Secrets to Profitable Stock Investing & Trading Part 1 of 2

right hi guys so in this video I'll be

talking about the difference between

stop investing and stop training because

a lot of people get really confused

between the two and that's why they

can't make money consistently you see

there's some stocks that are good for

investing but bad for training and then

some stocks which are good for trading

and bad for investing and people that do

buy the wrong stock for the wrong

purpose I mean buy a stock that's meant

for trading but they invest in it and

they lose money right and people so get

really confused let me buy a stock if it

drops they're not sure it's right by all

your average down alright cut my losses

okay and if I buy a stock goes I'm gonna

take profit quickly don't get greedy or

do I let it compound and double it

triple overtime they can really confuse

because they're not sure hey is it a

stuff for investing or stuff for

training and I'm here to tell you that

investing and trading in a stock market

are two totally different games it's

like comparing basketball to golf all

right I mean they have similarities they

both involve putting balls in holes but

totally different rules totally

different skill sets so if you want to

learn how to master both basketball and

golf right stay tuned now another way to

explain the difference between investing

in stocks and trading is investing it's

kind of like getting married or having a

long-term relationship and trading is

like a one-night stand now as you know

there's some people who make great one

extends the exciting right but you don't

marry them because they're not

trustworthy in the long run they are

volatile you are predictable right same

time there are people who make really

good husbands and wives really good

spouses but they may not make an

exciting one extent because they don't

sexy they're not in flirtatious right so

same thing in the stock market there are

some stocks are great for investing

because they are predictable get

trustworthy you know they're gonna go up

in the long run but a shorter they may

not move you know as fast right by the

same time there's some stocks great for

trading I've done really fast but you

don't want to hold them for free

they're really unpredictable in the

future people ask me can I be both an

investor in a trader absolutely I do

both as you know right so I've got to

stop investing portfolio why invest in

great businesses and a trustworthy

they're gonna go up in a long run and

I've got a trading portfolio back go in

and out really really fast you can do

both it's like you can't both be married

have a one-night stand just make sure

they don't mean you put it in the same

portfolio you will die all right you get

confused you call out the wrong name in

bed you get killed you lose money all

right so what are the secrets to

successful stop investing or the secrets

to a successful marriage well number one

is to marry the right person right is to

invest in the right stop

so for investing what kind of stocks do

we want to buy we only want to buy

stocks of fundamentally great businesses

that we know will increase in value over

time with a high level of certainty like

ninety five to her percent certainty you

increase in value all right now what

makes a copy more and more valuable over

time bottom line profits a business is a

money-making machine so the more money

it makes in the future the more it is


it is worth more in the future the share

price will eventually be higher

regardless of short-term volatility so

how can we be so sure that the business

is gonna make more money in the future

well in my very momentum investing

course I teach people how to analyze a

business inside out by studying the

financial statements and I've got a

seven step checklist that if the stock

can pass the seven steps it's a very

high certainty you'll make more in the

future you work more in the future we're

sharing some of these steps right now

step number one is to only invest in

businesses with a history of

consistently growing sales revenue net

income and cash flow from operations so

past performance so if the business for

the last five to ten

yes it can increase sales every year it

increases the net profit every year

increases cash flow every year high

chance it can continue to do this in the

future second step I only invest in

businesses within wide economic mode

that protects it from competition

you see when a business has a white

board it's got little or no competition

and these are the only kind of

businesses I want to invest it now

what's a mode in the all these Kings

live in castles so how do they protect

the castle from invaders they build a

white moat around it so the work the mod

is a water barrier and they put a lot of

crocodiles and piranhas in the moat

right so same thing of a business when

it's got a white more competitors cannot

take away their customers and some

result their sales and profits grew

every single year but when a business

does not have a moat what happens and so

he loses market she loses customers so

the sales and profits are unpredictable

they're inconsistent and you've got no

idea where you'll be killed by a

competitor so what can be the business

this white mode there are many things

I'm gonna share it two of them right now

number one is what it's not as a brand

monopoly so bread monopoly means that

when you mentioned the product is the

top of mine recall for most people's the

first thing that comes to mind alright

so for example if I mentioned search

engine top of my Google Ryan effect now

people say I'm gonna Google is Google

that so everyone uses Google right if I

mentioned videos right three videos what

do you think about you don't say pornhub

YouTube right

so YouTube has a brand monopoly now who

owns YouTube and who owns Google

