Author: Fahd Dameer

January 26, 2021

Short-term trading, the harsh truth revealed

There is a comprehensive article on Tradeciety that lists statistics from numerous studies and surveys about short term trading.

The article concludes:

After going over these 24 statistics it’s very obvious to tell why traders fail. More often than not trading decisions are not based on sound research or tested trading methods, but on emotions, the need for entertainment and the hope to make a million dollars in your underwear. 

Rolf, Tradeciety

The stats that we found most relevant were these:

  1. 80% of all day traders quit within the first two years. 

  2. Nearly 40% day trade for only one month before quitting. Within three years, only 13% continue to day trade. After five years, only 7% remain.

  3. The average solo investor underperforms a market index by 1.5% per year. Active traders underperform by 6.5% annually.

  4. Day traders with strong past performance go on to earn strong returns in the future. Though only about 1% of all day traders are able to predictably profit after fees.

  5. Traders with up to a 10 years negative track record continue to trade. This suggests that day traders continue to trade even when they receive a negative signal regarding their ability.

  6. Profitable day traders make up a small proportion of all traders – 1.6% in the average year.

  7. Traders tend to sell winning investments while holding on to their losing investments. 

  8. Men trade more than women. And unmarried men trade more than married men.

  9. Poor, young men, who live in urban areas and belong to specific minority groups invest more in stocks with lottery-type features.

  10. Traders are more likely to repurchase a stock that they previously sold for a profit than one previously sold for a loss.

  11. Traders don’t learn about trading. “Trading to learn” is no more rational or profitable than playing roulette to learn for the individual investor.

  12. The average day trader loses money by a considerable margin after adjusting for transaction costs.

  13. Traders are overweight in stocks from the industry in which they are employed.

  14. Traders with a high-IQ tend to hold more mutual funds and larger number of stocks. Therefore, benefit more from diversification effects.

The above statistics were sourced from American and Asian demographics.

Australian statistics are similar

We wanted to see something more specific to Australia, and spent some time doing a review of existing material on short term traders vs long term investors.

In general, the data shows that the average short-term trader in Australia underperformed the average investor by 6% per year.

A few years ago, that didn’t matter too much, as the Australian sharemarket had a long-term compound return of 12.5% per annum and retail investors / traders were averaging around 8% per annum. Institutions and corporate investors also used to outperform the index back then.

Currently, over 80% of active funds have not been able to beat the ASX 200 index in the last 5 years. We wrote about The three reasons Tabarruk beats the market, funds and short term trading in some detail too.

The trader’s delusion

Most traders I try and engage with about this, often remember their best trades and ‘forget’ their bad ones or don’t want to talk about those.

Most were also perfectly happy if they could generate 8% net return per annum. Even when I show them that by investing in an index fund that tracks the ASX 200 index, with next to no effort, they could’ve had a 12.5% return over the same period.

It didn’t matter to them that their trading costs, (plus other short term costs) and higher tax from selling shares in under 12 months, were higher. And that they underperformed a passive investment strategy.

They seem to have this delusion of doing very well, and proudly talk up their biggest wins, and underplaying or avoiding their losses.

I would push a bit at times and they admitted the losses they made in the past on stocks which had gone bust and they lost the lot – but these were no longer part of their current investment portfolio, so they tended to underestimate the cost of the duds.

I have a friend who is a professional investor / colleague from a past life. Anyway this friend tried short term trading with the shares of a company we hold at Tabarruk. It’s one of our major holdings and has done 300% in growth as of August 2020, with the upside potential some orders of magnitudes if the company continues on it’s current path.

Anyway, my friend bought and sold this company multiple times this year, holding a parcel throughout in his “investment portfolio” and chopping in and out with the rest, for small gains and losses in his “trading portfolio”.

When we compared our initial investments in this company, trading fees (brokerage) and our current net returns / growth, my growth was about a 100% more than his. His parcel that he initially bought and held outperformed his trading parcel by 200%.

