• Entry Point : Costco Wholesale Corp

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  • Entry Point : JPMorgan Chase & Co.

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  • The Rule of 10

    Have you heard of the Rule of 10? It’s especially relevant now with both interest rates and energy prices sky high.

    Created by Don Rissmiller, an economist, it states that the economy will struggle when interest rates and the cost of energy (e.g. gasoline) added together reach double digits (i.e. “10”). The average rate of a 30-year fixed mortgage crossed over 5% (“5”) in the second week of June 2022, while the average price of gasoline at the pump is nearing $5 (“5”) nationwide. For further context, as gasoline moves past $5 and comes closer to $6, that would equate to a $150 price on a barrel of oil. The time to buy good oil stocks (e.g. XOM, CVX) was 18+ months ago, which is why it is always important to pay attention to the markets.

    If 5+5=10 and this theory holds true, the second-half of 2022 could be just as bad (or worse) than the first.

  • Entry Point : Block Inc

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  • Entry Point : Shopify Inc

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  • Entry Point : Tesla Inc

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  • Videos We Like: The NFT Ownership Problem

    The Movie Heat (1995) Ownership Analogy

    Why We Like:

    • Accidents happen; it’s still too easy to lose your crypto or have it stolen
    • Ownership today is like bearer bonds with no recourse
  • Sell into Strength

    When it comes to trading, timing is everything. Trading, by its very nature, will typically involve stocks that can have a big move up or down in a short period of time. That time period may be a few months, a few weeks, days, or even intraday. So, when it’s time to “get out” you want to be out of the stock as quickly as possible, because the stock could move against you 5%, 10%, even 20% in a very short time, making you lose money.

    With so many millions of shares exchanged every single day, it’s easy to forget that the stock market is a MARKET – there must be a buyer for every seller; there must be a seller for every buyer. 99% of the time when you buy a stock, your order can be filled instantaneously because there is enough liquidity in the market for someone to match your price. If you’ve ever traded options, you quickly realize how much the market really is a MARKET – sometimes there won’t be someone on the other side to take your trade, and you’re stuck holding the option for a loss.

    So, whether it’s stocks or options, you always want to know there’s enough volume to exit your trade, and when it’s time to do so, you’re able to exit quick.

    When a stock is rising, there are more buyers willing to purchase shares at an ever-increasing price. As sellers offer to “sell” their shares at a higher price, they immediately get snatched up by a buyer. At some point, buyers don’t want to pay that higher price and the pace of buying slows down, thereby slowing the pace at which sellers can unload their shares. This push and pull happens every second, every day, every month, over the course of years which makes a stock gradually go up or down over time.

    So, when you sell into strength, you are not waiting for that plateau, where there are no more buyers. You are taking your profits while the “getting is good,” like leaving the casino right after you hit, because you know the house will eventually win.

    This means that you will not realize your trade for maximum profits, as you would have to time the top perfectly; it does mean you’ll be able to unload your shares in milliseconds, realize your gain, and move onto the next trade. This is critical when you’re trading right before close, or earnings, or some other event and need to get out.

    Sell into Strength so you’re not left holding the bag. The buyer on the other side of the trade (who you don’t know) is thinking you’re crazy for selling at such a price, because they think the stock will continue to go up substantially – that’s selling into strength (the strength of their belief). You’re choosing to not be greedy, and if done correctly, you’ve already made a decent gain on the trade and the few percentage points won’t matter.

  • Investing is NOT Trading

    There are two primary ways to build wealth through equity markets: 1) stock investing, 2) stock trading. While we cover some aspects of stock trading at UNEarned Inc, our preferred strategy by far is stock investing. One method is not better than the other if you know how to make money. But each method exists because they have different pros and cons.

    You can become super-wealthy through stock investing, but it may take decades and you can’t enjoy your money right away. You can even invest solely in dividend stocks that pay you a small percentage of revenue every year and never have to sell a single share of the stocks you own. Famed investor Warren Buffett’s Berkshire Hathaway company owns so many shares of Apple stock, they collect over $800 million in dividends alone each year and never have to sell a single share.

    Stock trading on the other hand can allow you to make profits very quickly – even within a day. Day Traders put upwards of ten, twenty, even fifty thousand on one trade, hoping the stock moves quickly in one direction just a few percentage points. That’s enough to make tens of thousands of dollars in one day. This method of trading has the highest risk, but also the highest reward. But not all trading has to be this risky – a swing trader may buy and hold a stock for a few months anticipating the company will have a good quarter and then sell those shares, making the same profit, but over months instead of days.

    Risk tolerance, your amount of free cash, time, and a host of other factors play into whether you should be an investor or a stock trader. Many do both. The catch is to realize that some stocks are better for investing while some are better for trading. A stock with a huge market share, a product difficult to duplicate, and ever-growing free cash flow may be good to hold forever. “Forever stocks” are investments. A meme stock that is going up fast because of a fad, where you can make 50% in one month is better off being a stock trade. Even then, some stocks are good trades and don’t necessarily have to be meme stocks. If they follow a steady and predictable pattern, but never rise in price too much, they may make for good trading stocks.

    Before you ever enter into any stock position, ask yourself if you are buying that stock for an investment or for a trade. Not knowing this is the first and biggest mistake many make. Entry price is much more important when buying a stock for a trade.

  • Videos We Like: 7 Steps to Build Wealth…

    7 Steps To BUILD WEALTH From Nothing! | Lewis Howes

    Why We Like:

    • Business owners don’t invest enough in passive income and why that’s bad
    • Owning one home (that you live in) is not as great investment as we’ve always been told
    • You have to be maniacal about being patient
    • High return investments (~10%) is about wealth preservation
    • Money is [an] award received for rendering service to others