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CTSSHAH avatar
#WarrenBuffett #GoldenRule Warren Buffett's Golden Rule is - "Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1." So what does this mean to you? How do you put this into actual practice? Share w/ us below 👇 Imagine you have $100 invested in Stock A which is a small cap, volatile, low chance of a very high return, and high chance of losing some money (not all). Now say Stock A experiences some unexpected negative news and drops 20% to $80. In order to get back to $100, it would requires a future increase of 25% of the now $80 just to get back to the original $100 ... Yup that is right it took -20% to get there but would require a +25% just to get back to even. This essentially happened to me last month w/ $GKOS (technically barely Mid-Cap) after medicare cut reimbursements and they had a 22% intraday drop. I decided to sell, take my lumps, and move on but that money is now gone and trying to make that money back will take time. Glad I sold off, because it dropped another ~10% a week later before trading even ever since. So it makes sense that Warren Buffet's number one rule is to "never lose money" in the stock market. Because once you do it is so much harder to make that money back - just like with our personal budget ... we have less control over how much money we make, but we do have far more control over how much money we spend (or lose in the stock market). P.S.: Here are top 100 quotes by Warren Buffett - https://www.fool.com/investing/best-warren-buffett-quotes.aspx #SlowAndSteady #DefensiveInvestor #LongTermInvestor #TheMoreYouKnow
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Nathan Raymer photo
So…what does this really mean? Is he saying that you should never SELL at a loss? Is the expectation that (even if you have to hold for a long time) sooner or later the share price will exceed your entry point?
CTSSHAH photo
@Fangdangler - Nah. During COVID 2020 he sold off and lost money in the airline industry. When presented w/ new information there is no need to hold onto something hoping it comes back ... sometimes you cut bait and run. My personal take away from it was that it was meant more to pick safe investments that are going to be blue chip companies, companies that consistently hold value and pay dividenSee more
Nathan Raymer photo
Thanks man, that’s my takeaway in my limited experience too. I’ve noticed most of my investments in smaller companies is down as much as 600%. (I seem to always get in right before it plummets). But the more we’ll established companies is only up a few %, but the key point is that its up!
Paul G. photo
So don't buy $SOFI or $AMC .... Shit.
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@Fangdangler You sir are not alone. I'm guilty of falling victim to this trap too. Why I do mostly safe stuff that way when I get suckered w/ my 10% on short term ... it doesn't drag down my long term wealth building goals. I just treat those loses as educational expenses and keep on trucking. But ya as a long term investor ... this is the sentiment and mindset I want people thinking about. SometimSee more
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@tenbeersdeep 😜 we all gotta live a little ... those are funded out of my entertainment budget
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❤️
Veronica photo
@ctsshah my take away from that waste never invest what you can't afford to lose
Cory photo
I’ve learned a lot by just using a set amount of money, that I would be comfortable with if lost. Just moving it around. Heck of a lot cheaper than business school or University tuition!
CTSSHAH photo
@Vero24 yup that is a great rule @Vc2miller yup, making mistakes is part of the learning process and as long as your learn from it ... then it becomes worth it. I guess another analogy would be like counting cards. Technically, this gives the card counter the advantage over the house but only if they have enough money and patience to play the long game to ride out the eventual runs of bad beats. AlSee more
💥Dayday💥 photo
Warren is giving advice to investors on his level,not ours guys.He can hold stock for as long as he wants to(while his other investments are correcting his portfolio)until advised(by an insider btw to sell off shares for lil profit or break even investments. Anyone who has invested in the market has lost at one point or another.Afterbacktesting,I saw the Covid 19 candle(price go down 300 pts inSee more
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@Daydaybee I guess when I read that I took it less to be about never selling and more to be never to invest in assets that have high risk and downsides. I think that thought process is applicable to the average investor. He has sold positions and lost money - most notably the airlines last year. But generally when he picks his investments he is looking for safe investments w/ history of producing iSee more
💥Dayday💥 photo
No,I see your point Hash(your nickname),just that"some investors"have people on the inside who are walking indicators and have a better heads up than us as retail do.Much love for sharing and keep it coming💥💥
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J-Ay@One1JonLuv
When holding for long term. How often do you collect gains? Or do you leave them alone and let them keep compiling? 🤔🤔🤔
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I have a rule of thumb that anything that hits 50% I’m selling. But I like gains and want to secure the bag and rebuy. My thinking is I’m gambling on house money. This is money I never had before but now I do. I take “that” money and put that into growth stocks or put them in the graveyard “etfs” I’ll also always be killed by Uncle Sam for taxes. So FYI lol
CTSSHAH photo
@Daydaybee I appreciate that ... I'm still paranoid that I'm gonna ruffle some feathers accidentally and get myself in trouble. And ya I'm sure Warren Buffett definitely has some insight that the rest of us don't have, but I do think his sentiment on investing allows for good fundamentals. @One1JonLuv So that is open for interpretation - see @AndrewJ1489 response which is good and does point out thatSee more
💥Dayday💥 photo
Very smart
💥Dayday💥 photo
It depends on the discount you entered the trade at.There is always an order block and a price that is respected an rejected and price trades lower to mitigate and take some lows
💥Dayday💥 photo
Which ticker are you curious about?
J-Ay photo
J-Ay@One1JonLuv
👍😜👍 awesome... 😊 thanks
💥Dayday💥 photo
Hash,do you mean you put money in your account as well as the dividends?
CTSSHAH photo
I typically automatically re-invest dividends into the original. The only time I turn it off is if I am doing tax loss harvesting to avoid an accidental wash sale
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