This stark difference in numbers on the screens had him drop his jaw on the floor, followed by ‘And I spent hours watching the charts and trading this, which I will never get back’. I couldn’t resist a cooking analogy to drive my point home. Cooking a perfect steak means you don’t keep turning it!

Statistics generally show that well over 50% (and as high as 90%) of traders lose their money or significantly underperform, therefore we don’t try to beat those odds and we prefer invest long term with the Tabarruk Framework and Screening Process™. We do use pricing opportunities (often with alerts set in our broker platforms) to time our entry points.

Short-term trading is fraught with danger and often turns out to appear fairly random. For us, it is far easier to identify companies which are a long way below long term value and buy and hold them until they realise the inherent value, or until we can find something else with greater potential upside.

Misunderstanding between traders and investors

There is a basic problem here with short-term traders butting heads with long-term investors.

Some of the traders get up the noses of investors by implying they are smarties who are making profits on every twist and turn (highly unlikely when you consider the overall stats on trading) and some are trying to manipulate the situation by throwing around worrying comments, or by manipulating share prices directly.

Some of the investors seem to want the price to rise continually without any corrections and are worried that the traders will force an unjustified price fall.

We all know a continuous rise isn’t going to happen – and even if there are no traders out there, some get nervous and sell to “lock in profits” and some need to sell to fund their lifestyle – pushing the price down temporarily, even if it is worth much more in the future.

This arguing and misunderstanding has the aspects of culture wars – you’ll never convince the other side, so it’s better to work out your own investment philosophy and stick to it – don’t let others panic you into doing something against your own strategy and financial circumstances.

There’s no point people arguing with diametrically opposed points of view between trading and investing – you’ll never convince each other and it becomes philosophical and sometimes hysterical, with science and statistics ignored in favour of one-off “proofs” by someone who has a short term win concluding that just because they ‘won’ a short-term trade, they were right – very poor science, more arguing by anecdote and selective correlation.

Unsubstantiated comments like “the price has risen too fast” or “the market cap is unsustainably high” or “Company X will have to raise more money” can shock and unnerve investors – but there’s often no underlying science to them.

Our experience also shows the greatest potential upside in a share is the first decile of the price cycle when the the price starts to rise from an oversold “near death experience” i.e. when the price is ridiculously cheap but nobody has the guts to buy it and the last panic seller has just finished selling; and the second greatest potential is the tenth decile of the price cycle when everyone is piling in to a sure thing and pushing the price way above what I think it is worth – so don’t sell out too early!

And as always, this is not financial advice. Read our disclaimer.

Investing Psychology – Part 3: Holding – where the growth really happens

The key to being patient is not what it seems

From Part 1 – What the market really is to Part 2 – Share price movements we’re now taking a deep dive into to the growth of our investments.

One of the things most investors struggle with is patience; the ability to wait for years and watch their money grow as their shares increase in value. This is true, especially for new investors. Moin and I know this intimately and there are times even now when we lean on each other to resist it.

It may seem easier to be patient when your investment is doing well, but you’d be surprised that it’s not the case. Investors who’ve owned shares in a company for a few months and have watched the company / share price do well are also prone to the pressure of selling.

I know people who are almost addicted to keeping track of share prices. It wears them out. We did this early on too.

Money Habits – Part 1: Switch on the flashlight

This is a 5 part series that I’ve been thinking about for a while.

A conversation I have often with people looking to invest is how much to start with. While we think starting with 500 or 5,000 can lead to equally powerful results, the fact is, many people don’t know how much they can start with.

Or more to the point, they don’t know how much money they can afford to start with, because they don’t know how much they save.

You can’t know what you don’t measure. Data is key and it’s often in the dark.

Money Habit 1: Switch on the flashlight

Shine it on your money. Money coming in. Money going out.

Look at it and track it. Do it alone. Or with a friend. Or with your partner. Whatever works for you and you feel comfortable with.

Know what every single dollar in your account does. In other words, you need to track your money. Answer the following questions honestly:

What percentage of your income did you spend on living expenses, entertainment and investment last month?

