What did you learn about investing in 2019?

[Phil]

You can read all the investing books in the world, but some things you only learn by doing.

I’ve been investing on and off for 7-8 years, but Freetrade really got me back into it this year. Here’s what I’ve learned in 2019:

Pay attention to when earnings are

My worst moment of the year was when I bought Texas Instruments, unaware that the earnings were being released 3 days later. When they came out, the stock tanked 7.5% in a day. Having learned this lesson, when I invested in Okta, I bought either side of the earnings date and this was more successful.

Be patient

Netflix has been my worst performing stock this year. I bought on 31st Jan and after some gain, I was down 25% by late September. I’m quite good at buying and holding, so I just waited and it’s slowly risen back to a point where I’m down 2.7%.

If you’re confident, buy the dip

When Netflix was down so much, it made me question my views about whether it was a good company or not. In retrospect, I should have stuck with beliefs and bought more when it was down. I didn’t “buy the dip” this year and it’s something I want to try next year.

Allocate based on your confidence level

I know a lot more about some of the companies I own than others, and this gives me a varying level of confidence in them. I’ve allocated based on this confidence and it’s worked well for me this year. Apple is my biggest holding and since I bought on 31st Jan, I’m up 66%. I follow the company more closely and know more about it than any other.

Beware currency fluctuations

I’ve never paid much attention to currency fluctuations and although I knew that they could affect investments, I didn’t really see how this impacted me until this year. When the election result came out, some UK stocks went up 10%. Because the pound gained 2% and most of my investments are in dollars, it had a mainly adverse effect on my holdings. I’ll pay more attention to this next year.

Google Sheets is great

I hadn’t used a spreadsheet to track my finances before, but this year I discovered the GOOGLEFINANCE function and all of the ways you can use it. Now I have a quite advanced portfolio tracker and watchlist which gives me a much better way to track my investments than the standard info in the Stocks or Freetrade apps.

Stock evaluation websites

I didn’t know about the many stock evaluation websites until this year. The main one I’ve started using is Simply Wall St. after I saw it on @Certi.Curti’s YouTube channel. I haven’t paid for Simply Wall St (although I’ve been tempted), but it is a helpful way to research potential investments. I’ve also copied the way that they format their return reports for my Google Sheet.

Know your strategy and comfort zone

The more time you spend learning about investing, the more opportunities you’ll be tempted by. The problem is that you could get drawn into buying stocks you don’t understand. This year I’ve been good at largely avoiding this. I got interested in housebuilders after the election, but I know nothing about this industry so I’ve stayed clear.

Instead, this year has allowed me to reflect on what I want to invest in. My strategy is to focus on companies in the tech and consumer sectors. I prefer those with strong brands and a great customer experience. I’m mainly looking for growth, with a minor interest in value and dividends.

YouTube channels are a mixed bag

A lot of investing channels have very clickbait-y titles and thumbnails, but there are a few good ones. My favourite is The Swedish Investor, which summarises investing books.

This community is awesome

I’ve gotten a lot of value from the discussions here this year. For example, when I was researching Twitter, I post my thoughts and a couple of you responded with words of warning. Being able to share ideas with likeminded people makes investing a much more interesting and rewarding experience.

What did you learn this year?

[shane-aurora (Shane Ireland)]

Great writeup @Phil. Also don’t wait for entry point on great companies is my lesson of this year. Apple, Disney.

And dont sell out too soon. Sold out of Big Lots with a 12 euro loss and now its up 50% in a few weeks! Stick with your reasoning - theres a reason you bought into a company at a certain valuation (undervalued)…stick it out! Time in the market and all that

[krr13]

If I could add anything it would be the importance of diversification. Thats why funds are a good investment.

[Jamie1088 (The Scottish Investor)]

Selling at a loss should be last resort - I haven’t personally done it, but have faith in the market that things will eventually pick up.

Strategy - This is one I absolutely agree on, having an allocation, an entry and an exit plan on your stock selections. I’ve got my 2020 stocks already picked, their allocations etc all laid out in my notes.

Payout Ratio - When looking at dividend stocks I never used to bother, but now my first analysis is, is the payout under 70%? If it’s not I won’t touch it.

Buy what you use - Self Explanatory.

Keep investing in the S&P 500 - Because the only way that doesn’t go up long terms is if the world ends, to which point we won’t be here anyway

To add one more to what I’ve learned…

The importance of an emergency fund - Having this buffer incase you need access to cash will stop you stressing and being emotional over any dips, news or corrections in the market

[Certi.Curti]

I’ve learned too much to even mention the half but some of the key ones:

• Strategy, have one and stick with it.
• Don’t panic, get emotional
• Buy more when it falls, providing fundamentals are still good (similar to your Netflix example)
• There are many routes to the top, what works for some, may/may not work for others - so understand who you are and what will work for you and ignore the rest.
  –

TOP 10 STOCK MARKET LESSONS | UK Stock Market Investment Channel - Infant Investors

Thanks for the shoutout!

edit added a video - great topic @Phil

[Han]

Lots of good lessons in this thread, but I completely disagree with this.

