It seems like a long time ago that I did not write here, but it did not give even five days. The interesting thing is that I have never been so rich last month and have never seen so much the price of the assets of my stock portfolio falling, from the end of the month to here have been almost $ 100 thousand falls (in about 15 days).
And what do I think of that? I think some swings are well half a mouth, which is very annoying, and some swings are surprising very well. I think I got vaccinated with the 2015 drop all year, and I was buying anyway, maybe that’s why the equity has taken such a big leap, I’ll explain later.
Let’s talk about purse here. And on a qualitative analysis of what the stock market and what is to be the Buy and Hold.
Stock Market is by far my favorite subject, more challenging, more intense and what most stimulates me to study and learn by its variety and complexity.
To get into the bag you have to know what you are doing and what your proposal is. It’s no use getting into “making money,” or “getting rich quick,” or thinking that “you’re smarter than others, or smarter than average.” If you propose to be a holder and to buy and hold you have to be sure of your strategy.
You have to KNOW that:
1) Shares are a LONG-TERM INVESTMENT or even INFINITE TERM.
2) Shares will not pay you well TODAY but in the future.
3) Actions that will cheer YOU THE FUTURE are those of GOOD companies.
4) Shares of RUINS companies and with good VALUATION will make you LOSE MONEY.
5) There is no VALUATION without a company and no COMPANY WITHOUT A VALUATION. If you do not buy numbers in tables, you ASSOCIATE a business in progress, if the going goes wrong, your company will go wrong.
6) If you want money for today, or next month, or next year, or 5 years from now, STAY OUT OF THE BAG (you are not required to enter) but you may be required to leave (and Between my legs, all beaten up).
7) Keep track of your business (but do not neurotic at most take a look at quarterly and a better look at the annual ONLY. This part here DOES NOT INCLUDE LISTING OR ASSET PROFITABILITY.
8 ) This one I do for myself, I usually take a look at the MULTIPLIES of the company on the day I’m going to buy to make sure I’m not buying the paper with a very distorted valuation in a bubble or going through some very large oscillation in some multiple considering the context of the company, Its competitors and the general market itself. For example, I would not buy a Nikkei with a PL of 200 or a PONTO.COM with PL of 150. No. There are several commandments of the defensive investor very well explained by Filipe Fischer, Peter Lynch, Ben Graham and Warren Buffet who oppose this, In general, you have to know your limit, your criteria.
I’m not a fucking stockbroker or a financier, I’m just another learner on the planet. And here I’m just passing some of my vision, and the things I read and learned.
I remember that when I started I thought like this:
Day 15 when I drop the money I’m going to buy Banco do Brasil.
On day 10 it rose 1%, on day 11 rose 2%, day 13 rose 0.5%, day 14 rose 1.5% and finally on the 15th when I bought, arrived at the end of the day she had fallen 3 % And I could have bought her cheaper some 50 cents.
Wow, I got really pissed off, cursing the gods, if that money I had bought 6 days ago would have 100 MORE actions on paper. I did not quite understand what I was doing, I was not really wrong, but I was thinking wrong. So here right now I would get PUTO after I bought the papyrus after TANTA ASH.
If I got PUTO after buying the paper after it went up a lot, I should be happy to buy it after it drops about 15% in a week, right? Yes and no, it’s cool, it’s comforting, it’s a little less painful, but it does not even mean much.
“Frugal, I do not understand is nothing. “”
The Buy and Hold WILL DIE full share in equity. Yes, because to live on stock income you have to have a lot, but VERY MUCH, it’s no use having half a dozen, it’s something that you’ll have to buy from the day you started working until you get there, AND IF YOU GET TO, In which you will be able to stop working without decreasing the standard of living or passing need.
Having 400 0u 1,000 shares more because you hit a low and bought those 1,000 shares at a price slightly lower, WILL NOT MAKE MUCH DIFFERENCE in the long run (and actions are an investment for the long term). Okay, that TODAY, saved 200 reais because I bought the lot a little cheaper, BUT WHAT WILL MEAN ONES 200 REAL HERE TO 30 YEARS?
Investing in stocks is like a private retirement that you were paying for yourself, with the difference that is paying you over a lifetime, and you can use the money or reinvest, which is wiser and wiser obviously.
How can I imagine 20-30 years from now?
More or less with a portfolio of good quality, well diversified companies, good and profitable companies, generating constant income, with thousands of shares of all of them, and being able to use some of the money to travel or pay some bills from home, without worrying In reinvesting EVERYTHING back in the wallet, and playing my life quietly. That’s what buy and hold is all about, helping you to have a somewhat quieter future.
The market is made up of hundreds of thousands of people, companies, assets, ETF funds, brokers, governments, currencies, managers, pension funds and individual investors. These guys buy and sell stocks and coins every day twenty-four hours a day. It’s no use if you want to know more than they or try to play pure and simple, the chance to lose is much higher than the chance to win.
To succeed in BH, you have to know VERY WELL what the BH consists of.
Do you really know? Or do you think you know?
I will define here in my understanding what is Buy and Hold (a Buffet).
BUY AND HOLD:
ACCUMULATE GOOD STOCK ACTIONS.
BUY TO FEW.
PROTECT YOUR MONEY.
DO NOT LOOK FOR TO DRINK WITH TRADES.
DO NOT MIX WITH SWING TRADE OR DAY TRADE OR OPERATE SOLD.
NEITHER THINK, NOR DREAM IN SELLING DISCOVERY.