Don’t deflect it as “Why is that important?” or “It doesn’t matter” if you don’t know.

You can be an executive sitting behind the desk in a bank, or even a high-flying project manager.

Truth is more money doesn’t make you more financially responsible, it just makes it easier to spend.

A survey in Australia found the following:

  • Almost one-third (30 per cent) of Australians don’t set a budget
  • Just under a quarter (24 per cent) aren’t saving any money at all
  • Almost one in five (18 per cent) are living pay cheque to pay cheque

That’s almost ¾ of Australian citizens, one step from falling off a financial cliff.

Then COVID happened.

The rich and financially successful people say, the road to financial success is to start with one simple step.

Budget and track your expenses.

The way my father thought me to budget my money was to follow 2 simple steps.

Step 1: Percentages to goals

Based on what you’re striving for (e.g. buying a house, saving for your children’s education, getting married etc.) start with your total income and break it into percentages for different aspects of your life, with your big picture goals in mind.

As an example, I split it as follows many years ago, into 4 chunks.

  1. 50% goes towards your living expenses (includes mortgage/rent)
  2. 10% goes to entertainment
  3. 30% goes into shares
  4. 10% goes into a rainy-day account, that has no card linked to it     

Step 2: Divide and conquer

The second step is to execute on the chunks you made by diligently tracking and funnelling money into these chunks.

The more detailed you can be, the better it is.

With internet banking and almost no cost or limit to how many bank accounts you can have, make an account for each chunk.

Here’s my current split of bank accounts as an example. This sets a clear delineation of your money and what role it serves you.

Growing wealth starts with knowing where you’re starting from. Whatever your motivation is, for a lot of us, there’s an aspect of wanting to make a difference. To our lives, to those of others. To help those with less. It’s a big part of why we created Tabarruk and decided to give 10% of our revenue to charity.

For us it’s extremely important because the main reason injustice and oppression occurs today is that money talks and those with good intentions usually have shallow pockets.

As a result, the possibility to make meaningful change is limited.

Some may say, we live in the age of social media and everything is interconnected. While this may be true to some extent, everyone has bills to pay and no matter how true a cause, the need to keep a roof over their heads will have most people return from the streets to a cubicle in an office (or your desk at home) working some kind of 9 to 5 job.

If you want to make a change, influence society in a meaningful way, remember that change starts with us and by apply the financial habits of the rich and powerful to better our lives, we can start on the path to financial freedom.

Stay tuned for the next part.

3 reasons why investing earlier builds more wealth

The cliche No time like the present is overused. You hear it in the context of buying a house too. What is missing and not looked at is the why starting earlier in the context of investing makes a difference and how it allows you to grow more wealth.

Reason 1 – Compounding needs time

The most important principle about investing, is that the earlier you start your investment journey the easier it gets to build your wealth. The main reason for this is that it allows your money to take advantage of compounding return. We have explained with examples in our article how compounding is one of the 3 reasons we beat index funds and short term trading on the share market.

Reason 2 – Learning earlier from mistakes

The other reason it is important to start early, is that you learn from your mistakes earlier. What this does is give you experience which cannot be learnt from a book.

A mistake you might make as 20-year-old with $500 is not going to be as costly as a mistake you make when you invest in your 40’s and lose your life savings.

Reason 3 – Growth Mindset and psychology

Starting earlier, even with a smaller amount means you learn by doing and as a result you experience the following scenarios:

  • Seeing your portfolio in red and what that feels like
  • Patience to allow the companies to grow and therefore your investment
  • Developing a detachment to short term price movements
  • Learning objective decision making by recognising when emotions like fear and greed influence us

These situations over time build resilience and make one have a much higher stress and risk tolerance.

Current market conditions an opportunity

With the virus crisis and the economy not fully recovered yet, there is no better than to start than now. Certain sectors and companies are trading at a discount. We use the Tabarruk Framework and Screening Process to identify these and invest in them.