@Jamie1088

Never Sell at a loss - I haven’t personally done it, but have faith in the market that things will eventually pick up.

[Jamie1088 (The Scottish Investor)]

I maybe should have worded my explanation better, but I suppose there is more tangibles than just it being black and white. From my experience so far, I’ve had stocks dip 30% that have rebounded (Centamin being the prime example) …suppose it comes under the bracket of don’t become emotional and be patient.

But yeh “never” is maybe a bit strong

[MOS182 (Mark O'Sullivan)]

@Phil

Simply Wall St

Never knew about this and I’m glad you shared! Signed up, got the mobile app and will be diving into it over the weekend.

[jbowen (Bow)]

Great piece. Everybodys still learning at the end of the day.

[FT27]

I’ve learnt of the importance of looking at freecashflow over earnings. Earnings can be faked but cash can’t. Cashflow also gives a better idea of how much can be returned to shareholders in the form of dividends and shate buy backs.

[Freetrade_Team]

Great post, Phil!

[mrpbennett]

+1 - sometimes stocks don’t go back, and with this attitude you could be out of a lot of cash, if you think a stinker is coming back.

During a fantasy folio, I also sold all my shares if a stock was below 8%. I could also come back in If it was to drop lower and I thought it would turn around. But giving my self a 8% loss target meant I took the emotion out of it.

[jspen (#1,490)]

My first year of investing - I’ve learnt to hold on for dear life… caused by AMD mainly. I’ve been down 17% and up 17% in the last 12 months. Currently up, and believe in the future of the company so will carry on holding.

Other than that, I’ve learn to stick the majority in ETF’s and watch my pot grow.

£1,730 deposited including £30 of free shares, currently up by 20% over the 12 months. Not every year will be the same of course.

[Rollingskies]

@Jamie1088 & @Han - almost never sell at a loss.

I’m sitting on some right old howlers, but refuse to sell, because I have set myself a rule for now to help me in the early years of investing. I believe there is a time to sell and realise a loss. If a piece of really bad news comes in it can take years to recover and often is a trend downwards. Some stocks can make that same loss up and more in no time which are on the way up. However, as a general rule impulsive reactions of selling just leaves you vulnerable to market movements and emotions.

[Rollingskies]

I think another thing about loss positions is we just hate seeing red. It makes us perhaps feel bad about ourselves and want to change them green just to cheer things. We’d rather sell up and have less money to see the whole screen green or with + signs.

We don’t like being reminded of our mistakes and perhaps worse don’t like to see bad luck when we feel we did absolutely nothing wrong to deserve the red stuff.

That’s why I like my wall. NO selling. End of.

[anon810895]

I propose changing the red negative percentage to just

“Lol”

Would make me better as I scroll through. (Looking at you Beyond Meat!)

[Rollingskies]

Beyond Meat is my biggest annoyance. I knew it was overpriced and knew it was all speculation and silly and yet i wanted a slice of the pie. FOMO and all that. It’s lost like 65%. I’m furious with myself.

[anon810895]

Ouch. I’m at 36%. Absolutely fuming I thought I’d bought the correction.

[Han]

This is a great thread. Here are a few things that I learned. And a few things I think you should learn.

This Community is Awesome
Agreed with Phil. It’s the first time I’ve really engaged with other investors. It’s not even about the quality of information, but just engaging fires up the neurons and broadens your scope. I’ve found out about new companies that I hadn’t previously considered even though they fit my outlook. From this thread, I’ve added Okta to my watchlist.

And there is quality here. This post by @engineer Charles Schwab Corporation (SCHW) - Share Chat - #20 by engineer lead me to invest in Schwab. I’m up 30% in just over 2 months.

Don’t wait for Freetrade
Schwab isn’t on Freetrade. The Invest Platform should already be here by now, it’s disappointing it isn’t. There are unactioned stock request threads where the company has produced significant gains since the thread was posted. If you want to buy something, buy it. Don’t wait. Even with the Invest platform, there will still be stuff that you want that is not available here.

Ignore IPOs
This isn’t something that I’ve learned this year. It’s something that I already knew and followed, but ignored and got burned on this year with Slack. With Slack, I already knew about Microsoft Teams and its growth when I invested, and I thought the market did too - I was wrong. I thought a direct listing would give a truer picture of the company’s value. By ignoring IPOs, you might miss some big gains, but it’s clear that the private markets are useless at pricing companies. So I’m staying away again.

[Phil]

@Certi.Curti

edit added a video - great topic @Phil

Thanks, now I’m YouTube famous!