alphabet right so alphabet has a white

economic mode it has little or no

competition and so is future sales and

profits are very certain and print

double right another example would be

what is known as high switching cost

high switching cost means the moment

that customer uses the product is really

hard for them to change to another brand

it's too expensive to change to a new

brand so good example B Adobe Adobe

makes software designing software Dobby

Photoshop Adobe PageMaker Dobby

achromatic right so imagine designers

use Adobe software they went to design

school for three to four years to let

designing now after they graduate do you

think you're gonna change software know

they spent FOIAs learning Adobe it's

gonna be really tough for it to change

to another brand

so there's stuck to Adobe the entire

lives and as a result Adobe looks in the

customers for life

same thing with Microsoft Office alright

so these are the businesses that we

wanted man you wanna invest in because

they've got little or no competition

future sales and profits are very

certain predictable business will rise

in value over time all right one else

makes a company's safe to invest in

number tree we only want to invest in

companies with very low debt they're

very very conservative dead and a lot of

cash on the balance sheet so they're in

the future if they go to a recession or

a pandemic when their competitors die

you know they won't die because they've

got a lot of cash and no debt see it's

really hot for business to go bankrupt

if there's no debt right

so the recession guess what these

businesses get stronger and stronger

because got all the cash go no debt and

they're able to buy up the competitors

and it much from the recession even

stronger and these are the businesses I

invested so you can see that choosing a

stock for investing is what choosing

someone to marry we're not choosing

someone to marry to bring with your

parents what are you looking for you

know so much interested in you know

sexiness and all that although that's

important right we are more interested

in the person's fundamentals right a

person's values the intelligent you're

honest they're hard-working you're good


design so same thing with the business

alright time for pop quiz I'm not sure

some stops at you and you tell me if

these stocks are good for marriage or

one-night stands all right ready number

one Tesla is Tesla stop you would invest

in or only for short-term trade think

about it and the answer is Tesla is only

for a short-term trade Tesla's the

company I would never dare to invest in

why because it is unpredictable it is

uncertain in its future right as to many

variables and it fails the first three

steps if you look at the last couple of

years it does not have consistent cash

flow from operations in fact cash flow

from operations is negative on certain

years it doesn't make increasing

consistent profit in fact something is

it loses a lot of money all right

does it have a wide economic more no

Tesla has got a lot of potential

competitors there's so many car

manufacturers that could compete if

Tesla in the future so high competitive

environment yeah

next Tesla has got high levels of debt

and it's really dangerous because it

could go bust if they can't manage their

debt so once again Tesla may be great

for short-term trade but not for

long-term investment okay next how about

you like the airline's or any airlines

for that matter all right so do allies

make good investment the answer is no

right you should never invest in

industries like airlines like

manufacturing like energy like oil and

gas no no no no no why is because these

businesses do not have a why economic

mode remember white vote means little or

no competition airlines have a lot of

competition all and gas companies have a

lot of competition so when there's a lot

of competition what happens sales and

profits are not predictable profit

margins are very low sales are

inconsistent really dangerous for

investing alright next one you ready


as a controversial one Facebook is it

good for investing or only for trading

the answer is Facebook is great for

investing one of the cost stocks in

mining investment portfolio why number

one every single year for the last seven

to eight years it has grown sales every

year net profit and cache of operations

it's really a consistent performance

next does it a white increment mode yes

alright it has a brand monopoly when you

think of social media what do you think

about what's app what set is owned by

Facebook you think of Instagram

Instagram is for my facebook you think

of Facebook which is bought by Facebook

right of course you've got Twitter

you've got snapchat got pic talk but

they are pretty insignificant right

Facebook is the brand monopoly and they

have got what is known as a network

effect the more people then use Facebook

the more people wanna use face because

everyone's using Facebook it's got high

switching cost once you are there your

friends are there your memories are your

photos are there is really hard to

transfer something or transfer it to a

different social media platform right

most importantly Facebook has little or

no bet it's gonna hardly any dent and

it's got obscene amount of cash on the

balance sheet right so there you go on

Facebook all you need to know is that

out of thousands of stocks in a stock

market less than one percent of them are

investable so for example in the US they

are about eight thousand stocks less

than fifty of them are safe enough to

invest in alright so in the value

momentum investing cost right teach you

how to find and identify that 1% of

stocks in the world that are investable

and if you're too lazy to do it yourself

we have got the ultimate investors plate

where I do it for you and I show you my

portfolio live and you can see exactly