Start with the basics

The most important step you take in your investment journey, is to pay yourself first. You need money to invest and if you don’t do that, there is absolutely no way you can build your net worth.

Regardless of the size of your paycheque right now, take the challenge to pay yourself next time you get your salary.

Decide what percentage of your income goes towards your future. If you want a conservative figure pay yourself 10%.

Put that money aside into an account where you cannot touch your money.

For those who struggle to make ends meet, don’t lose hope, we were there ourselves at a point in time.

I strongly recommend you read our upcoming series ‘Money Habits 101’.

Even for those who live month to month, work out objectively if your expenses are more than your income.

If they are then quickly make a plan and accept that flipping the scales to have your income be greater than your expenses may need some sacrifices and change in spending behaviour.

The next step is to have an emergency fund. There is no point starting your investment journey without an emergency fund. If an emergency strikes and you must touch your principle.

Ensure you keep paying yourself, till you have 4-6months of income set aside and then start your investment journey. If you think this will take too long to save up, then increase how much you pay yourself.

To earn more, you have to learn more

The best ‘non-financial’ investment you can make is in yourself.

Educate yourself, sign up to courses learn about investment, look at what successful investors are doing.

Be different, as most of the world is working on auto pilot and you need to chart your own unique path out of the rat race. This will allow you to make better, rational and educated decisions in your life.

To earn more you have to learn more.

Once you have got this far, you start looking at stocks and ETF’s. Explore all the options that are out there for you.

As someone who only invests in a Halal and ethical companies, my life is so much easier as my screening for the companies that fit our criteria makes the investing world that much smaller and the ability to pick good companies becomes easier.

Start early but stay for the long term

When investing, the best thing you can do for yourself is have a long-term mentality.

If you don’t have a long-term mentality, then this article is probably not for you.

The reason a lot of people make extremely bad decisions is because they have a get rich quick mentality.

Tabarruk’s and our personal investment success is due to the long-term investment approach we take.

Our focus is to invest in businesses that have good long-term prospects and a good history of positive return and yield.

The beauty in investing in these kinds of business when you start early, is that you have the luxury to wait.

Regardless of the price of the stock going up or down in a business you have invested in, it won’t you because you’ve understoof the business and their long-term prospects.

If anything, when the price is down, you just buy more. We cover this in The secret to buying at the bottom article.

When you invest with a long term mindset you understand that regardless of the economy booming or entering a recession, solid businesses always find a way to thrive and the market always recovers and stops for no one.

Mining poised to lead in the post pandemic recovery

The global lockdown and economic halt due to COVID19 has had a positive impact on the environment. Daily emissions of carbon dioxide levels in comparison to 2019 levels dropped by 17% in April this year.

We start August with many countries around the world still in some form of lockdown and this has only further reduced the level of carbon dioxide emissions.

Many innovators and researchers are pursuing a return to a pre-pandemic level of productivity while ensuring the positive affects on the earth’s ozone layer is not reversed as the global population slowly returns to normal.

There is an urgent need to come up with better solutions that cross between conventional energy and renewable energy. Energy and sustainability go hand in hand. The materials needed to develop new technologies still has a long way to go and have not been exploited in full.

It is for this reason, I pick the mining sector as the one that will buck the trend and lead us in the recovery phase of the market.

Renewable energy, batteries and technology are interlinked with mining operations. They cannot exist without the other.

Mines need to adopt green energy to reduce operational costs and this opens the door to creating more employment opportunities.

Renewable energy is not a buzz word anymore. It’s ethical and is gaining strong lobbying support and being adopted around the world. Although a more balanced approach is needed, as people, even with the right intentions, could effectively set us back decades.

Renewable energy, modern batteries and environmental vehicles require a unique mix of metals. These metals are copper, cobalt, iron, nickel, lithium, rare earths and silver.

Many of these materials are mined in Australia. In fact, name a metal and we can probably dig a hole somewhere in WA and SA and find it.

