Now, I believe you've discovered this video at one of the best times in the history of investing into the stock market. This is because in the past several years, we've gone through some of the craziest moments in human history, including a global pandemic, record-breaking inflation, and the most debt this country has ever seen from the amount of money that was printed in the past few years. But here's the thing, out of chaos comes opportunity, and the aftermath of this global crisis has created a landscape ripe for new investors like yourself to come in and make generational wealth for you and your family.
Today, right in this moment, marks the beginning of a new era, and it's almost as if we've been handed a golden ticket right at the palm of our hands in being able to single-handedly change our lives financially forever. Now, how do I know this, and where does my deeply rooted, strong conviction come from? Well, it comes from experience. Before I made millions of dollars for my businesses, my investments, including stocks, crypto, and more, I started out in the shoes of many of you watching this video here. Now look, I grew up in a Korean immigrant family with not much to our name, so I can assure you that I didn't have this trust fund that allowed me to have this head start and being able to have multiple millions of dollars.
More specifically, when it came to investing, I first started this journey about 10 years ago while attending community college without any sure idea of what I even wanted to do with my life. At that time, I was helping my dad at work, putting down hardwood floors, and working as a health technician with kids who had autism as my part-time job. Now back then when I was trading stocks, I will be honest, I had no idea what I was doing. Simply put, I would just buy stocks based on how much I liked the company in real life. If I was walking past a TV and I saw some stocks pulling up there, I'd probably buy some of that.
If I saw some stocks blowing up and getting 100% runs in a short period of time, those would be the stocks I'd buy. Or if I'm even just going out and I like the quality of those Lululemon pans, I'd be like, alright, it's time for me to pick up some of that stock. Through that method, sometimes I made money, sometimes I lost money, but essentially, at the end of the day, it was all a gamble.
It wasn't until I went from gambling as a beginner to strategic investing through proper education where I was able to make money consistently from the stock market and have my money truly work for me. Had I watched a video like this when I first started out, I personally believe I could have saved hundreds of thousands of dollars that I lost and even possibly made millions more. Looking back, I mean, there were certain days where I literally thought that I was the richest person on earth because my stock portfolio on Robinhood had gone up to over $50,000 in unrealized profit. I remember even at the peak of me mania and the last bull run where I saw my stock portfolio closing in on over half a million dollars across all my accounts. And even at that point when I'd never seen that kind of money before.
I even got greedy from someone who started with nothing, who had a lot to seeing a drop even more. I've learned so many key lessons that I'm going to share with you all in this video here. So the importance in you watching this video is tremendous. And that is at least if you really want to make money investing into the stock market. So in this video, I'll go over why now is the most important time to be investing and how you can take advantage of the opportunity that we have at hand so that you don't miss out on that life changing wealth.
Then I'll come to explain what the stock market really is, how it works, why companies issue stock. And by then you'll have a complete understanding of how the stock market truly works. From there, I'm going to be going over some of the most important stock terminology so that if you want to talk business at a dining table and sound like you're from Wall Street, you'll be able to do that too.
Next, I'll share with you two very important research methods in knowing which stocks to buy and when to buy through the use of fundamental and technical analysis. Not only that, but I'm going to share with you additional strategies that will give you an unfair advantage for you to be able to profit in these markets. Some of these methods include the Nancy Pelosi tracker or copy trading some CEOs and executives. Now this is going to be perfect for anyone who who might be a beginner and you don't feel like putting in hours upon hours of work where you're learning candlesticks and learning the moving averages and you want to just stick with increasing your odds of being able to find good stocks to buy and just forget about.
afterwards i'll go over the process on opening a brokerage account and also go over real time how you can buy and sell a stock and implementing those different trading strategies that i just mentioned so 10 years ago when i first got into investing the way i started was actually just going on the app store downloading a free app and then just starting my journey there because you guys are watching this video here and because of the connections that i have as a financial youtuber i got an exclusive deal where you guys can pick up up to 10 or even 15 free stocks now i'll go over some of the more details to that a little bit later on on from here i'll share with you the importance of diversification and building a proper balanced stock portfolio next i'm gonna go over all the risks associated with stock investing so that you don't just know how to manage it but you know how to come out ahead last but not least taxes a lot of people don't know that there are ways that you can get around taxes they don't even realize how much taxes you have to pay we're going to go over all of that towards the end of the video all right so before we begin i highly recommend that you guys have a place to take notes you use a notebook get your phone out so that you can also follow along on some of these exchanges when we get to that point if you don't have a notebook i recommend at least pulling up the apple notes tab just so that you have a place where you can document all the new things that you'll learn today all right so before we kick this video off let's go over why you should consider investing into the stock market today. To start, the S&P 500, which also stands for Standard & Poor's, is a stock market index that measures the performance of 500 of the largest companies listed on stock exchanges here in the U.S. Now, the S&P is one of the most commonly followed index funds, and it's considered to be one of the best representations of the entire U.S. stock market.
Now, an index fund is very simple. It's pretty much just a basket of all the different apples, bananas, and oranges, which actually represent large companies like Apple, amazon meta tesla and more now here's the thing the s p 500 has been consistently trending upwards for decades and has officially hit a new all-time high of forty nine hundred dollars for the first time in history earlier this year On average, this index has an annual return of anywhere from 7% to 12% over the long term after adjusting for inflation. This right here just shows you that right now, the stock market is still picking up and all-time highs are not a thing of the past.
