I still don’t know what to make of this stock market. I suppose it’s always better when the broader market is behind you, but, at the end of the day, being successful at speculating in equities always comes down to owning the right stock at the right time.
Some companies, you just want to own forever. Companies like John Deere, Hewlett-Packard, or General Electric. These are the kind of companies that have some ups and downs, but for the most part, these businesses just tick along generating solid returns to stockholders.
Of course, these are also the kind of companies you invest in if you already have the capital to do so. I don’t want to speculate in these companies — I want to own them forever.
Naturally, if you want to make money from the stock market, you have to be a speculator. Most often, the best companies in which to speculate are smaller, faster-growing businesses. But, as I’m sure you already know, the hard part is finding the right business at the right price and owning it at the right time. Frankly, the only way to become good at finding the right stocks and owning them at the right time is through experience. I liken being a successful investor to being successful at golf. You can read and study everything there is about the subject, but eventually you have to get out there and play the game. You just can’t one day decide to take up golf and then play like a pro. You have to learn the basics and then go out and practice for years.
A lot of people with money to spend often ask me what the latest hot stock is. My answer frequently starts with something like, “What do you mean? You don’t already know?”
Even if you hired Tiger Woods to be your personal, full-time golf coach, you can’t become a great golfer if you don’t practice a lot, learn from your mistakes, and hone your game.
It’s the same thing in the equity speculation business. There isn’t a stock broker out there with the time, skill, or intention to help you make money from the stock market on a consistent basis. At the end of the day, if you want to be a successful speculator in equities and actually take money from the stock market, you have to do it yourself.