Hello friends,
Today we will talk about one of the best investment insights I gained from the wealthiest and most successful entrepreneurs and investors in Israel and worldwide! ๐ต
Let's begin:
"Do not confuse stock price volatility with fundamental business changes." ๐
Sounds simple? Let's break it down! ๐งฎ
Polak Prasad notes in his book "What Darwin Taught Me About Investing" that the deep fundamentals of a company are what ultimately generate long-term success, not stock volatility. โ๏ธ
Just as Phil Town argues in his book Rule #1, "It is important to remember that stock fluctuations reflect only investor expectations." ๐ฏ
And this is important to understand because in the stock market you invest and trade in companies, not stock symbols! ๐
Whoever invests in symbols is like a gambler; they act just like in a casino, and it's better for them to leave the stock market and go to the beach because the damage and tuition they will pay will be very great. ๐ฐ
Not many understand that there is no direct link between stock performance and the company's future; stock performance does not reflect the company's future in any way. ๐ฎ
Let's simplify this with a classic example from the present -
Tomorrow people buy Palantir stock without any change in activity and push it up 1,000% - is there now such a huge surge in the company's business activity? ๐
Probably not. โ
Remember: true investing focuses on the business, not the chart or the stock price. ๐
Stock price fluctuations are a natural part of the journey, but long-term success is built solely on strong business fundamentals of the company, not on the stock price. โก๏ธ
Instead of focusing on stock price volatility, focus on an in-depth analysis of the company and do not let volatility scare you. ๐ป
Think about it for a moment:
Are you confident in your understanding of the businesses you've invested in, or are you mainly following the chart and stock price? ๐
The common denominator that made all the greatest investors in the world what they are is that they know how to filter out background noise by focusing on expanding their moats, flexible business cultures, and excellent management skills! โ๏ธ
Amazon and Broadcom are examples of companies that are growing more and more and continue to grow historically year after year. ๐
What's the secret? Strong business fundamentals. โก๏ธ
And where is the power...?
Leveraging these investments for compound interest in the long term is much more profitable than constantly changing your investment portfolio. ๐ชง
We hope you feel the power of these insights. ๐ช
If you apply this approach, you will feel an enormous weight lifted from you. ๐๏ธโโ๏ธ
Suddenly you will see that there's no need to frantically check stock prices every day, and no need to fear missing out on the 'hot' stock that some guru just pumped on YouTube for two cents... ๐
You will gain confidence in your path just like the world's greatest investors, by looking at the business itself! ๐
If you ponder these principles often, you will begin to see how they operate in complex ways in your mind. ๐ง
Every day we have an opportunity to sharpen our thinking and learn about the businesses we invest in, strengthening our understanding of what truly matters. โ๏ธ
And over time, over weeks, months, and years, this knowledge accumulates into a huge snowball, preparing you to make rational and profitable decisions every time a new opportunity arises on the horizon. ๐ก
When you understand that maximizing certainty begins with identifying businesses with a low probability of failure and a high probability of growth, the entire perspective changes. โ๏ธ
Suddenly you will feel calmer amidst stock volatility and more optimistic about the future potential of your investment portfolio. ๐
Our advice is to create this momentum as your guiding principle in investments starting now. ๐
Make it a habit, and you will notice how your investment skills grow day by day. ๐งฒ
Adhering to this approach will give you the freedom to break free from short-term noise. ๐ฌ
If you apply this thought pattern to your investments, you will be able to look back in a few years and see how it paid off for you...๐ฑ
Remember: true risk is not related to daily volatility, but to permanent loss. ๐บ
Look for opportunities with a low probability of failure, focus on them, be patient and focused. ๐ฏ
"Successful investing is not about timing the market, but about being confident in the market." ๐จโ๐ซ - Warren Buffett
In the picture - my friend Eitan Yohananoff and I at his home at the end of a fascinating conversation about life, AI, success, and investments! ๐ต
The fascinating conversation will soon be uploaded as part of the new series where I host the wealthiest and most successful entrepreneurs in Israel for engaging and valuable discussions! ๐คซ