A lot of newer investors assume that, okay, if we hit an all-time high before, there's no way we can hit it again. Now, the second reason why I would invest into the stock market is simply because you have a better chance of making more money. Historically, the stock market has provided higher average returns compared to other investments such as treasury bonds, high-yield savings accounts, and other commodities like precious metals such as silver and gold.
Over the long term, stocks have the potential to generate significant capital gains. And even this past year, we've already seen stock prices for major companies blowing up. Nvidia, Meta, Abercrombie. I mean, these are just a few examples that have been on my watch list of showing some enormous outsized gains. Reason number three, for 2024, we have something important happening, and that is election year.
Historically speaking, election years have had a significant impact on the stock market. On average, we've seen over 20% gains with the S&P in pre-election years and about 11% in gains on election years themselves. Now, this data on positive price action stems as far back as 1953. This means the market has been favorable overall in 20 of the 24 election years from 1928 to 2020. Through that, we've only seen negative returns.
on just four occasions. Not only that, but we're also looking at the chance of having a Republican back in office. This year is great for the market and gives us another reason to invest because Republican administrators are typically seen as more business friendly because of tax cuts for both individuals and corporations.
To explain it simply, lower corporate taxes can increase company earnings, which can lead to further stock price appreciation. Now, although we've seen some correlation between the election year, getting a new president in office and how the stock market reacts, the single most accurate correlation turns out to be this. If the economy is rising in growth and we see inflation fall, then we're in the best possible conditions for stocks to simply just go boom. So historically, higher inflation and higher interest rates.
have been an indicator for poor performing stock markets because of limited economic growth. On the other hand, low inflation and low interest rates means we have the best possibility of stocks outperforming how they did in the past. So within the next year, the Federal Reserve is planning on introducing additional rate cuts to those interest rates, which only improves the investing conditions and currently right now to making the stock market look even more favorable.
So before you decide to go all in cash out. all your 401k and your retirement funds and you decide to invest it into some of these top stocks that I'll go over in this video, let me make something clear. Although the stock market has been indeed doing the exact opposite of what top analysts and banks have been saying, where the greatest and worst recession of our lifetime was coming up, I'd still move cautiously.
Don't forget in 2023, we had some of the largest banks collapse because they couldn't take the rising interest rates. This here is what I believe would have been the start to the great recession. But instead, a lot of those larger banks that went under got a one-way ticket out with a government bailout program. Now, since then, things have been rather quiet.
But even today, before I filmed this video, I even saw headlines of the New York Community Bank reassuring its investors that it had enough cash to stay afloat after the stock shed about 60% of its value over the past eight days. Even Moody's Investor Service, which is one of the largest credit rating companies, downgraded the bank's credit rate to junk. So this means there's still a possibility we could see more banks collapsing, and this could be the domino that tumbles everything over. Now, the second reason I'd be a little bit more cautious in the market is the fact that the US economy in 2023 gained momentum at an annualized rate of 3.3%, despite the higher interest rate environment.
which was actually meant to slow down the economy. But it turns out, even with the rate of growth that we account through the GDP could have been significantly skewed. By the way, if you don't know GDP, it just stands for gross domestic products.
It's a term you'll often hear in the news about the economy. And it's just a way for most people to get a gauge on how the country's economy is doing. So the reports are is that we've had an increasing GDP, but a lot of these reports don't account for the fact of how high inflation is requiring more people to spend money.
Not only that, but U.S. credit card delinquencies and debts are still increasing at continued all time highs. In 2023, consumer debt reached 17.5 trillion dollars. And for the month of January of 2024. Americans had amassed over $19 billion in credit card debt.
Now, if we divide that up by the total population, it's around 340 million people. That means every single person in the US would have $54 in credit card debt. So as we begin to peel the layers to the onion back, or what I like to say, the cabbage to my kimchi, this news here isn't something that would make me reconsider wanting to invest in the market.
This is because the way I see it, everything is an opportunity. Given the context of how resilient the stock market is and how strong the US government has been, and even more given the long-term horizon of how I decide to invest. it makes me even more bullish on wanting to buy, say, as an example, stock of companies like American Express, Capital One, Chase, or Citi, knowing that interest rates will get cut in the near future, but credit card debt being at an all-time high would secure additional long-term profits for some of these other banks. This here is just an example of being able to still spot opportunity amidst the fear that everyone might have and how even you watching this video can capitalize on strategy thesis as an investor. So I believe over the next five years, interest rates will still be lower than where it is at today.
This means we're going to see positive GDP data. And with this still being the strongest correlator for a well-performing stock market, then it makes sense to me that the market will be at a much higher and better place even five years from now. Now, look, this does not mean we won't see a recession. It does not mean we won't see a massive correction in the market either.
Those things could definitely still happen in between those five years. But according to historical data, The average length of a bear market is still 289 days or about 9.6 months. And this here could emphasize that once in a life opportunity to be able to buy assets at a price where it's pretty much like the equivalent of seeing a Black Friday clearance sale. Either way, regardless of what you decide to do, I'm going to give you all the tools that you're at least well equipped in understanding.
the different time horizons, the different strategies, so that you're able to make the best decision for yourself and being able to buy into the markets without risking your entire life savings. So regardless, by the end of this video, if the stock goes up or down, you still have all the tools to play the market both ways and still be able to make a profit. That begs the question then, Brian, well, how much money can you really make? So investing in the stock market is a long-term game.