China has spent vast amounts of money on renewable energy and they are trying to reverse the process of climate change and make their economy more durable. They are doing this by adopting and leading the charge in the green energy sector, to have an economy and energy system that will thrive in the future.

What does China need from Australia?

Minerals and metals. For all the political posturing and sabre rattling, a country of China’s size cannot grow without the means to feed its growing economy.

They’re building to restart the economy, by introducing large infrastructure projects and upgrades. Their investment into Green energy needs Australia’s raw material.

There are other countries in the world that could supply China, take Brazil as an example. However, they do not have the ability to provide the quality and quantity on a consistent basis to China.

The advantage for Australia is that China is not the only country to shift their focus to green energy, there are a lot of countries around the globe that will need the minerals and metals that Australia exports.

A lot of countries around the globe are kick starting their economy by spending on large infrastructure projects to boost flagging unemployment rates.

With all of the above considered, the mining sector ticks the boxes to buck the trend and lead the recovery in the post pandemic world.

Members can check our folio for the in-depth analysis on our mining company share holdings.

Will there be another share market crash in 2020?

There is a growing apathy in the share market. The ASX 200 (Average weighted index of the top 200 Australian companies listed on the ASX), is struggling to make any meaningful breakthrough the 6000 points psychological barrier.

Crash or correction? What is the difference?

Technically the definition is a downward movement of 10% or under is considered a correction and anything larger and leading to a prolonged period of economic hardship is considered a crash.

For us, there isn’t a big difference. It could be argued we’re still in the process of recovering from a crash. Some sectors have recovered more than others.

Members can read on to see what we think is likely to happen.

I am convinced that we are looking at another correction taking place within before the year ends.

Looking at some of the companies currently trading at insane premiums, it makes us wonder how long this run can be sustained. We’re optimistic pessimists when it comes to the share market and understand the role of fear and greed in this context. The more understated, but impactful emotion though, is hope. A base built on hope is very shaky, which is the main underlying sentiment driving the influx of retail investors (a non-professional individual investor) into the ASX.

We’re passionate about education and try to explain to readers and members why a correction is not a bad thing and the factors that would lead to the correction. We also educate people on identifying the tell-tale signs so they can become astute investors.

Crash or corrections are buying opportunities

This is because an investor is always on the lookout for buying shares in companies that are trading at a discount, in comparison to their fair value.

What this does is create a scenario over the next few months, where we approach the end of a mini recovery (aka bull run). Corrections like the word implies is a reality-check to a share market flooded with retail investors due to the “fear of missing out” (FOMO). This inevitable results in money being flooded into the market and inflate stock prices to trade at premiums that do not reflect the fundamental reality of a companies prospects and financial balance sheet. Another way to look at this is, more demand = price increase.

We often get asked, if everyone is buying, why would the market correct itself? Shouldn’t it keep increasing?

The role large investors play in corrections

This is where large corporations and institutional funds come into play. Think banks, super funds and other large financial organisations with money to invest.

Let’s take a popular company that gets invested in by retail and large investors, BHP. Over 60% of the company is owned by major entities like HSBC, JP Morgan, Citicorp, BNP Paribas etc.

What happens when they want to realise profits and think prices for BHP are inflated? They sell BHP shares. For large investors, they will be substantial amounts of shares.

What happens when these shares get sold in large volumes? More supply = price drops.

Now think about what retail investors, like you or me would instinctively do? What would the everyday Mum and Dad investors do when they see large amounts of shares being sold? They might panic and think, the price is dropping, maybe something is wrong and also join in the selling. This triggers a price to decline over a period of weeks.

Now multiply it with the strategy of large institutions, who are active investors, they’re looking to sell high (and keep selling even if the price drops a little). What they’re looking to do next is sometimes not obvious until it’s too late. They are waiting to buy back the same shares at even lower prices that inevitable some retail investors will end up selling.

A sobering reality is that approximately 30% of the global share market is owned by large funds and institutional investors. 50% by government, pensions and corporations. That makes up 80%. The remaining 20% is us, retail investors.

