust into the investment.
Normally, I would always do my own research. This was one of my biggest mistakes when it comes to investing because I trusted my friend and I also trusted Warren Buffett’s disciple, so I skipped ahead and did not do any research.
Why bother doing the research if he has done it already?
INVESTING ADVICE CHECKLIST:
When taking investing advice from your friends, there are a few things you need to be aware of and really think through.
1. What is their investing strategy?
Define whether their investing strategy aligns with your strategy. For example, if your goal is to hold for one year and your friend’s goal is to hold for five years, then their strategy may not fit your goal.
2. Is the company genuinely strong?
Only you can answer this one. You should do your own research on the company and not rely on your friend’s research or any analyses or reports. Rely on your own research.
3. What is their exit strategy?
This question is particularly important and a lot of people actually overlook this problem.
Even if you know how to enter an investment, if you do not know how to exit you can still lose money which is quite interesting.
For example, if you bought Berkshire Hathaway which is a great company according to Warren Buffett himself, there were three times in which Berkshire dropped 50% in value.
If you were using margins, you would have been taken out. If you have a bad exit strategy during those 50% drops, you would sell your Berkshire Hathaway shares and you will lose money.
These are a few precautions to take when taking investing advice from friends.
Personally, I would recommend against doing so unless you can do your own research as well and be absolutely sure that your strategy and your goals are achievable.
THERE ARE NO SHORTCUTS IN INVESTING
Since that incident with the metal compressor company, I have always done my own research when it comes to investing and I will continue to keep doing research on a company over and over again until I am absolutely certain.
When choosing companies to invest in, I only move forward if I am 95% or more confident that I will be generating returns.
I would recommend that you adopt the same rules and habits for yourself as well because when it comes to investing your hard earned money, there are no shortcuts other than to do your own research.
INVEST WITH ME
My personal investing goal is to achieve a 30% return each year.
I have successfully been investing in the last five years. If you are interested in my investing approach, here is the link to a four-hour webinar that is perfect for you if you are a full-time professional with no financial background, and you want to manage your own portfolio with confidence.
This is a long-term strategy and not designed for short-term traders or day traders. You will be holding onto your investments for at least a year.
My transformation from losing money to earning 30% a year was an interesting one because I tested over 300 strategies using programming to find out what worked and what didn’t.
In the end, I arrived at one single strategy five years ago. At the end of these five years, my return on investments total to 783%.
After that, I started to teach other people how to invest as well.
When you follow your friend's advice, it's probably the easiest way to lose money slash first started investing. My first investment is a stock recommended by my dear friend. So we start, I just want to say that to 96.4% of you are not yet subscribed and it is free. So you can always change your mind in the future. It's a company that compressed metal together, and he told me that Warren Buffett's disciple, Ashley invested in it. So it's a sure fire, like there's no way this can be a bad investment. And the stock price has been dropping 80, 90% and it is so cheap. It is unbelievable that it is so cheap. It is a great opportunity. And even if the company goes bankrupt, you will make money. And that's what he said to me. After I bought into the stock in two weeks, the manufacturing plant was on fire and the company went bankrupt and I lost all my money.
And that's an important lesson to learn when you are following your friend's advice, it is very easy. That's you trust him and you project that trust on the investment. He picked at that point, I've always been doing my research and that was one of the biggest mistakes when it comes to that investment, because I trust my friend and I trust Warren buffets and his disciple. I just skip ahead and not do any research. Why bother doing research? If he has done it already? I trust my friend, right? When you are listening to your friend's advice, here are a couple of main problems you need to be aware of and think through. So first, what is his investing strategy and whether that is the same as your investing strategy, if his goal is to hold for five years and your goal is to hold for one, then this is not going to work out.
Second is to company genuinely good. And you can only answer that question. If you do your own research on the company, not your friend's research, not an analyst report your own research. Third, what is his exit strategy? Now this is particularly important. And most of the time people overlook this problem because if you know how to enter, but you don't know how to exit, you can still lose money. And that's quite interesting, right? If you bought Berkshire Hathaway, great company, Warren buffet, Ashley set this himself. There are three times where Berkshire dropped 50% in value. And obviously he remembers very clearly. And he mentioned this during the shareholder 2020 meeting. If you're using margin, you'll get taken out. And if you have a bad exit strategy during those 50% drop, you will sell your Berkshire Hathaway shares and you will lose money, very straightforward. So that's why when you listened to your friend's recommendation, my recommendation is don't just do your own research.
And since that's investments, which is one of my very first one, I always do my own research when it comes to investing and I'll keep doing research and research and research and research until I'm extremely comfortable. When it comes to investing. I only invest in companies that are 95% confident or more. And I think you can follow the same rule as well, because it comes to investing your hard earned money. There is no shortcuts. Well, technically there are shortcuts, but there's no way to go around out of debt, doing your own research. My goal when it comes to investing is really to target 30% a year. I've been doing this successfully for the last five years, and I'll make a video about it fairly soon. And if you want to learn more about my investing approach, then you can grab the free four-hour training on my websites.
And this is perfect for you. If you are a full-time professional with no financial background, and you want to manage your own portfolio with confidence, and this is a long-term strategy. So it not meant for day traders or short-term traders. You will hold your investments for a year. So if you want to learn more about how it works, then you can click on the link below in the description and go to five minute investing.com/free case study. And in terms of my transformation from losing money to making 30% a year was quite an interesting one because I tested over 300 strategies using programming to find out what works and what doesn't work. And in the end, I arrived at one strategy five years ago, and it has worked out pretty well so far. And my return for the last five years is 783% in total. And after that, I also started teaching other people how to invest as well.
So here's where Greg made 58% from Altrix. That is fantastic. Within three days, you can think about the kind of results you can achieve. If you're able to master investing effectively. Now this month, I'm looking to help an additional 20 professionals without a financial background to master investing and target 30% a year. The stretch goal is 30 people. Now, in terms of this video, I'm doing a giveaway as well called who'll by randomness. And if you want this book for free, just tap like and say, you want it into comments. And after a month or two, I'll come back and pick a winner from this video. And in terms of one of the previous videos, I have selected a winner, which is Mary. She won the book Sam Walton made in America. So he's the owner of Walmart. And if you are an entrepreneur or if you're interested in learning more about business and how it works, then this is a great book to start with. So that's it. And I'll see you in the next video.