Just remember that. And it's possible for people to make millions or even billions. billions of dollars now the truth is the longer you remain invested the more potential upside you can see as the growth compounds in your stock portfolio now there's a reason why even albert einstein would go as far as saying that compound interest is the eighth wonder of the world now to give you a realistic idea of the earning potential let's just use an investment calculator here that emphasizes on compound interest, which is something that most stock investors will commonly see. So currently in the US, the average mean salary is anywhere from $50,000 to $60,000 a year. That can come down after taxes to about $4,000 to $5,000 a month.
Say after rent, utilities, your car payment, you're left with about an extra $1,000 that you can invest into the market. Say you're one of those people that have done a great job of saving your cash and you have about $10,000 in your savings account. Let's say you put $10,000 into the market.
Every month, you're putting in an extra $1,000. For an average annual return, I think 6% is on the much lower side if you were to play very conservatively with some of those index funds with already big companies, but it's not uncommon for us to see investors who make an average annual return of even 30, 40, 50% by just investing into a few technology stocks. To make it fair though, we're not gonna put any of those crazy numbers. Look, I'll say even 10% average return.
If we leave that to grow for 20 years, your initial deposit of $10,000 could be worth $832,650 by 2044. So how about this? Say you got a little bit more money. All right. You put in $20,000.
You say no to that new Tesla and you decide, all right, I'm going to cut back on the spending and the dinners and we're going to put $2,000 a month. Now, after watching this video, if you're able to make an average annual return of anything above 10%, let's say even 20%, here's what it would look like after 20 years. That amount.
ends up turning into $7,275,000. To break that up at the end of those 20 years, that means your initial investment would account to $500,000, but your return on investment would be over $6,700,000. thousand dollars now personally i don't know about you but i don't think these numbers are too crazy now i do know like everyone's got student loans these days you know credit card debt is going on so let's just bring these numbers down let's say your time horizon is even 10 years let's say you're contributing a thousand dollars a month and we stick with that same average annual return by being disciplined with your investment and by utilizing compound interest you could still expect to see about a half a million dollar portfolio by the end of those 10 years. So at this point, I'm going to be breaking down some of the biggest misconceptions that I hear quite often when it comes to investing. The first one here is, I need a lot of money to make any real money in investing.
Look, even from the calculator that I just showed you, hopefully it gives you an idea that you actually don't need $50,000 or $500,000 for you to make life-changing wealth. The truth is, even... All amounts can grow significantly over time due to compound interest and many successful investors with a modest sum were still able to grow their portfolio gradually over the long run. Even nowadays, thanks to modern investment platforms, you can also buy fractional shares of more expensive stocks, meaning that you are not limited by the amount of capital that you might have.
As an example, Nvidia at the time of filming this video is just about hitting $700. But if you're a newer investor, you're just getting started off, maybe you can't even afford to buy just one share of that company. So this is what a fractional share is.
You could buy actually a piece of that where you buy $200 of that stock and you're literally getting a fraction of it instead. Second misconception is that investing is just like gambling and the markets will have to crash soon enough. So here's the truth. Investing in stocks is fundamentally different from gambling.
While there is obviously inherent risk, investing is based on research and analysis of market trends, company performance, economic factors, and this is far from gambling, which is largely just based on chance. Now, stock markets do indeed experience volatility, but still, unlike gambling, a well-researched long-term investment strategy and diversified assets still typically yield positive returns over time. Third misconception. I will need to lose a lot of money in learning as a beginner before I can start making money.
Now, this misconception is something that could be true if you did not take advantage of all the abundant resources that are available for learning about investing without risking money. So this includes literally like watching a video like this all the way till the end. You can also buy books or take online courses, or you can even activate yourself in something called paper trading.
Paper trading is just what it sounds like. You're literally using fake paper monopoly money so that you're able to get a feel of how the stock market is, see if you can make money or not based on whatever strategy you may have at that place. And it could be a very basic strategy, just buying whatever stock that you see fit and you can get real reps in without risking real money. Now, I'll go over some of the best risk management techniques and strategies like setting up stop loss orders or even just finding ways to diversify your portfolio so that you can hedge against certain losses.
If you take advantage of that, no matter what market condition we're in, if you're holding for the long term, chances are you'll still be able to. to have a profitable investment. All right.
So with that being said, we're now going to go into the computer. We're going to be going over a lot of the most important basics when it comes to the market. And after we'll go on my phone, show you how you can get some free stocks. And I'll also be showing you exactly how you can utilize all the tools that this app has to offer. So what is a stock market?
Well, imagine the stock market as a giant buzzing marketplace. And in this marketplace, instead of buying and selling things like fruits or clothes, people buy and sell shares of different companies. These shares are what we call stock.
So think of a stock as a tiny slice of a company. When you buy a stock, you're buying a small piece of ownership in that company. And in essence, you're now a co-owner for that business. A company sells stocks to raise money. So let's say there's a company that makes amazing cookies and they want to make even more cookies and maybe even start baking some cakes.
But making those additional goodies is going to cost them money, money that they do not have at the moment. By selling stocks to their company, they're giving out. ownership, which allow them to get the funds which are necessary for growth. Now, if you become a part owner of a company and the company does well, well, you do well too. So this usually means the value of your stock goes up and you can make a profit if you decide to sell your shares.