The other kicker is that the large institutions use other people’s money and by deciding to sell shares at volumes, the market experiences enough of a downward pressure which leads to corrections. Retail investors often follow like a herd.

These same institutions then picking up the stocks at the bottom after a few weeks or months. On average a correction lasts two months.

So how can we as retail investors, make money?

When the odds are stacked against you, you keep it simple.

You play the long game.

Watch, understand the market and the companies. Look for buying opportunities or invest regularly in the same companies, so your average price ends up being discounted.

Finally, we’re not in the game of making grand, fluffy predictions at Tabarruk. We do make educated estimates of the probability of certain movements in the market. We look at all the facts, analyse macro-economic indicators and have a plan to act on, regardless of the market moving up or down. 

3 reasons we would sell our shares

At Tabarruk, we look at investing in great businesses that we can hold as long as possible, while watching our money grow. We’ve talked about how time in the market is what allows compounding and the reason why we always beat short term trading and index funds.

Our intention with the shares we own in quality, ethical companies is to never sell.

Reason 1 – Personal circumstances or emergency

There have been times when personal circumstances have forced us to shave some positions, or sell the whole position in order to have money in the hand for emergencies.

If you read our article ($500 vs $5000), you would know we consider every investment the same way we would consider buying a house. However just like when buying a house, circumstances might arise that would make you consider changing you neighbourhood.

There are also situations that may arise in a company’s life cycle that will make us consider selling it’s shares.

Reason 2 – Company fundamentals have changed

What we mean by this is that, the direction or the journey the company was undertaking has changed. They are no longer able to keep up with competition and stay ahead of the market by being innovative. The moat they have built around their business is no longer able to keep competition out.

Every company changes over time, and the superstars are always changing for the better. The same way you have superstars, you also have companies that sometimes change for the worse.

In today’s economy, where venture capitalism is on steroids and stock markets experience volatility influenced by roid-rage, the number of companies which go bust has gone up exponentially.

Don’t believe us?

Have a look at the below sample from 2019. One can only imagine how many investors (seasoned and beginner alike were sucked in by the hype)

  • The We Company
  • Uber
  • Greenlane Holdings

These companies mentioned above, will never make money. How do I say this with the certainty? We ran it through our screening methodology.

The three companies above make up a total of approximately $55 billion USD. That’s from companies we don’t see ever turning the corner or be able to make a profit.

The reason we’re highlighting the above is because in the past companies used to last for longer than they do today. This is because the world we live in today is smaller, than the ones our parents grew up in. Companies need to be able to not only react to be successful but also adopt and set the trend in order to be relevant.

Here are some of the other things that could happen in a company’s fundamentals, in order for Tabarruk to put them back under the microscope:

  1. New management takes over, they start making mistakes, and the mistakes start costing the profitability.
  2. Company has a new player in the field of expertise. The company is unable to outpace the competition through their innovation and get wiped.
  3. Company no longer operates in an ethical way or in a halal sector

The changes mentioned above are only some of the examples and it is important you keep conducting a reality checks with all your holdings often. Ask yourself the following:

  • “Is the company I invested in, still the same?”
  • “Do I still believe in them, have they changed?”
  • “Is the change for the better or worse?”

The above questions force you to make a decision, if the business you hold is now a better company or worse. If it’s the latter, you know what you will do. At Tabarruk we will do the same, we will part ways with the business.

Reason 3 – A better opportunity elsewhere

This is where you tread with caution. When you sell, the tax man get’s his share. That’s an instantaneous loss on your income, and as my Dad says, if you are selling because there is another opportunity available, write off 40% of your profit as a loss and think hard if this new opportunity can make that 40% or more in growth.

The opportunity has to have a more than solid chance, and there’s high conviction backed by research and analysis, the financials point to you being able to make the 40% back, to recover what you paid in tax to break even and then anything on top of that is a profit.

If you see an opportunity that can do this, knock yourself out.

Is starting with $500 to invest in shares different to $5,000?

