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Invest in fun s***, and tap dance on hard-work’s face.

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Here is a secret: If you are having fun, you never have to work hard. Or, to put it another way, if you are having fun, working hard is not an ordeal — it can even be a rewarding, enjoyable way to spend your time.

This goes for:

  • Work, work: Work for yourself; work at Pixar; work doing what you love …
  • Exercise: Tramplines, sports (basket ball, soccer), paint ball, rock climbing .. .
  • Other boring, annoying, scary, tiresome, awful, painful and/or smelly stuff: E.g., Raising children.

Examples of hard work being fun:

  • Sex (although, I bet you had already figured this one out)
  • Showering (stop and think about how much work you do in there! I bet you never noticed, as it feels so nice).
  • Games/puzzles …
  • Misc. (i.e., punching a pillow, chewing gum or running from small woodland animals while drinking Boons Strawberry Hill with your friends in the woods).

One of the secrets in this life is to learn basic life-hacks, such as the example above, and creatively, (and actively) apply them to other areas of your life. So how do we apply this “fun can distract from annoying/tiring/painful work” theory to investments?

Here is a list of five things you can do to make investing fun:

1)  Invest with friends: Get a group of people together, pool your money, and buy lots of stocks. Advantages of this route include: diverse knowledge and fresh leads; lowered fees, due to buying in bulk, and splitting the costs; more brains working on the problem; rapid diversification; it can be an excuse to get together and have fun!

2) Invest with your kids: Have your kids help you invest, and teach them a valuable skill at the same time.

3) Play “fantasy investing” (i.e., paper trading or paper investing). Get a bunch of fantasy football addicts, ante up, and win a pot of money at the end of a set period — then use your research to invest for real …(also, all of your competitors are giving you their research for free! Suckers!). My infomercial: Stop wasting your time on Baseball, Basket Ball, Football, Soccer, or Hockey, which only take your money! Play a game that can make you REAL money! Just send me three easy payments of $19.95! Act now! Supplies are limited to the first 6 billion! 

4) Buy companies you love: Guitars, watches, motorcycles, helicopters,  Hollywood, cosmetics, fashion, theater, whatever turns you on! My wife watches Charlie Hunnam on Sons of Anarchy, and begged me to buy Harley (HOG). I love music, so I bought a stock of a company I had heard of, Avid (NYSE: AVID), which makes Protools, a software used by every professional musician in the world. There is also Porsche (OTN: POAHF), Virgin Media (NASDAQ: VMED) and TakeTwo Interactive Inc. (TTWO) which owns RockStar & 2K Games, two well known video game companies. Your imagination is your limit, from Barbie (MAT) to Dungeons & Dragons (HAS) to Phineas & Ferb (DIS) to parachutes to Mythbusters (Discovery Communications, NASDAQ: DISCA) to L’Oreal (NASDAQ: LRLCY).

5) Buy companies you hate (and get your money back!): Microsoft is a dirty thief. I am determined to get my money back (see article related to this: here).

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Lies we have told you so far … (Quick tip)

As a follower, you have many benifits, such as not having to think. But, there are problems too.

As a follower, you have many benefits  such as not having to think. But, there are problems too.

For the past two months and eight articles, we have been preaching the same fundamental actions: Buy solid stocks, keep costs low, avoid brokers & administrators, hold your stocks long term and ignore stock news.

But as one of our genius friends always says, “There is an exception that makes the rule.” He must be a genius, because that axiom doesn’t make any sense to us.

Here is the exception: Read stock news, on losers — because the bigger the loss, the greater the potential recovery. So, every once and a while, Google something like, “Prices fall”, “Stock slips” or “investors are selling”, and note the names of companies on that list. Here are three current examples: Caterpillar; JCPenney; Apple;

However, don’t actually read the article! You are trying to get ideas on companies with a sale price, not over think it. Why this is true: here.

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Bonus quick tip!

So, now your thinking, “These people are asking me to put my money into the least safe place I could put it! I’m going to lose all of my money!”

Well, maybe yes and maybe no. You want to be sure about your money? Put it in a savings account. That is as close to a sure thing as is possible in this life — too bad the sure thing is that it will lose ground on inflation.

We live in a world of volatility. The question is not if a company experiences volatility in it’s price/business, but, is this volatility based on real or perceived problems.  

There are a lot of reasons there can be a loss  in the price of a company: Pending legal action/outcomes, income loss, change in management, market loss, change in strategy/product/the color of the VPs tie, opinions, economic astrology, etc.

Where there are many reasons for a price loss, there are only two categories: Real and perceived.

Remember, the market is run by people that a) panic b) follow the panic-ers and c) people that take advantage of all the panic. The thought process of each of these people can be very, very complex, but the results in aggregate are fairly easy to understand: if there is bad news, the price goes down; if there is good news, the price goes up.

This is where you’re BS detector comes in, and a little common sense. Also, the slightest hint of research … but just a pinch! Just enough to answer this: Is the price low because the product sucks or because the press sucks?

NOTE: StockGuilt is a blog about interesting stocks, and our views. We are not stock brokers, investment councilors, planners or legal advisers. In fact, at least one of us is an idiot. The rest are just folks who think about investments. This is what we think, and what we will do/did. In no way are we telling your what to buy or sell … Do your own homework.