Sometimes companies also pay you a part of their profits, and this is called dividends. Now, here's the catch. If the company happens to not do well.
and those cookies ended up tasting terrible, the value of your stocks could go down, and this means you might get back less money than you invested if you decided to sell your shares. Now, buying stocks is a way for people to just invest their money in companies that they believe will grow in the future. If their prediction turns out to be right, they can make a profit, and it's a bit like planting a seed and just hoping it grows into a more big, fruitful tree. So going back to the example of owning your own bakery, you can raise money collectively with a group between family and friends, but you can also- have the entire public market get access to it to do that you would go through something called an ipo where if you ever see those photos on the cover of a newspaper where you got a bunch of people in suits clapping and confetti's coming out it's because they just launched their company to the open market as soon as a company has an ipo it means anyone who is able to trade and buy stocks which is about 99 of the people out here are able to then buy into this company too so there are two primary types of stocks preferred and common stock Preferred stock is becoming an increasingly rare class of share.
It's even estimated that right now for every dollar of preferred stock, there's about $80 of common stock in circulation here in the US. If we take a look at some of the biggest companies out in the world, Apple, Exxon, Microsoft, they do not issue preferred stock. In fact, within the top 30 largest companies in the US by market cap, only the leading four banks, Wells Fargo, Bank of America, Citigroup, and JP Morgan Chase are known to offer preferred stock.
Between the two, here are just the most important things you should know. Preferred stocks often pay fixed dividends at regular intervals, similar to bond interest payments. Now, these dividends are usually set at a predetermined rate and take priority over dividends paid to common stockholders.
Now, this does not mean common stockholders would not receive dividends. dividends, it's just worth noting that these dividends with those common stocks are typically more discretionary and they're not always guaranteed. So if a common stock company does really well, one way that oftentimes they want to give back to investors is by just paying them extra dividends. It's also worth noting that common stock is generally a lot more volatile than preferred stock.
So stocks are often categorized by these three major buckets. you have market cap, market sectors, and different themes. Now, market cap is one way an investor can evaluate how much a company is worth. To do this, you're simply just multiplying the share price by the number of shares outstanding. Now, the structure of classification for this starts with micro caps, then small caps, then medium caps, and large caps.
So micro caps are generally under $300 million. And the vast majority of these stocks trade on the over-the-counter market. So if you've ever watched a movie like Wolf of Wall Street, those penny stocks that Jordan Belfort was selling to his clients in the beginning is very similar to the modern day micro cap stocks today. The smaller the market cap on a company means the higher the risk there is, but there is still a higher opportunity for you to possibly make even more money with them. Following that, you have your small caps.
This ranges from $300 million to $2 billion. After that, you have your mid cap, which is between $2 to $10 billion. And then you have your large cap, which is anything over $10 billion. So the larger the market cap, the more established the company, but arguably there will be less upside.
So taking a look at some of the large cap companies, this will include Microsoft at $3 trillion, Apple at $2.9 trillion, Google at $1.8 trillion, Amazon at $1.7 trillion. What's great about understanding market cap is that you start to get an idea of how much money is really in circulation. If we wanted to compare something to the likes of crypto, you'll notice that Bitcoin is still significantly far off from the market cap of some of these larger companies.
Now, if we want to compare currently Microsoft at a $3 trillion market cap, you'll notice that. they are still significantly under from the market cap of a precious metal or commodity like gold. Next, we have market sectors.
This includes energy, materials, industrials, utilities, healthcare, financials, and real estate. Now, these here are the main 11 sectors that you should definitely understand because it's a way for you to be able to diversify your portfolio once you begin to build it up. There are some people who just ignore all of this too.
And they're like, you know what? I just want to invest in some of the top tech stocks. And they go all in on just like Facebook, Apple, Microsoft.
And by doing that and not looking at some of the other sectors, you're putting yourself at more significant risk. Furthermore, we have three different types of stocks themselves. We have value stocks. You'll hear about growth stocks often.
And then those dividend stocks. So a value stock is just a stock with a price that appears low relative to the company's financial performance. So when it comes to investing into value stocks, it's very similar to people trying to go bargain hunting where you're finding stocks that are considered to be cheap relative to their intrinsic value. Following that, what I think most people are attracted to, at least these days, are growth stocks.
And these are more specifically companies that have substantial room for capital appreciation. So this tends to be newer and smaller cap companies, but we have also seen a lot of those mid cap and large cap stocks still considered to be strong growth stocks. Now, when you're considering growth stocks, you need to look at the industry and companies that could flourish in the future.
Growth stocks oftentimes even show low or sometimes even negative earnings because they're in a market that might not have just picked up yet. The classic rule of thumb as we get through this presentation is that when you assume there is more risk, usually there is higher reward, but it goes vice versa. If there's a higher reward, there is going to be more risk where you could lose more money. Now, between the two, what a lot of people consider to be the safest and the most passive form of stock market investing is through buying dividend stocks.
So a dividend stock is when a company pays its shareholders in the form of additional shares or cash. These dividends are always different. It just depends on the company, but sometimes it can be paid out monthly, quarterly, or even semi-annually. Now, one of the primary benefits of dividend stocks is their ability to just generate a steady stream of income.
Companies that generally... provide some kind of dividend are oftentimes are the ones that are just very stable, meaning that you don't see huge volatility or fluctuations with their stock price. Now, dividend stocks are also great because you have an option to reinvest those dividends automatically.
