I was more of an index investor. When you are on Reddit and X and people start telling you that “VOO and Chill” and I OWN VOO shares but somehow there is misunderstanding there.
Again, I own VOO shares which is a S&p 500 INDEX fund but here is something important, you don’t need to make 100% of your portfolio into the index funds and I am saying this because I have experience this. On average, S&P 500 index funds double every 7.5 years. But, finding a good company, and it is very high and it brings a lot of volatility to your portfolio.
High beta stocks bring a lot of volatility to your portfolio. Volatility in general isn’t a bad thing neither it is a risk. If you can have the guts to hold under extreme volatility and with fragile macroeconomics, you can win big time.
The most important thing for any stock holder is “companies financial results” day. It is where big holders of the stock could see the potential in the company or what the company management is looking for In the future with their guidance.
I find a lot of my winners through social media. But, choose who you take your advice from. And, a single bad event from a company could actually make the stock trading sideline for months and quarters. For example, and I DON’T own $HIMS but when they were sued by another company because they were selling their compounds and then they have to halt selling them. Later, the stock saw some gains when they make an agreement but a lot of investors sold their shares because they saw no future for that company.
Can you achieve financial independence just by investing in Index funds?
Real wealthy people invests in index funds or ETFs but they are unlike you. They have wealth and make a lot of money outside of investing in the stock market. But, YOU, need to invests money in the market to become wealthy, finding and investing in good companies will make it possible for you to achieve financial independence and could retire early.
Again, it is not easy to invest in individual companies as these companies have risk of downside but the asymmetrical gains too.
You need a bull market:
You can do either: a bull market, or keep invested until there is a bullish market. A short term bear market is not a problem and we don’t have an extended bear market since 2008.
Bull market make it possible for you to have symmetrical gains and to have a stock run in a euphoric way.
Stay away from Options buying:
Buying options is one of the stupid thing you could do to yourself. You are on social media and seeing people making tens of thousands of dollars through Options buying, they are just showing you the good side of their trade but not their losers and they have multiple of them.
I like to do Options selling. It is a risky thing too but the risk is a good risk here. For example, if I SELL Options, any of the following could happen to me:
- If I sell Cash secured Puts, I will be assigned shares at a striking price.
- if I sell a covered call, the worst thing could happen is that I have to sell shares at a striking price and the profit is locked in that case which means no more upside above that point.
But, nobody should do Options selling as a full time job. I don’t sell Options every week or month. I sell Options on some of my positions and don’t sell options on stocks that I don’t hold. You understand the price action which is what make It a high potential for success.
PS: How to get wealthy by investing in high growth stocks?
- Find good stocks. Study them.
- Embrace the volatility.
- Stay invested.
- Sell very conservative Options.
- Learn.
You have to learn a lot with time.