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#3 - How do you find your first stock?

Updated: May 4, 2022


How to find first stock to invest | Invest with Martin

Welcome, welcome wonderful Sunday people. This is todays two topics.

Sunday-to-Sunday Update
  • Update on the war in Ukraine

The very basics
  • How do you find your first stock?

This will be a 5 min. read. Sooo. Let's. Get. Started!


Update on the war

All things considered, it seems that the war in Ukraine has now stabilized a bit, in terms of the financial markets.

I'm aware of the rising tensions and that it's still unknown what exactly Putin will do but for now, the market seems to have priced in the current outcomes.

"Priced in" means that the stock market tries to predict what will happen in the future, by setting a price that is most realistic going forward. It is, however, always exaggerated because people tend to panic and sell too much (price goes down, a lot), or be euphoric and buy too much (price goes up, a lot).

When the war started, that meant the stock market also had to go down 10-15% to price in the future outcome of it.

Why? Because companies, in general, will likely have less revenue, and it will be harder to do business in the future. The price is as such, always a reflection of what the stock market thinks will happen, going forward.

This week we have seen the German DAX Index (like we talked about last time), go UP 9%. That's a lot in one week for one of the biggest indexes in Europe.

What this tells me, is that the stock market is more optimistic about the outcome of the war.

There remain two questions still:

  • What will Putin's main decision be?

  • What is China's final position in all of this?

If you're interested in more of that, Ray Dalio wrote a LOOONG article on this.

That was the short update on the markets.

Let's look at how you find your very first stock.




HOW DO YOU FIND YOUR FIRST STOCK?


Finding your first stock is easier than finding number 2, 3, 4 and so on. Here's why: When you buy your very first stock, you shouldn't be thinking about whether or not it's going to make you a lot of money, or if it's necessarily the right one. You should be thinking: "What is the first stock that I can learn from?". The stock market, like anything, is something we need to learn how to maneuver. The most important part, is your EMOTIONS. You might think "Emotions.... What about them?". Well, when you at some point have your money deep in the stock market, and everything drops 20% (like they just did in the last 3 weeks), then you will know what I mean. It's a complete rollercoaster ride in the beginning. People literally have panic attacks, or check their stocks 30 times a day. That's not why we're here. I would say that your emotions account for 80% of your performance in the stock market. It's what separates the novice investor from the experienced one. We want to be rational and calm, but to get to that point we need to experience some ups and downs first. It's a bit like an amusement park. You go for some of the smaller rollercoasters first, before you drink 2 liters of soda and go on the Amazing Dragon Slayer with 6 loops and a 40-meter drop. The same goes for the stock market. Start small. Put a bit of money in a stock, and see how you react when it goes up and down. Learn from this experience, and think about what you will do next time. See the first money as "playing around" money. It could be €100, or 1-5% of your savings. Whatever makes you feel like you have a bit of skin in the game, but won't be even close to ruining you. When you know what it means to be in the stock market, then you can start putting in more money, which is now waaay less risky, simply because you know what you're doing. You understand the whole concept better and how to maneuver it. Ease into it. Find a stock where stuff happens, and where it's easy to find information about it. Here are some ideas for inspiration only:

Again, it's not dead important what stock it is just that you can learn from it and try things out first. Like buying a small kids go-kart before you jump into a Formula 1 race car.

Stock number 2, 3 and 4...

When it comes to finding your next stocks, you should then start thinking about what they're doing, if they are making money, how they would look long-term, and so on. I will cover more of this in next week's newsletter. I really hope this was helpful and made you think. Maybe you even want to get started? ;)


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