Now, reinvesting dividends also plays a part into the compound returns over time, which could also accelerate the growth even further of one's portfolio. So the rule of thumb is if a company pays out dividends, which you can see when we actually go through analyzing some of these stocks, they usually have a very stable and mature business model, which generates steady cashflow. Dividend stocks play the long game. It's the safe game. And if you're someone who's rather more conservative and you don't want to be putting your money into more risky businesses, this year is one of the best options for you.
Now, at this point, we've covered different types of stocks. You have an idea of how the stock market works. Let's go over some of the most important stock market terminology. Now, there's a lot of terminology, but I just broke it down into the ones that I believe are the most commonly used. In just a moment, I'm also going to show you how I go in and buy different stocks.
And when I do that, I'll also go over the definition of some of these other. your terms. Now, bullish versus bearish.
This is something you're going to hear very often, even if you're in stocks, crypto, or even different types of market. So when an investor says that they're bullish, it means that they have a positive outlook and they expect prices to rise. The reason why it's these two animals, by the way, is that a bull, when they attack something, they normally... go up they usually use those hooks and they penetrate anything that is in their way bears on the other hand usually when they attack is that they come down they'll swipe down from top to bottom so if an investor says that they're bearish it usually means they have a negative outlook and expect prices to fall now this next term is pretty important a stock market bubble and this here occurs when the prices of stocks or other assets become inflated far beyond their intrinsic value where it gets driven by pure speculation and sure enough we hear of the term the bubble bursts, which means eventually all of those stocks start to correct and they start crashing down in price. If you want to have a better idea of a stock market bubble and how you can protect yourself from a future one, take a look at history.
The last major stock market bubble was the dot-com bubble. And this year took place in the 1990s, where we saw the internet becoming more accessible to the public, sparking a revolution in all these companies trying to ride this wave. What happened during this time was that many dot-com companies went public with those IPOs that we talked about earlier, and their stock prices soared on the first day of trading. Now, this happened without any evidence of a sustainable business model.
And it was just the fact that it was a company launched around during that time. So imagine this, anytime a new company would... go public that off the first day they would just go up like 100 to 200 so this here is in reference to the start of the bubble forming and eventually the bubble popping by the late 1990s it became increasingly clear that many of the dot-com companies were now significantly overvalued so with all these companies that had huge valuations they were not able to turn a profit and show the numbers they needed in order to maintain that price when this realization set in basically everyone started selling and when most people started selling the bubble began to burst where companies were starting to plummet, resulting in massive losses for other investors.
Now, the bursting of this bubble had such a huge impact on even the economy that it led to numerous bankruptcies and a sharp decline in the NASDAQ. And following this was a bear market where after that positive price action really wasn't taking place. The main lesson that we can at least draw from that is we just need to be very careful and rational.
between the investments that we make. Even in the last crypto bull run or the meme mania, you might've heard often the- bubble is going to burst. And that's exactly what we've seen happen time in and time out. As you begin to have more time in the market, you'll realize that even some of the best investors always succumb to the dangers of getting too greedy and getting too fearful when the markets are down.
This is why one of the most famous quotes taken place by Warren Buffett, one of the most successful stock market investors said this, be careful when others are greedy and greedy when others are fearful. Now, another term is an index. So this here is just a statistical measure of the performance of a basket of different stocks representing a particular market or a sector. We talked about earlier the S&P 500, that's an index.
The Dow Jones is an index or even something like the Nasdaq. Now, blue chip stocks, you're going to hear about this term quite often. And this here just represents some of the largest industry leading companies. Examples of blue chip stocks include Apple, Microsoft, Johnson & Johnson, Procter & Gamble, Coca-Cola, Exxon, and more.
Now, as a stock investor, there are also a few ways that you can make money. And this involves day trading, swing trading, or even playing around with something called options. Now, day trading involves buying and selling securities within the same trading day. If you ever see a lot of these like college dropouts or making a ton of money in the stock market, it's not usually because they're buying and just holding. It's because they're day trading.
Day traders go in on the computer, they pull up charts, and they use something called technical analysis. This here is just another form of research that you can predict how a market- does based on how it performed before. Now, day traders who utilize technical analysis oftentimes don't even look at a company's financials.
They don't care about the profits, the earnings. They're simply just looking at data on charts. Now, we'll go into more detail on this, but this even includes setting up things like support levels, resistant lines, and looking at moving averages. So on the other hand of that, we have swing trading.
So for this, just literally imagine a kid on a swing going. back and forth. Swing traders often hold a stock anywhere from a few days to even several weeks, but swing traders aim to capture short-term price movements within a longer-term trend.
This is personally the way that I would rather trade stocks if I made the decision not to hold that stock for a long period of time. Now, let's talk about how you can further research stocks. So we just discussed how technical analysis works, but how about the fundamental analysis side of things?
So to become a fundamental analyst, you need to learn how to read a company's primary financial statements. This includes looking at balance sheets, income statements, cash flow statements, as well as understanding the importance of key financial data, such as the earnings per share, also known as the EPS. or the price to earning ratio, which is the PE ratio, and the price earnings to growth ratio, which is. the PEG or the PEG ratio.
