People have often asked me over the years “Homeless Investor, how are you so consistent? How do you always manage to do the impossible? Are you the evil twin of the Barefoot Investor?” And the answers are always “yes, yes, and yes.”
So to give my followers a chance to be as successful as me, I’ve decided to release them to the world.
1. Invest in the name
You can learn a lot about a company simply based on the name. Take Neuroscientific Biopharmaceuticals (NSB.ASX), you just know this company has a lot of smart people behind it, that’s a company name with 33 characters over only two words! The more letters, the more likely it is to have a bunch of Einsteins running the place.
2. Think quick
To maximise profits and limit losses you have to act fast, like really fast. If you invest in something and the next day it goes down, even just a little bit, just cut your losses and try again. That’s what those super successful algorithmic traders do, probably.
3. Double down. No wait. Triple down.
If you decide to not follow tip #2 and instead let your losses run or get hit with a sudden stock plummet, instead wait until you reach that point where you think “Well I might as well just let it run to zero at now”. That’s when you put in TRIPLE the amount you originally invested. Think about it, all the stock has to do is go back to its original point and you’re literally rolling in it. And what are the odds of a move like that happening twice in a row?
4. Listen to forums
There’s always smarter people than you out there. There’s a great quote that goes “If you’re the smartest man in the room, there’s no-one else in the room”, or something like that. Online stock forums are full of clever financial experts that will tell you exactly what to do when you’re unsure. And if you don’t know which poster to follow, the most accurate measure is whoever has the most ‘likes’ closely followed by whoever is the most aggressive.
5. Realize your dreams
Dreams can be a powerful investing tool, this may be the most controversial of my trading rules but trust me. The amount of times I’ve had a dream where one of my stocks has skyrocketed and the next day it’s actually up is astounding.
If you need proof, popular radio presenter Hamish Blake famously won big on the Melbourne cup by successfully interpreting a dream, linking ‘something green’ to the long odds cup winner – Green Moon. So you can even use your dreams as a way of backing yourself in when nothing else makes sense.
- The homeless investor shares his closely guarded trading rules - August 7, 2019