What I’ve learned in my five years of investing

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Since 2015, I have grown my money at a compound annual growth rate (CAGR) of 34%. My $5,000 investment will increase to $1.7 million after 20 years.

Before dismissing my success as beginner’s luck in a bull market, note that I have outperformed both the S&P 500 — which gained 11.63% in the same period — and Warren Buffett’s 20.3% record since 1965.

Here are some important lessons I’ve learned along the way.

1. All roads lead to Rome

A failed business venture taught me to play to my strengths

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Those who can, start businesses, and those who can’t, invest. Entrepreneurs and investors are not one and the same. It took losing €12,000 in a failed business venture to understand the critical difference. It’s money I couldn’t afford to lose — it hurt having to make loan repayments for a business that had already failed.

In 2011, two of my friends and I decided to open an internet café in Harare’s city centre. It’s incredible to think these used to be viable businesses. Yes, we should have foreseen the popularity of smartphones, but we didn’t. …

Is it time to cash in on Tesla?

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In the same week that protesters stormed the U.S. Capitol Hill, Tesla stock continued its upward price momentum. It added a further 24% in only a few days of trading in 2021. You would think it’s time to break out the champagne and celebrate. But not quite. This surge in price introduces a dilemma. Should people sell or hold on for more gains?

Is a surge in price a valid reason to sell your stocks?

Wrong Reasons To Sell

1. Predicted Market direction

No-one can predict the short-term market direction with any regularity. Beware of those who have been right occasionally; even a broken clock is right twice…

What does the future hold for Peloton?

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When is the right time to exit a sinking stock?

The other day, I received the dreaded email. One of my stock positions had “depreciated by a minimum of 10% from its initial value”. Translation — the sky is falling. What are you going to do about it?

Is this the beginning of the end for Peloton, as the naysayers have forecast? Or will they make a comeback like Muhammad Ali in the 1974 Rumble in the Jungle fight against George Foreman?

I opted for the latter and bought a few more shares (*not investment advice).

Here are the steps…

The best stock to buy in a diversified portfolio is that of your own company.

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A pivotal part of your financial freedom journey requires you to have far more assets than liabilities. The most accessible asset to own are stocks, and the best stock to buy is that of your own company.

There are no certainties in stock investing, but your employer’s stock is your best buy because:

  • You’re an expert in your company and industry.
  • It’s cheaper.
  • It can be a signal for you to start hunting for other job opportunities.
  • It makes you a part-owner of your company.

You’re an expert

You don’t need to waste time researching your company or industry.

Some things need to…

Knowledge of their insider talk is necessary.

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“Fred, Congrats on Q1. Can you give us some color on the headwinds for the quarter and why comps are down?”

Crikey, that’s a complex question! Only it isn’t; the analyst is simply asking for more details. Why don’t they say that? It ain’t rocket science, and any 10-year-old can understand if they drop the insider talk.

Yet, they won’t. When stock analysts appear on financial channels like CNBC or Yahoo Finance, they appear to speak a higher form of the English language, privy to select individuals — the more intelligent among us.

The insider talk gets worse on earning…

To evangelize is to entice.

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What’s the standard response to a child asking endless questions?

  • Why must I go to bed?
  • Why must I eat my vegetables?
  • Why must I go to church?

The universal response is “because I say so.” It pretty much works 100% of the time until the child grows up. At which point, subtlety is now needed. Telling a teenager “because I say so” might bring the desired results, but it also brings along resentment.

Likewise, Christians must be nuanced in how they engage non-Christians. Always proclaiming truths without enticing explanations breeds resentment. …

Make stock investing attractive and satisfying.

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Trading in and out of stocks regularly is compelling and addictive. It gets you out of your seat with excitement. But the same can’t be said of long-term investing.

Although holding on to your stock positions for years has been proven to work — the process isn’t enjoyable for most people.

I’m an enthusiastic and die-hard stock investor, but even I sometimes wish I could fast forward to a moment in the future when I can cash in my gains.

Long-term investing isn’t immediately attractive or satisfying. It’s understandable why people abandon it altogether. …

There are no participation trophies with online writing.

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Most of your articles will flop. It would be best if you made peace with this fact. Even the top writers don’t hit it out of the pack all the time. They rely on a few of their articles to drive most of their views in any given month.

Medium doesn’t hand out participation trophies for failed articles. The platform is more of a winner takes most.

You can either view it as a negative or positive. It’s one of those “is the glass half empty or half full?” scenarios. Personally, I…

It affects how you relate to yourself and others.

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Who do you love more, your partner or your children? That was the delicate question under discussion in my work office. My automatic response was to say, my wife. Everyone else opted for their children.

For years, my response ate at me. Should I have also said, my kids?

My search for answers led me to a 4th-century Christian philosopher, Aurelius Augustine. He proposes a concept called ordered love. Order is his way of saying type or kind.

You must love according to orders. A partner and a child are different orders. It’s improper to love your partner the same…

Flex Mauto

Uncomplicating money and life through honesty & realism. | flexmauto@gmail.com| newsletter — https://flexmauto.substack.com/

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