Now, I know this can go over a lot of people's head. I'm going to make it way more simple soon when we actually go into the app, which will show us examples of what a good PE ratio or even an earnings per share should look like. Now, to become a good technical analysis trader, you're going to need to learn trend lines, candle lines, moving averages, VWAP, trading volume, RSI.
You also need to have a level of management when it comes to risk. your emotional discipline, not having FOMO, where you get fear of missing out on some of these trades that are happening. You feel like you lost a lot of money from the trades that you didn't enter and you just build up your psychological resistance.
Now, by the way, technical analysis not only applies to stocks, but it also applies to crypto. I have one of the largest crypto trading servers and we have some of the best technical analysis coaches in the entire world. If you guys also want to take a look at that, you want to join a community, you want to learn more, we also do have a separate stock section in there too. And anytime I'm making some larger swing trade positions, I send out an alert there.
I have a link for you to join that down below. You don't have to. Even through the free content that I post here on this channel, you can still find a way to win and succeed in this market over the long term.
Now, following that, there are a couple more analysis methods that a lot of people don't really go over. And this is something that you should definitely be on the lookout for. As great as technical and fundamental analysis is, a lot of this still takes time. Now, granted, I know like... 80% of the people out here still don't do the full.
due diligence that they should. And this is why there are companies that go ahead and summarize a lot of these reports. So the first is following influential figures traders.
Now, this strategy involves monitoring the stock transactions of influential figures such as politicians, CEOs, or other prominent investors. Earlier in this video, I mentioned the Nancy Pelosi strategy. And this here is an approach where a lot of these public figures are legally required to disclose their trades. Now, it's important to remember that their investment goals and risk tolerance are completely different.
but it also plays into the whole argument that a lot of these politicians have an edge in the market. If they're going to go ahead and pass a bill that we might not know about, they might go ahead and buy stock to a company. And if we look at even the data, a lot of these politicians make tremendous amounts of money just investing. Now, I'm not going to go into the ethics of whether this is insider trading or not. I just want to make sure that you guys are aware of this so you can fully take advantage of ways of making a.
additional money in the market. The second is copy trading. Similar to what it sounds like, you are literally basically just copying someone's homework.
A more seasoned investor who's been in the market for years may have already done all the technical analysis. They might have spent weeks on doing fundamental analysis on their top 10 companies. And all you do at this point is just copy their trade. Now, I do need to mention the importance of always verifying the research and doing your own due diligence before aping into any kind of investment or trade. As an example, if I made a top 10 stock picks video today, it doesn't mean you should be going all in, liquidating all your assets and just buying those 10 stocks that I talked about.
The best way I would utilize copy trading is just getting a list of some of those other stocks that people mention, see if they're mentioned even more, Do your research and then from there make your decision. Now the third one here is social sentiment analysis. And this here uses tools to gauge the sentiment of stocks using social media platforms like Twitter or Reddit. This here involves analyzing the mood and the opinions if people are feeling more bullish on certain stocks and then you making a play. Now social sentiment analysis is huge.
One of my friends that I've known for years, his business partner started his investing career in 2007 with just $20,000 and he was able to make more than $2 million in investment returns in just three years. following the strategy. So this here could be as simple as in the fall season, if you see a whole bunch of girls wearing those Uggs and you're like, oh, whoa, I'm noticing that a lot more and everyone's loving it and the quality is going up. You could buy stock in the company Uggs knowing that this is a popular trend that could pick up. Another way is to go on Reddit.
This is how I was able to buy in at AMC before it had its short squeeze many years back. I remember putting in a couple thousand bucks into this and literally waking up the next morning and seeing it turn into 10 to 15,000 bucks. So that right there is just one other strategy, but please. do your due diligence.
Now, the fourth strategy is algorithmic trading. And this here uses computer programs that follow a defined set of instructions for placing trades in order to generate profits at a speed and frequency that is impossible for most human traders. So this also falls under the umbrella of quantitative trading, also known as quant trading, where computer algorithms and programs help identify and capitalize on the next trading opportunity. Next, we have event-driven trading.
And this involves trading based on anticipated events, such as earning reports. product launches, or even changes in government policy that could affect certain stock prices. So as an example, NVIDIA, they've been on a tear.
And one of the reasons behind that is because the government signed a contract where they're going to be needing a ton of chips from NVIDIA, which means that they're going to have even more business ramping up. Number six. we have contrarian investing. And this strategy involves going against prevailing market trends. Now, this strategy here involves going against what the big narrative behind the market trend is.
Contrarian investors often buy stocks when people are selling and sell when others are buying. So what we- Mentioned with Warren Buffett. Yeah, this is exactly what he was talking about.
Going back into the movie, The Big Short, Michael Burry, one of the characters had a hunch that the market was too overvaluated. So he decided to do the opposite. He decided to make short positions where if the market started to fall, he'd be able to make a significant amount of income.
So that's where the title of the movie came from. And with him. going against what everyone was doing, he was able to make a significant win leading up to one of the worst financial crashes. Next, we have sector rotation.
And this year involves moving investments from one industry sector to another to take advantage of the current economic cycle. So an example of this is you could be invested into technology stocks during a boom period and then consider switching over into microchip stocks. So narratives that are now built around AI or what might even follow that. Last but not least, we have pairs trading. And this here is a market neutral trading strategy, which enables traders to profit from virtually any market condition.
This one is a bit more advanced, but it's definitely something you should know of. And this strategy involves matching a long position that you could take. with a short position in two stocks of the same sector. So think about it like this.
