Keep adding wood (capital) to the fire (portfolio) until you burn the place down

One of the key things to do when you are investing is to keep adding in new money.  I know this sounds like it is obvious, but when most people think investing they think that they throw a chunk (aka a windfall) at something and then it increases in value.  If you really want to win though, when you load up you want to continue to systematically load up over time.

Systematically buy in

In the investment club we tend to bring in chunky money monthly and typically what we do is we go all in on a deal.  I was listening to Cramer a few weeks back though and he dropped a gem. He said that when you are buying you don’t want to hop all in at one price.  This is because we never really know what is going to happen. We think we know but we don’t know until after it happens.  A good strategy is to buy, wait, assess, determine if you are going to buy more and then pull the trigger.  This is a much more sophisticated and strategic manner of investing than just dumping and running.

Investing is a lifestyle and you obtain that lifestyle through habit, practice and patience. The best deals I have seen occurred when we purchased quality and then follow it up with subsequent purchases of the same security (aka buying strength).

Don’t just set it and forget it

To be successful you have to keep adding to your positions and your principal amount. A lot of times people get a windfall and they just invest it and wait.  Often times they will lose money, or they will make a little money but they don’t follow it up with more money.  You have to continue to add fuel to the fire.

The only thing worse than losing money in the stock market is seeing a huge gain percentage-wise in a small position.  Don’t be that person.  Buy and then continue to consistently load up on your better performing positions.  It might even be wise to sell your poor performers to buy more of your better performers.

This last point is very counter intuitive because we all know about buying low and selling high. Well, if you buy high and it goes higher guess what you just did?

So the take away here is to continue to load up on what is performing well, sell what is losing, and continue to add new money and fuel to the fire.  I was managing a persons account who gave me a small chunk but they never added to the position. We gambled and took a loss but we didn’t have new money to hold what was not working for us and go all in on other opportunities. Instead what happened is we had to pour the lower amount into something else. That limits the gains on the position you are trying to dig out of.

A better way is to commit to investing. Go all in and systematically grow your money.  If you are interested in working with our club email us at info@capitaltodd.com we want to work with you.

Be great, invest well,

Todd Millionaire

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