The approach to investing with a small sum of money and a large sum of money is always the same. In the long run, you are looking to buy good businesses at a discount, with a promising outlook for the future. 

The problem is that too many people chase quick, easy money. They want someone else to do all the work, which absolves them of all responsibility if they make a loss. And it’s easy to take all the credit when they make a profit.

The unique opportunity we have today

When working with a smaller amount of money, especially today, the universe of opportunity for a diligent investor has never been larger. The reason is, we have access to expert research and analysis on companies, at our fingertips. This arms us with the knowledge to make the best, educated guesses on which company we should invest money into.

Whether you are investing $500, $1000 or even $100,000, you should treat that decision-making process the same way you if you were purchasing a house. 

To experience significant returns on your investment, you need to look no further than the success of Tabarruk’s subscribers, our goal is to ensure we educate members about the exciting companies out there.

With knowledge and education, we equip ourselves to make informed decisions. By knowing exactly why we are investing in a company, we take the uncertainty out of the equation. This helps regulate our fear and anxiety better when the market, at times, goes up and down like a roller coaster.

How do you end up with a $100,000 portfolio?

Simple. You take the first step. 

You arm yourself with knowledge. 

You choose companies from a list of ones that have been carefully researched and analysed.

You learn from the success of others when they share it openly.

Money compounds

500 or 5,000 will compound and grow exponentially. We explain that with examples in our How we beat short term trading and index funds article.

$500 wasted is a potential $15,000 in ten years.

In Australia, we maintain that the minimum amount of money needed to start is $500. 

There you have it, to end up with a six-figure investment profile, you need to start with a three-figure investment.

The key to success on the stock market is doing less

Before buying shares in any company and investing in the stock market, it is extremely critical to understand things.

Not your typical market

The stock market is completely different from a normal market, where buyers and sellers meet up to conduct trade. These trades happen in a manner which is mutually beneficial and results in synergy.

The stock market, however, doesn’t operate the same way. New investors, should never lose sight of this fact. 

In the world of investment, buying and selling shares happens in a melting pot. A chunk of people who do it have incredibly high IQs and some have average IQs. 

What they both have in common is, they’re all trying to out-think each other. This is why the market behaves erratically. Often a result of overthinking. 

Sometimes all you need for a good cup of tea is a tea bag and hot water.

Business and investment schools are teaching the younger generation about ways to get an advantage over the competition. Consequently, you come across extremely hard-working individuals who put in the time and hours required to understand market and business trends.

Doing less means you don’t follow the herd

What ends up happening though, is that the system, like an assembly line, produces ‘drone investors’, the new age version of alchemists who want to turn lead into gold. 

With the advent of the information age, being calm, rational and objective on something simple like the stock market is getting harder and harder.

Why only a few people successfully invest and grow wealth?

The key to being successful on the stock market is to do less. 

This is why I have never been a trader. 

I believe in doing less and removing the complications out of decisions. 

If I do not understand the business model and am not comfortable with the risk, I don’t take any part in it.

Doing less is not panicking

Truly successful investors do not have the fear of missing out. They don’t panic and attempt to jump a train to nowhere because everyone is getting on it. 

They know there are plenty of opportunities out there and if you’re someone who diligently invests over time (I invest every month for example), you are bound to come across some real gems.

At tabarruk, we’ve been successful over a long periods of time because we know every company we own shares in, like the backs of our hands. Because we know that opportunities are important and the more crowded a cafe, the harder it is to find a seat at a table.

We don’t try to overthink and take it upon ourselves to conduct in-depth research. If we don’t have the time to research, we find multiple reliable sources of research and analyse the work already done to form insights.

Tabarruk set out to be one of the best resources of ethical investment education on the ASX sharemarket, and has achieved it through:

  • 75 combined years of experience between Moin, myself and our fathers
  • Our combined experience across sectors in Australia
  • The refining of the Tabarruk framework for analysing, researching and rating companies
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Someone from Sydney (AU) bought a yearly subscription 13 days ago