If you go to the casino, instead of just putting all your chips on black, you decide to put your chips on both black and red. To combat any type of market crashes, we'll see other investors do this where they're able to diversify playing even both sides of the field. All right, so at this point, you should have a pretty solid idea on how you can research stocks and utilizing some of these different strategies that we spoke about.
The next thing we're going to do is put it all into action. I'm going to show you exactly how you can take advantage of these different type of strategies, how you can implement them right away. And not only that, I'm going to go over how you can also pick up 15 free stocks.
Now, the brokerage firm that I'm going to use for this section of the video is going to be MooMoo. This works out perfectly too, because the last time we actually made a video similar to this was about a year ago. That video did about half a million views.
You guys have loved it. You guys have asked for more. And for that video, I mentioned MooMoo as the platform to use. Well, it worked out perfectly because MooMoo told us they'd also want to sponsor this next video here. Good news is I've been using MooMoo for over a few years now.
I even took a call with their product development team. And from that call, I was just getting so excited for all... the features that i could share with you here now by the way moomoo is available outside the us too so if you're in canada and australia you can also pick up your free stocks down below all right so to do this folks go ahead and scan the qr code here on your screen i will also go ahead and have a link down below in the description from here you're going to notice the current promotion this is subject to change by the way but right now even if you decide not to invest into the stock market and you just have your cash sitting on their platform you can earn 8.1% APY, which is massive.
That is currently the highest amount that I know of between all the different platforms, exchanges, savings accounts, and different vehicles that companies have reached out to me about. Now, in order to get the 15 free stocks, you do need to make a qualified deposit. Now, a few years ago, when I went ahead and redeemed my free stocks, these were not like just cheap old stocks. Some of them were actually some pretty decent picks. So make sure you use this link.
Otherwise, if you sign up without a referral link like this, you are not going to be able to pick up the bonus. All right. So the next step here is to go ahead and use your phone number.
From there, you're going to get a verification code sent to your phone. All right. So from here, I'm going to be able to claim my free stocks clicking on this link.
All right. So by scrolling down, I can actually see some of the stocks that they deposited earlier into my account about a year or two back. This was Palantir. F, I believe this is Ford. I got Grab and Fcell.
Now some of these stocks are actually up a pretty decent bit. Even at the time of filming this video, my Palantir that I got completely for free is up over 195%. So I made even 65 bucks for me getting a free stock, not touching it.
And if anyone says passive income does not exist, this is what I would say. This is the most pure form of passive income just by taking a few steps and getting started. Now, let me mention a few things here.
First of all, MooMoo has some of the lowest fees with no minimum balance, and you'll also get $0 commissions on your trade. So you won't ever pay a subscription fee or anything else. This is completely free to use.
Not only that, but Moomoo is also a member of the SIPC, which protects securities customers of its members up to $500,000, including $250,000 for claims for cash. If that's not enough, Moomoo is also secured and registered with FINRA, which is actually one of the largest organizations ensuring a fair market with regulations and protection for investors like us. All right, so I personally like using this app on my phone the best. but let me at least get you started on some of the tools that I look out for, the ways that you can actually pick up and buy some positions into the market. All right.
So here on my phone, I just pulled up the MooMoo app and you're going to notice on the bottom, I have five different tabs. You have your watch list where you can add different cryptos or companies, stocks, whatever it is, and you could view it at a glance. So even right now, like Tesla's doing well right now, I have that on my watch list, but I can also say I wanted to add Adobe.
back onto my watch list. We'll have that there. On the navigation bar next, we have markets.
This is where you can see a broad overview of markets, even outside of the US. From here, you have index futures. You have commodities that you can invest in.
You have Forex. We which stands for foreign exchange. You have the bonds market and even crypto.
This year is great because you can literally see so many different types of investments that you can get into and have a broad overview of the market with even just seeing how things are performing based on the color. Now we'll go into a bit more of that later, but for now, let me show you just one of my accounts. By the way, I test and use many different brokerages. So right now I have my funds in many different spots, but on this Moomoo account, I have about $1,300 in here.
with some stocks that I purchased a few months back that are also doing pretty well. So this is exactly what your account would look like. So I can get a gauge on today's P&L. So right now, it's telling me I made $71 for today. I was up 5.82% today.
My total position P&L is $220. And it's also going to give me notifications on even things like how many day trades are left. Now what's great is I can pull up even my assets here and see different type of visuals. So I can see the total assets right now. I have about 91%.
of my stocks in the market. I have about 8% here in cash. I can see how my stock portfolio is doing today in the last five days, in the last one month, or even the year to date. Below that, you're going to be seeing different lines and this compares to some of the other larger indexes in the market.
If I click on it, it'll go away. So all I can do is see my organized line of how my own portfolio is doing. By scrolling down, you can actually take an even in-depth look on seeing how you're performing for the last month. So I can even pull up a calendar view.
This is a feature that even a lot of the best apps in the world don't have. And I can see literally every single day. what my gains are.
Now, this past month has really been good, but if I even pull it back to say, as an example, January, we had a lot more mixed days. This here is the power of just staying long term. If I sold it on a red day, I wouldn't have received the 13% of gains that I've seen this week.
What you'll also realize with Moomoo is that it can seem intimidating at first, just because there's a lot of features, but once you really walk through it and you open up different tabs, they even have different resources where it'll tell you what it all means. So just a reminder, guys, if you have not yet picked it up. pick it up and literally follow along with me with your app and play me on your TV or on a second computer.
