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Trumponomics: Jump into the Market Now and Change Your Future

4 | By Shah Gilani

Stocks are notching higher highs, but a lot of would-be investors are still on the sidelines.

Some have been scared of the market forever. Some have been scared since 2008. And some have been scared of getting back in since the election of Donald Trump.

Scared investors who avoid the markets during uncertain times think they’re making the smart play. But being scared doesn’t make you money, it costs you money. Over your lifetime, it will cost you a lot of money.

Here are the reasons why you shouldn’t be scared, how to successfully invest, and how to play the market right now…

The Two Rules for Successful Investing

Investing is easy because it’s personal.  It’s all about you. Who knows you better than you do?

You can become a highly confident and successful investor if you just trust yourself.

When it comes to advice from anyone else, there’s a lot of really good counsel out there… but there’s also a lot of really bad brokers out there dealing in self-serving advice.

There are, of course, good brokers and good registered investment advisors, and there is a huge difference between those two. I’ll help you to understand the difference next week (and it may shock you).
But, in the end, it’s you.

Being a confident and successful investor boils down to two things:

  1. Invest in what you understand, and…
  2. Don’t be afraid to make small mistakes.

Yes, mistakes mean maybe losing some of the time.

To my first point: invest in what you know. If you know cars, think about buying shares in car companies, parts companies, or a company in an industry that serves the automobile industry.

If you like beauty, fashion, or shopping, invest in the cosmetics industry, the clothing industry, or other retail companies.

Essentially, if you buy shares in companies whose business you understand, you’ll watch the stocks you’re invested in.

And that’s critical. Investors lose money because they lose sight of the stocks they’re invested in. They don’t follow them. That’s no one’s fault but their own.

If it’s your money, no one is more responsible for your money, future, or potential to become wealthy than you. It’s your job to make money in the market. Learn to love your work.

To my second point: if you’ve been scared, get over it. You’re in charge and you’re going to be a smart, successful investor.

You get over the scared part of investing by simply accepting that the market can be a strange beast. Stocks don’t always do what you expect them to do.

Successful investing is all about learning from your winners and losers. But, let’s face it, it’s losing that hurts and scares us.

Everyone loses sometimes. The trick to learning from this is to lose small and figure out what just happened that cost you some money. That goes back to knowing the companies you’re invested in, knowing what’s going on with them, and figuring out why the stock you own just did what it did.

Google the company and ask questions like, “Why did XYZ stock drop today/yesterday?” and put in the date. Sometimes there will be articles about your company that explain what happened.

You should read as much as you can about the stocks you own. Understanding what analysts or journalists are saying about what you’re invested in helps you understand what others are thinking. Then you get to decide whether or not you agree with them.

Once you buy a stock, you need to figure out what you’re going to do with it if it goes down.

Sometimes the stock will drop because of bad earnings, or some other company-specific news. And sometimes your stocks will go down no matter how healthy the company is simply because the rest of the market is going down.

That’s where portfolio management comes in. There’s a lot to learn about how to manage your portfolio, but you start the same way – by learning how to manage one or two stocks.

What to Do If Your Stock Falls

There are three things to think about if your stock goes down, and what you do depends on why it happened.

  1. You could sell the stock.
  2. You could hold on to it.
  3. You could buy more of it at a lower price.

Always have a “get-out level.” Make that get-out price a small amount, maybe 10%-15% below where you got in. If you get out there, you have a small loss and can reassess what happened.
If you hold onto a stock as it goes down, the negative is that it’s painful to watch yourself losing money.

The other side of that is called “buy and hold.” That means you buy and hold the stock no matter what happens, under the theory that stocks eventually rise again. That’s just not the case.

So, if you’re a beginner, I don’t recommend you buy and hold. If you do and you are losing money, it paralyzes you, it makes you scared to make decisions. You never, ever want to be scared. You’re better off taking that small loss and learning from it.

As far as buying more stock when it goes down, leave that to the pros. You will eventually become one, so you can think about averaging down when you’re up for it.

When your stock goes up, it’s fun. You’re making money, which is addicting.

As long as your stock keeps going up, keep enjoying the ride. While you are watching the company and the stock, if you see reasons to sell the stock, sell it. It never hurts to make a profit.

Use What You Know ASAP

Now, let’s talk about where the market is now and what you should do if you’re on the sidelines.

Get in. The water’s warm.

Sure, you might be scared because the White House is being run by newbies who are shaking a lot of trees here and across the globe.

But you’re not investing in the White House. You’re investing in the stock market.

So what if the White House looks topsy-turvy? It always looks that way to someone.

Look at the stock market – what’s it telling us? It’s gone a lot higher since Donald Trump’s election.

It’s saying it thinks the future will be more business friendly. It’s saying there’s money to be made if the economy starts growing again. It’s optimistic.

Does the market know what the future holds? Sometimes it does. At least, it’s right until it changes its mind. Then it’s right about going down. The market’s rarely wrong – it just reflects what the majority of investors believe the future holds.

I’m bullish for a lot of reasons, which I’ve written about here.