If it works out for you, and you feel generous, well, we’ll probably get in trouble if we take your money, so …  We like Ronald McDonald houseUnicefSalvation Army and SafeNest

ROTH-IRA vs. Godzilla! (Quick Tip)

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If you are going to get into investing, the very first thing you should do is look into an IRA (look at the pros/cons of ROTH vs. traditional here).

Any online investment house can host your IRA, for free (well,  the account is free).

Why an IRA? Because it forces you to not spend what you save (or, at least gives you serious pause), while also giving you a tremendous tax advantage (while the money is within the IRA):

i.e., If you cue up all your big-gun dividend yielding stocks, and put them into your IRA, you don’t pay taxes on the dividends (whether or not you re-invest them: why this is important) … then you can buy non-dividend stocks* for your non-IRA investments and not pay taxes until you sell them [at which point you should have very little “income”, a.k.a., you’re retired, and won’t get taxed like a brain surgeon].

As one professional said, “Put your tax-adverse investments within your IRA, and put your tax-advantaged investments (e.g., US government bonds) outside of your IRA.”

Hustle! The faster you get your IRA up, the more you can contribute! Time is the main variable at work here!

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*Keep this in mind and be careful — in general companies that pay dividends do so because they are not reinvesting their money, whereas a company that is growing fast is probably not paying dividends (or, very little).

NOTE: StockGuilt is a blog about interesting stocks, and our views. We are not stock brokers, investment councilors, planners or legal advisers. In fact, at least one of us is an idiot. The rest are just folks who think about investments. This is what we think, and what we will do/did. In no way are we telling your what to buy or sell … Do your own homework.

If it works out for you, and you feel generous, well, we’ll probably get in trouble if we take your money, so …  We like Ronald McDonald houseUnicefSalvation Army and SafeNest

How to invest like a big-time, Cristal guzzling, yacht cruising, hairy-chested hedge-fund manager — on a teachers salary. AKA The StockGuilt manifesto.

Bubble

“I’ll take that one …”

The name of the game is: Beat the S&P. The S&P 500 is an index, a lump, of the largest 500 companies on the Dow-Jones market. And we have to beat them! Beat them?

How the heck can we beat the biggest companies in the world? Do we really have to beat them? Why?

Well the answers are, in order: You probably can’t, and no. Why? Why, is because that is the baseline everyone else is trying to pass. You may have heard this, or, if you are serious about investing in the stock market, you will hear about it: the S&P grows (or declines) in a given amount of time, and you compare your portfolio to it. If you are better than the S&P, you polish up your trumpets and sell seats to your carnival show. If you don’t, you just don’t mention it.

But, here is the truth: The line in the sand is arbitrary (why not every other company listed on the NYSE, numbers 103 till 2175?). Clearing the  hurdle is based on chance (i.e., luck) and really doesn’t mean anything. It is — (get ready for a swear word) — bullshit. 

Let me tell you right now, you may beat the S&P for one year. You may beat it for two. You may beat it for 10 years. You may throw heads on a quarter 14 times in a row. But it ain’t skill, its dumb luck.

So get the image of the swaggering, uber-intelligent, market savvy stock trader out of your mind. You aren’t her, just like you aren’t Beyonce or Jessica Flecher (Murder She Wrote reference … I lost a bet. ).

What we want to do is about as lucky and glamorous as making a brick out of mud. We take the ingredients,  use a system someone else taught us, slap it together, and build a house. We don’t really think too much, because we know we can’t outsmart the market. We just build bricks and make a strong foundation, and shore up walls, and build a future. It’s slow, boring, messy and unglamorous, but, fortunately, it’s pretty foolproof, and it makes more money, and is nearly as safe as your savings account or a CD (or even Bonds). Besides, we don’t have time for this crap. The reason we are doing this is for our families; it would be pretty dumb to ignore them while you are planning for their futures!

So, here are the basics, no messing around. Each of these will be expanded and explained in detail later, but for now, just make a checklist:

  • Buy individual stocks!
  • Keep fees down! 
  • Do your own financial planning!
  • Don’t move your money around, plan to buy and hold for at least 10 years.
  • Use an online brokerage … and if someone wants to give you $600 for putting your money in there, do it. 
  • Save as much as you can — remember, $1 today is $100 when you retire! Every penny counts. 

Now, the moment you’ve all been waiting for: How to invest like a super-smart, Ivy league educated, platinum TAG-Heuer watch wearing  mutual fund managing superstar! 

  • The secret is you simply buy the companies listed on their prospectus (a document they make for number’s geeks, that tells all the financial voodoo, wizardry and statistics; this document shows what their mutual fund is buying). Why pay them, when they are giving you their expertise for free? 

So, about that S&P. The funny thing is, the S&P does just fine. So fine, in fact, there are funds you can purchase (which we discourage, due to fees) that do nothing but mimic the S&P. You would do well to come close. Everything else is luck and should be cherished like gold found on the sidewalk. 

Now, send me $1000 every year until you retire, like a financial planner. Yeah, I didn’t think so. Still think people that invest have to be super-smart? You are now smarter than 90% of them.