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Happy New Year everyone
It's been great to see so many new faces doing so well in the small cap space over 2020, but stay humble
This market is vicious & will tear your eyes out the 1st chance it gets
Here are some hard learned tips from some extremely hard fought battles 1/12
It's been great to see so many new faces doing so well in the small cap space over 2020, but stay humble
This market is vicious & will tear your eyes out the 1st chance it gets
Here are some hard learned tips from some extremely hard fought battles 1/12
Tip 1- Above all protect your capital
No matter how well you've done on paper this year, end it by at least taking your original capital off the table
Put that money somewhere secure, well away from the market
If you can bank more than your original capital, do it
2/12
No matter how well you've done on paper this year, end it by at least taking your original capital off the table
Put that money somewhere secure, well away from the market
If you can bank more than your original capital, do it
2/12
Tip 2- Survive in the game (with capital) for at least two full cycles (Bull & Bear)
You'll have one hell of a journey, but the experience will be invaluable
Anyone who can survive two full cycles (& remain liquid) cleans up in the third cycle
Without fail
3/12
You'll have one hell of a journey, but the experience will be invaluable
Anyone who can survive two full cycles (& remain liquid) cleans up in the third cycle
Without fail
3/12
Tip 3- Never put >25% of your capital into one stock
This might sound punchy, but we're all gamblers at this end of the market
We're speculating, not investing
Even so, basic discipline is vital
>25% in 1 stock & you risk emotional over-commitment
That is a toxic killer 4/12
This might sound punchy, but we're all gamblers at this end of the market
We're speculating, not investing
Even so, basic discipline is vital
>25% in 1 stock & you risk emotional over-commitment
That is a toxic killer 4/12
Tip 4- Learn to cut your losses.
Really can't emphasise this one enough.
If you're wrong, you're wrong.
The table below is not mine, but illustrates perfectly the damage you can do to yourself by holding on too long (also confirms the importance of Tip 3)
5/12
Really can't emphasise this one enough.
If you're wrong, you're wrong.
The table below is not mine, but illustrates perfectly the damage you can do to yourself by holding on too long (also confirms the importance of Tip 3)
5/12
Tip 5- There are no protections for private investors in this market
None.
You are totally on your own here &
Even if a bunch of directors lie their arses off to steal your money there is nothing you will ever be able to do about it
Just trust me on this one
6/12
None.
You are totally on your own here &
Even if a bunch of directors lie their arses off to steal your money there is nothing you will ever be able to do about it
Just trust me on this one
6/12
Tip 6- Enter any small cap position on the basis you can afford to lose the entire stake
This is vital for peace of mind
It is, of course, important to go into any stock with an optimistic outlook (otherwise no point buying), but be able to walk away if you have to
7/12
This is vital for peace of mind
It is, of course, important to go into any stock with an optimistic outlook (otherwise no point buying), but be able to walk away if you have to
7/12
Tip 7- Never (never, never, never, never, never) believe a director's interests are fully aligned with yours
They never can be
There are certainly directors who are trustworthy, but always remember their priority is to look after themselves (as yours is to look after you)
8/12
They never can be
There are certainly directors who are trustworthy, but always remember their priority is to look after themselves (as yours is to look after you)
8/12
Tip 8- Read "Reminiscences of a Stock Operator"
If you read nothing else, read that book
So much wisdom in it, a Tweet cannot do it justice
Read it again a year later
Then again a year after that
Your trading life will be rewarded in ways you will find hard to believe
9/12
If you read nothing else, read that book
So much wisdom in it, a Tweet cannot do it justice
Read it again a year later
Then again a year after that
Your trading life will be rewarded in ways you will find hard to believe
9/12
Tip 9- Meet as many directors & City professionals as you can
Learn who you're up against
Know your enemy!
Doesn't matter how large or small your portfolio
Too many people "on the other side" thrive behind the "impressive" mystique of the City
Pull back the curtain!
10/12
Learn who you're up against
Know your enemy!
Doesn't matter how large or small your portfolio
Too many people "on the other side" thrive behind the "impressive" mystique of the City
Pull back the curtain!
10/12
Tip 10- Learn how to exit a position - the art of averaging out
Should have put this higher, but getting out of a multi bagger can be SO much tougher than getting into one
No one can call tops or bottoms
Be happy to leave some profit on the table for the next person
11/12
Should have put this higher, but getting out of a multi bagger can be SO much tougher than getting into one
No one can call tops or bottoms
Be happy to leave some profit on the table for the next person
11/12
Tip 11- If you find a penny stock that genuinely could deliver an outsize fundamental return, hold it
Come wind, rain or shine, those are your golden tickets
The key is to find a management team that EARNS your trust
Watch what directors do, listen less to what they say
12/12
Come wind, rain or shine, those are your golden tickets
The key is to find a management team that EARNS your trust
Watch what directors do, listen less to what they say
12/12
Above all, enjoy the game
This is an incredible environment to operate in, with some incredible people to learn from
The highs can be dizzying & the lows appalling, but the trick in the long run is to stay grounded throughout
Good luck next year & happy hunting to you all!
This is an incredible environment to operate in, with some incredible people to learn from
The highs can be dizzying & the lows appalling, but the trick in the long run is to stay grounded throughout
Good luck next year & happy hunting to you all!