what I'm investing in every single day

right it's a no-brainer approach to

really building your wealth all right

now to be a successful investor knowing


- bye it's not good enough you have to

know exactly when to buy it see a great

business can be a bad investment if you

buy at the wrong time if you pay too

higher price for it but a great business

can be a fantastic investment if you pay

a low enough price for it so you only

want to buy a start of a great business

only when the share price is

significantly undervalued which means

the share price is selling way below the

true intrinsic value of the company all

right remember when you select a great

business you are confident you are

certain that you will increase in value

over time so this green line represents

represents the intrinsic value but in

the short term the share price doesn't

always reflect the true value because in

a short term share prices are driven by

market manipulation driven by news

driven by emotions right so whenever

there's good news whenever times are

great people start buying the share

price goes up yeah it's going out

fantastic but guess what eventually this

will be bad news no trade war pandemic

crisis scandal people panic and they

sell what happens share price good oh

wait oh my god oh my God we're gonna die

oh my god and after while good news

again you know company's doing well

economy is expanding yes all right

fantastic oh my god and then something

else happens drink detergent trade oh my

god Crandell go up again right so we

call this volatility now as investors we

love volatility because it creates the

mispricing of the asset it causes a

share price to be disconnected to the

true value of the business now here's

the good news

remember we said we want to buy when the

price is significantly undervalued when

does that happen

does it happen during good times or bad

times it happens during bad times so as

investors we wait for bad

needs to hit the market to hit the stock

and when people are panicking and

selling in fear and the share price goes

way below the intrinsic value like over

here when it's way below the intrinsic

value that's where they start to buy

shares at a discount because we know

it's kinda like a rubber band right then

you stretch a rubber band eventually if

you know it's gonna be worth this first

step back step back so once we buy here

we know it's gonna snap back all the way

and gonna make a lot of money so

question people ask me would be hey so

how do you is it a bottom how do you

know it's low enough now you can't

always catch the bottom and you don't

have to right personally for me I like

to see that the price is at least 20%

below its true value right and it's a

20% discount and at a strong level of

support that's where technical analysis

comes in to support levels and I start

to add shares now is it possible that

you add shares and the price goes even

lower of course it is so for investing

we don't put a stop loss why because

it's tough like in a marriage in a

marriage if your spouse goes nuts for a

while you don't cut them off you don't

run away and abandon them right because

you don't have a good person so you

stick with them through the ups and

downs through thick and thin because you

know that eventually be a good person

they'll start to become great again

they're just a short-term bad mood so

take advantage of the bad mood to kind

of like that brownie points by you know

buying them flowers and being there for

them right so same thing must stop

so in investing you never want to buy at

one time it's gonna run on bullets so if

I want to invest $100 in facebook I'm

not gonna put in a hundred dollars at a

time I'm gonna buy twenty five dollars

worth first if it drops lower I buy

someone I buy some more as it goes low

and lower I buy more and a bigger

discount the bigger discount the better

right because only I'm gonna make more

money when it eventually reverts to his

intrinsic value all right so let's take

a look at a real live example Facebook


mentioned Facebook is a great business

it passes all my criteria so I know that

Facebook would definitely increase in

value over time so this green line that

I draw represents its intrinsic value so

you gotta know where the green line is

so how do we calculate this intrinsic

value that changes over time well you

have to use you know a discounted cash

flow method like this intrinsic value

calculator so again I teach my students

how to value different kind of

businesses in the value momentum

investing cost so for Facebook we use a

discounter 10-year cash flow analysis

right so based on the analysis you can

see facebook has an intrinsic value of

two hundred and twenty three dollars

right now again this changes over time

as it gets more valuable up based on its

current cash flow based on the cash in

the bank it's worth two to three right

now so you can see again currently it is

worth two to tree all right so currently

the share price as of yesterday was two

to nine so it is now above the green

light is over value so I would not add

any more shares of Facebook but you can

see that in the last three years

what happened like that diagram right

shows like good news bad news good news

oh my god bad news good news again bad

news good news right so this is

volatility so this bad news was because

of the scandal right the privacy data

scandal the Cambridge and Nell Ithaca

scandal at Facebook face and when it

called laughs what did I do

that's when I started buying shares so I

buy shares when it's bad news when

there's good news like now I don't buy

shares anymore and of course this was a

covert 19 pandemic bear market crash

I bought shares there I bought shares

there now again exactly where do I buy

well I look at

technical analysis so I put in some

moving averages like that when BAM okay