DO NOT LEVER, DO NOT BET.
Ah but profitability …
Ah but the Fixed Income …
Ah but the Treasury Direct …
Guys, you can not compare investments in different assets, if they have different risks, IT DOES NOT HAVE.
You can even compare but essentially is wrong by nature, even if everything is accounted for in cash, different classes of assets such as real estate, stocks, and fixed income can not compare especially profitability. Every thing has its purpose, its function, its role, its nature. Every thing was made for one thing.
There is no way to compare the underdog, underachiever and skillful who scored 30 goals in the league with the tall and slow goalkeeper who defended 80 balls in the goal. How are you going to compare them? Measuring what? The height? The weight? The skin color? And what are you going to do with these data?
Each investment has its function. If you do not like or do not understand or are not prepared to invest in stocks, there is no problem, stay out and be happy. You do not invest in corn, and you’re not unhappy about it, are you? Same thing with actions.
Now, why is the title of the post?
Well, WHY HOLDER if BENEFIT when the paper falls.
It is in the falls that a small window opens for him to buy a paper that he likes for a lower price and thus to acquire MORE actions, and thus, IN THE END, will end with MORE HERITAGE.
Imagine two situations A and B. In A, the role ALWAYS OVER (positive profitability always), in B paper rises and falls, rises and falls, rises and falls, but in the end the final balance is positive and in 10 years it is in the Same price of A that always went up and never fell.
Consider the same company with two different scenarios and the term of 240 months in total. Disregard inflation and dividends for simplicity.
In situation A: he buys $ 1000 per month from the paper, the paper costs 20 reais in the first month and rises 1 real per month. The investor will ALWAYS see his equity and his positive profitability, BUT EVERY MONTH PASSES he will buy a little fewer shares of the company since the $ 1000 to invest are fixed. At the end of this period, it will have a number of X shares and an X1 equity.
In situation B he buys the same $ 1000 a month, the paper costs 20 reais in the first month and goes up and down many times, costing sometimes 9 reais, 8 reais, 6 reais, 10 reais. (Note that for example, if it has an average price of 15 reais a given time and the paper fall and cost only 10 reais and it is looking at profitability, will see -33% !! ). – WHAT DOSE HEIN? BUT, at the end of 240 months, he will have A LOT NUMBER the same company SHARES OF LARGEST and Y equity (MUCH BIGGER than X).
As the company is good and profits well, the share price and shareholder’s equity will always grow by investing in this company, since in the long term the quote follows the profits and good governance of the company. So what really matters is if the company is FACT, GOOD, NO MATCHING QUOTATION, and when the quote FALLS, instead of being SAD to see your NEGATIVE equity in that role, GO THERE AND BUY MORE!
If you tabulate the data in a worksheet (I do not know how to do this) you will see that in situation A: you have no unpleasant surprises, but you will end up with less equity than in situation B.
Oh, Frugal, it’s a lot of theory, it’s a fucking theory, and you still have to tabulate data and do a simulation, you work hard.
Wants to know? Let me give you an example. (True story)
The first time I bought M. Dias Branco MDIA3 she was at $ 89 a share, I went there and bought 100. R $ = 8900
Another time I went there and bought the $ 99 reais plus 100. R $ 9900
Again I bought the R $ 95 reais. R $ 9500
After these three purchases I had 300 MDIA3 shares at $ 94.33 the average price, right?
Is not that one day that same role was being traded at $ 80 reais?
For 300 x 80 = 24,000
and I had spent 28,300 to have those 300 shares.
That’s where the difference between the real BH and the sardines comes from, as some say.
What does the sardine think? Damn, I’ve lost $ 4300 reais in this action. If I had put in FI or savings, today I would have almost 30 thousand reais, reapplying the interest. The sardine is there seeing the red lines in Google Finance or the BM & F application or in the worksheet that he himself did at home. And he thinks BAD because the price of the company that he is a member has dropped a little, he decides NOT TO BUY MORE THE STOCK because he is starting the bad company or that it is not worth the investment.
What did I think of my buttons? Wow, I’m going to review the fundamentals of the company. I read the releases, the pictures of Bastter, everything correct, profit did not grow as much as last year but okay, without considerable debts, in a PL that was not out of the standard of good company, I’ll buy more, the company continues round.
As I was with good money I bought another 300 shares at 80 reais. R $ = 24000
Now I had spent R $ 24,000 + the previous R$ 28300 = R$ 52300,00 in this papyrus, divided by 600 = 87.16 the value of each stock in my hand.
Very good, I lowered my average price from R $ 94.33 to 87.16 in a good company role and with good fundamentals, and I doubled my position on it now I have 600 shares.
And what about the role of a good, well-managed and profitable company? That, it goes up.
Today I think there are 120 reais or something, and 120 x 600 = 72 thousand reais. It’s what I have more or less in that role.
So this is a practical and REAL example that happened to me that NOT NECESSARILY falling is a bad thing and that in the future and in the LONG TERM you can do real good deals in the days of these falls, panic, Trump or when The world will end.
Does that mean I want the paper to fall to 10 cents tomorrow for me to buy some 150,000 papers? Of course not. You have to have common sense, dropping to 10 cents is because the factory exploded and killed 10,000 employees.
Stock market volatility, negative returns and falling papers will HELP YOU, to buy more stocks. You do not have to despair or be sad, that’s the way it is, just that the company is good (it does not have to be phenomenal, just good).
Next week I go shopping.
It would not be bad at all until some time.
I hope you have understood the message well.