This is my Thou Shall Not Version. I figured sharing to the rest of the world too. Hope this helps you in your investing and longterm wealth creation.
(Please note that some of my commandments do echo Motley Fools’ David Gardner’s precepts and Chris Mayers’ 100 Baggers book. I recommend people to follow them and to read their works too.)
#Awesome10X 10 Commandments:
1.) Winners Win. Just because a winner has had a 1000% move in the last 3 years or 5 years does not mean that it has ended. Find out if the company’s moat is going to continue and grow because a winner will continue to win.
2.) TINA TOO TAM
TINA — There is no alternative
TOO — The Only One
TAM — Total Addressable Market
Ask yourself if the company you’re holding belongs to TINA TOO TAM. If it is. You have a winner so do not sell it cheap. You deserve to be paid 10X not 10%.
It takes time but it does happen.
On average, I reviewed a thousand companies and it takes 6 years to effectively get a 10X. If you do get a 10X in fewer than 3 months or a few 1–2 years, you may trim but not all. That could have grown faster than normal. Just gauge and check why it’s growing way too fast.
3.) SECULAR TREND EARLY or MATURE? We invest in early trends. It can be a mature company but growing in an early trend which means it can keep growing. Example Amazon invested in the unlimited upside of Cloud computing . A great company can continue growing even if it’s already grown 500X in the last 20 years. We’ve seen 100X grow to 500X and 1000X. However, these are rare. Your chances of getting a 10X is better if you simply invested earlier.
4.) DIVERSIFY . WE CANNOT OVER EMPHASIZE DIVERSIFICATION. You do not need to put all your money in a single trend, nor a single stock. Just coz you like videogames doesn’t mean your entrie portfolio only owns Nvidia or Nintendo or Sony or Activision Blizzard or Creepy Jar. Take an understanding that you can make so much money in a sector and within sectors more than 10 companies are likely growing. If you missed a Sunrun in Solar, we mentioned Sunpower. If you missed an Enphase, we said Solaredge exists. The point is that there are millions of companies in the world. You can make great returns by getting the average growth of a sector. It means if the entire solar industry is going to grow 300%, you may win with the #1 or #2 or #3 if they’re all winning together. Disney and Netflix and HBO Max and Roku are not competitors to each other. They help the streaming and connected tv revolution together.
5.) TIME IN THE MARKET is MORE IMPORTANT than TIMING the MARKET. While it is true that market timers can go all time highs and double your profit potential, the level of cost that it takes is 10X the effort that an average person will allot. Due to this, we try to cost average and add our winners. We also know that our losers we can let them have drawdowns as long as the quarter and news results and secular trends continue. Usually after a few quarters, our losers end up being rgiht. We embrace the fact that we can be wrong This is why we diversify in the first place.
6.) Prepare the Ark. Do not Predict the Rain Throughout your time and history, people will tell you an explosion happened, a recession, a bankruptcy or a depression. Your plan is to know you cannot predict everything. This is why we prepared the ark no matter what scenario. The Ark is your Cash. In the Biblical times, Noah built the Ark because God said it will rain. We believe it will rain and we don’t know what happens. This is why we emphasize ASSET ALLOCATION RULES! Your guideline is 25% cash. 25% stocks 25% business or job with 25% in propertiesIf you cannot invest in a property. build your job and business big enough to have more cash and keep investing in Global winning Stocks. Eventually you’ll be able to afford a house someday. We know how expensive houses are but we hope each one of us can own our houses too. Either way, if you don’t have cash — focus on your business. You can write,cook, teach, sing, solve a problem. You can do something online. You can sell something online. Think of what entrepreneurial business you can sell a service to help someone and ask them to pay you for that. Once you have cash, invest a few of that monthly or quarterly or yearly to your stocks. Increase your stocks from 5K usd to 10K usd to 15K usd to 20K usd..eventually 100K usd. This is a 10X journey not a 10 day journey. It will take 3–5 years to invest and maybe in your 6th year you would have 10X’d your original 10K usd but more than that, we hope we helped take you to your road of millions of dollars not just in stocks but how you grow your own business as well.
7.) NEVER SELL YOUR WINNERS. Dont say. Taking profits is great. It is a financial crime. a Mortal crime. Recall that JGS bought $SE at 10. he sold $SE at 24. $SE is 145. In a few year’s time $SE is 1000. Unless you can 100X your cash in another winner, do not sell your winners. $GOAT- The Greatest of All Time are not easy to find. The Amazon, Netflix, Sea Limited, Taylor Swift, Michael Jordan who keeps making all time high cashflows after decades are not normal. When you own it. Do not fucking sell it. IT IS A FINANCIAL CRIME TO YOURSELF
it doesnt matter if you only kept 1/2 of your original position because your winners will win over time. A small seed can grow to a big acorn over 6 years or 10 years. Do not sell winners.
8.) DECADES NOT DAYS we will overestimate the changes in a day or week but we underestimate the decades. Everyone never knew that games will grow to hundreds of billions of dollars
Even Sony Playstation didn’t know it. Even Zoom Video didn’t understand the total addressable market their product can change lives. Even the One Direction did not know when they were auditioning for UK’s X Factor they’d be where they were 10 years after. So do not count the greatness in decades of a wonderful company.
9.) SURROUND YOURSELF WITH WINNERS. Winners will always reside with other winners as well If you want to get better in finding winners, find people who help you find winners and stick and surround yourself with them. Do not underestimate that they can suggest new business ideas for you, the unspoken message is simple. Keep winners. surround winners. they’d help unlock new winners or help you hold existing winners.
10.) IMPRESSIVE FIRST IMPRESSIONS DO LAST. While people say first impressions dont last. We know great stocks always have a great impression to people the moment they first find that out. Unlock and uncover and learn more. If you get disappointed, so be it. But the best companies do make a great first impression and they help sustain it over days and decades too.
-facelesstrader
Find me on twitter @facelesstrader
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