There’s more capital than ever before chasing fewer and fewer listed companies across U.S. and global markets, which means stock prices will go up.

The market has gone up since 2009, amidst a lot of scary moments. The idea that it would suddenly go down now, right as a business-friendly president and administration is taking over, just doesn’t make sense.

The promises of Trumponomics (tax cuts, stimulus, and deregulation) are all bullish for stocks.

Are there boogeymen out there capable of stabbing the markets? Yes, there are. There always are.

But if you’re using them as an excuse to avoid the markets, you’re just running scared. And being scared doesn’t make you money.

I’ll tell you when I see those boogeymen raising their knives and axes, and we’ll get out of the way.

Until then, you’ve got to be in it to win it.

Sincerely,

Shah

4 Responses to Trumponomics: Jump into the Market Now and Change Your Future

  1. Stu says:

    Hey Shah — Very good article….every newbie investor in the stock market should read it. If there was any fault it would be the heading of your article — “jump into the market now and change your future”. That’s the problem, it could negatively change their future.

    Sure, we had a good day today, and market looks poised to move higher….but things can change on a dime as you very well know. Also, all boats don’t float at the same time. Maybe it would have helped if you provided a list of stocks on your buy list. In this way you would be better able to let people know when the “boogeymen raise their knives and axes”.

    All in all, an excellent article that should be on every newbies “must-read” list.

    Best regards, Stu

    • DoBR says:

      just buy around 5% inverse etf in the s&p “SH” for however much ‘long’ you are. Any correction likely to be under 10% before the corporations buy back their stock on sale running up buying season thru April. If you really believe in the big crash will arrive just in time for spring weather and tax holiday during bull run season, then thats some serious conviction so youre better off feeding your craving for gold exposure to blast off rather than take on more inverse bear bets on the s&p downside. And if you do it thru Robinhood ap, the trading commissions are free so you are not wasting money by slow laddering up your inverse ” SH ” to match AROUND 5% OR SO{ K. Fitzgerald cited 5% of your portfolio being inverse bets will protect a vast amount of pullbacks to ever occur to your longside normal stock portfolio over long term}…of the amount of stock you wade into paid in full for the long swim. This is just an example for true blue newbers. I didnt say this to get sued, thats why no one bothers to help with examples in case they are misconstued as advice. This is America, and you cant afford to be helpful. So advice is hidden in the research presented. nearly No one who needs the money the most thinks they have much time to learn, so you have to inspire yourself that its possible in the first place. things will stay scary from here on out until the commies’ paranoia capitulate to $elf financial planning, half-unfortunately for the privledged hippocritical inner class phonies. DEFENSE is more than half offensive to many people. might as well take the obvious tides in for whatever u look to know. and you can bet ahead of time the tide will always go out. make money all the tide$ . Dont turn your back at the edge of oceans of money while its still working ebbing and flowing and funding payments, everywhere. Great succinct writing G

  2. Robert F. Pacione says:

    Shah! Pleasure to read your articles. I have an interest in your outlook and Forecast on all Central Banks safety from “The Billionaire Agenda”. Curiosity has risen to great lengths now. As! Its Obvious the secret society is always on the move towards the greater reason of Life and the “Future” of our planet. These Banks must be worried I would think. Amazon is already on the move with pop ups about opening accounts and if we would trust our money with them instead. Probably offer better interest rates for those who do as an initiative as Tangerine does with there savings accounts. Which isn’t great but offers great interest rates for us little guys to build every month. And they pay.

    The real worry behind my thoughts is that these Billionaires are playing head games with each other and conducting secret agendas for even deeper reasons that are not that secretive in my mind. Example: Now! With The Donald in office. He now is putting the Kybosh on Warren Buffets train set. Union Pacific. Who controls the transport of oil from Canada to Mexico. Now! The pipeline possibly being constructed regardless of historic property and the Native peoples feelings towards this. We all know “Trump” wont care when he slips through. Cowboys and Indians. All over again.
    Is my point of the real outlook on all policies and Governments corrupted by these agendas for a “what they believe is what’s best for the planet and the pawns they move when they need to. Nobody can tell me different. I will never worry caring about what I cannot control anyways. I just wanna know the true effect of this massive shift that is coming through private corridors of the elites. Will this be safe for banks in the long run as they are changed ever so slowly or challenged by the billionaires of the world. What will happen if they do get there private Islands where they don not pay taxes. Will banks be affected by the drop of a pin. A vanishing act. There power has just been reduced by the ones that control them. Like cutting the middle man out. Its really getting ridiculous. Nobody is really safe anymore.

    THATS THE TRUTH AND YOU ALL KNOW IT. I am just saying it.

    I guess in the end. It is just another puzzle piece. But your outlook on this as your expertise on these issues on the rise. Would be second to none.

    • jr says:

      Robert,

      Okay, you have strong opinions and you express yourself with gusto.

      Maybe you are right, even.

      However, your prose will be more understandable if you take more care to use standard English grammar and standard English sentences. It would also help with readability if you used a spell checker.

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