1. Investment Advice
UWIG

2. Step one Have a strategy, stick to it
Most investors end up performing poorly because they either don’t have a strategy, or they have one and don’t follow it properly, letting emotions dominate their decisions
The result?
Buying high and selling low
Plan ahead and follow the plan, this takes emotions out of investing
Make sure you have a plan both for buying a stock, and selling it (your plan might be to never sell it)
People expend most of their efforts trying to value a stock in order to figure out a good price at which to buy
So when do you sell?
Figure it out in advance and you’ll do better over the long term

3. What Strategy Should you Follow?
Depends who you are
Don’t have much time to follow markets?
Buy an ETF
Good for diversification
You won’t beat the market, but you’ll get the market return at the lowest possible cost, which already puts you ahead of most investors
Think you know a bit more, but still don’t have time to research individual stocks?
ETFs on specific industries
Many industries go in cycles, you can buy when they are out of favour and sell when they perform well
WARNING: investors are terrible at market timing
(Don’t expect you will consistently buy low and sell high)

4. What Strategy Should you Follow?
Lots of time, lots of knowledge
Value investing is the way to go
This is how Warren Buffett and many other successful investors made big money
They did over a long period of time
Many believe this is the best way to invest, period

5. Value Investing
If you’re a value investor, sell when the price exceeds your valuation for the company
If you’re investing for the very long term, just buy a company that will survive long term and never sell it, collecting (and reinvesting) dividends all the way.
Want to learn about value investing
Read Security Analysis, by Graham and Dodd

6. Growth Investing for growth
Look for high ROE (NI over book value of equity)
This is a measure of the return a firm earns on its past investments
This is the firm’s version of compounding. High return, reinvested into the firm.
Misconception:
Investing for growth is all about “finding the next big thing” or you have to invest in venture stocks or penny stocks, or some other speculative approach
This is far too risky, and more likely will be a huge waste of time and money.
Better to find established firms that have a high ROE, as this compounds over time
Great example NIke

7. Nike
Founded in 1964
In 1985, already over 20 years old, had 50% of the US shoe market
(went public in 1980)
This was not a small company
If you bouth $5000 of Nike stock in 1985 it would be worth $2.5 million today

8. Options If you insist on taking on more risk
Learn about options trading
Lots of upside, limits your losses
although you could lose your entire investment
Can also be used as a type of insurance, to protect your portfolio from losses
Selling options can add extra income to your potfolio

9. Other Strategies Day trading (Don’t do it, you won’t beat computers)
If the stock/option doubles in price, sell half your position, you can’t lose
Many successful investors also know when to sell a loser
This is important for preserving your wealth and minimizing losses
One possibility: 25% trailing stop, means selling the postion when the stock falls 25% from its high after you buy it