and I know it looks a bit messy so let

me remove some of them like this one

okay so notice that I draw

we call this support levels these are

cost support levels that we learn in

technical analysis

so whenever the price is below the

intrinsic value by is 20% I'm getting a

good discount once it hits a strong

level of support that's when I buy

that's when I buy that's when I buy and

I buy before the rubberband springs back

to the intrinsic value

now besides looking support levels you

can also use moving averages right so

this is a short term moving average like

the 20 40 am a when you see the 20

crossing back above the 40 ma there is a

short term uptrend signal to catch the

wave up it's a downtrend because the

twin is below the 40 when it crosses

over it could be a signal to right away

so I use a combination of value

investing and momentum investing that's

why it's got value momentum investing so

you can see from one of my portfolios

over here that's what I do I identify

great businesses wait for bad news wait

for people panicking goes below the

intrinsic value I accumulate at support

levels and with it when there's a change

in trend so for example look at a

facebook over here right so I started

buying in stages so my average price at

this particular entry was about 182 so

the current price is two to nine right

so sitting on about 18 grand worth of

profits but right now it's a bit

expensive it's being overvalued

but I'm not selling yet because it could

go a bit higher ribbon rubberband could

go all the way up and then when it

reverses you know I could cash out some

shares by one two as well so like a lion

in the Safari identify the juicy deer

and once the days we

and he's crippled I attacked the deer so

he couldn't watch the market regularly

for these opportunities when it's bad

news you pounce right people say I don't

have the time to watch the market

regularly great subscribe to the

ultimate investors playbook where I will

tell you the moment a stop is right for

the picking and that's how my community

of investors they kind of like follow me

every single day to look for

opportunities alright last two steps I

me finish this off right so next step is

to know how many shares to buy okay and

as an investor you never want to put all

your eggs in one basket so you always

wanna have a portfolio of at least 10 to

30 great businesses and each stop is

allocated an equal percentage roughly so

for example if you have 10 grand to

invest and you want to buy 10 stocks

divide equally so each stock has a

$1,000 allocation for example alright so

why do we need to add a bit of

diversification because can happen

sometimes no matter how great a business

is it could be hit badly in the short

term like for example Boeing right

Boeing is one of the great companies in

my portfolio I call it the ex-beauty

Queen they got hit by a truck now is in

a coma right now I believe that it will

wake up of the coma

eventually I gotta be patient okay but

in the meanwhile I've got other great

wives okay in my concubine that are

doing really well they are making up for

the short-term drop in Boeing okay now

when to sell for investing I'm not

interested in a 20 or 30 percent profit

now for investments I'm looking for my

initial investment to double triple

quadruple increases the 10 bag over time

like you know when I first bought right

Microsoft had about 14 dollars right so

from from $14 when he went up to 16 17

dollars I could have sold it for 20%

profit I didn't because it's still a

great business and today it's almost 200

Bichette it has increased tenfold and

that's how you build massive wealth in

the markets but I will only sell if the

business fundamentals change you notice

it is no longer a good business it loses

its economic more that's when you get

out and I'm gonna teach you exactly how

to get out before everyone else

right in the evaluable mentum investing

cost what's the leading indicator to get

out even before the market crisis it is

or you can also sell when the price is

significantly over value like the rubber

band so the price is way too high above

intrinsic value gonna step back you

could sell some shares raise cash any

crash buy back again right so in general

for investing the wind rate that you

should target is between 95 to 100% win

rate now I'm not saying this to show off

to you but let me show off the you are

right for the last 15 years since I've

been using this approach strategy I have

never ever lost money on an investment

never my win rate for investing is a

hundred percent now this is different

from trading right in the next part of

this video I'll talk about short-term

training or in training you can't get a

90 percent of it great in training your

win rate is between 45 to 60 percent win

rate in fact if you can get a 60 percent

win rate in training you among the best

traders in the world but for investing a

hundred percent win rate is very very

possible now the reason I can get a hard

percent win rate is not because I'm

great is because I only pick very great

companies that are very safe which I

mentioned earlier on and when you pick

great businesses if you hold long enough

you whole long enough you will always

win right so for a timeframe you always

want to take at least a year to two year

time frame so that in a short term

market crash short term bear market no

worries you will recover eventually all

right so I hope that in this short


you now know the secrets of profitable

investing or profitable marriage okay in

the next part of this video I'll be

talking about profitable stock trading

which is a totally different game how to

be great at one-night stands and make

quick shot and profits with one-night

stand so I'll see you in part 2 of this

video may the markets be with you so if

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