Now from here, I can also get into another tab where I do an analysis on my profit and loss and just see the numbers. If I get into any IPO stocks, so these are companies that recently launched on the public stock market, I can see my performance here. Now this is going to give you just a general idea of how the stock market performs. I can also go left and right to see a percentage of my portfolio, the total P&L for the entirety that I've held it.
and even my cost basis. This price cost is when I entered the position. So with Disney, I entered it at $92 and currently it's at $110.
Or Palantir, I technically received my free stock when it was at $8, but currently it's at $24. If you want to learn more about the company, you can then click on the company and you're going to get hit with a ton of other data. So you'll see the open price and the previous close.
That means what the price opened at when the market. first started. By the way, the stock market opens at 9.30 a.m.
Eastern and closes at 4 p.m. Before the stock market opens though, there's something called pre-trading hours. And then after the stock market closes, there are post-trading hours.
Generally though, if there are holidays happening here in the US, the stock market will be closed for that day. Now I know for a new investor, you might get overwhelmed at this point, but let me show you just how simple things really are. Right here, the chart is going to show me how the stock is performing. This is based on the weekly.
So I could see it based on different weeks and I can... get different month overviews. If I wanted to see how it's been performing for the last year, I can pull it to the yearly. I can do a range of one month and I can even move it from candles into lines.
The great thing about this is you have full customization. You can also go ahead and draw different lines. You can have trend lines, horizontal lines.
And to do this, it's as simple as putting it here, moving it up. Locking it in. Now, if the phone is too small, you can literally open up the full screen mode and put it like this.
Aside from that, below, you're going to notice the order book. But this is because I also have a view right now where it's showing me a lot more information. Now, before I go even further, we discussed something called market cap. So you can obviously see that here on the right side at $53 billion. I can open up different highs and lows, and I can even close the feature just to make things a bit more simple to read.
It's from here that I can check out some of the different options. And what I love is that MooMoo has even things like unusual activity, where it's gonna show me. all the crazy plays that some other people are making. And you'll notice most of the recent calls are actually in the red.
So it looks like people are betting that it's gonna come back down in price. You can also have an analysis on the options tab. This is gonna go far outside the video, I think for beginners here.
But if you guys want to watch a full video on how to play options and take advantage of that, let me know down below in the comments. From here, we can see the comments. We can see the news.
We can even see how the company does. This here is one of my favorite tabs because I can see the financials. I can go ahead and see even the shareholders, which is insane. Oftentimes, when you want even more data like this or seeing just how much institutions are holding of this stock, you would need something like a Bloomberg terminal.
Now, standard license of the Bloomberg terminal costs around $2,000 per month or $24,000 per year. It's actually what a lot of the pro investors and hedge funds use, but I would say Moomoo actually has a ton of comparable data all for free. Now, I'm not even saying that because it's sponsored.
Literally, this stuff is crazy. If this was not sponsored, I'd still be saying the same thing. What I also love is you can get an idea on some insider activity, so you can even see the intent to sell with some of the largest shareholders, including... their chief revenue officer, who might be selling 120,000 shares.
And obviously when you have huge, huge bag holders making these bets, it can impact the stock price negatively. So you can take a look at that, have it help you on your decision-making. And if I even go into funds and you can see some of these different indexes and how much they carry of this position.
Now, obviously with Palantir, they're involved with a lot of major ETFs and indexes. They have a lot of smart people. So this actually makes me more bullish knowing that many companies added Palantir onto their balance sheet.
You'll also be able to see down below institutional activity. This here is huge because it shares with you how much they're buying. So even a giant firm like BlackRock, you can see just how often they are picking shares up.
of this company. Now, if we pull it out and go into company, once again, you'll be able to see the sector they're involved in. You can get a company overview. So if you know nothing about it, it tells you Palantir engages in data integration and software solutions.
You'll also notice that right now it says the concept chat GBT is pulling up. You're going to notice Wall Street bets. So probably some DGens are hopping into this trade. This goes back into social sentiment trading. And even right now with the Israeli-Palestinian conflict, even for this, there's actually a section for that because war plays a big role into how some of these company stocks move.
One of my other favorite tabs is the company executives. You can easily pull up the biggest players within the company and even just see how much they're getting paid. So the director and CEO of Palantir, Alexander Karp. He's 55 years old and he's making about 5.5 million dollars right now from this company.
Now this new section is actually very valuable. I do get notified every single day of Moo Moo news coming out and you can go into the discover chat for this and go into news and this here is going to pull up a lot of great articles. What I love about these articles, and I've been reading these for over a year now, is that they break down the news so it's easy to understand.
If there's some kind of job report coming out, if the feds decide the interest rates are going to get cut further, you'll be able to get notified of it within the app in this section here. So even hot news, this is great because it'll tell us, as an example, the S&P 500, it just passed the 5,000 point mark. Its leading index is hitting another all-time high. And it really just breaks it down so that you don't have to be hunting on...
five different subscription websites, and you literally have it all for free here. So whether it's technical analysis, fundamental analysis, whether you want to learn more about how much money is coming into the company, seeing the capital trend, or even just getting basic indicator sentiments. Like as an example, if I don't want to do all the different research on the TA, I can just look at what MooMoo is saying about Disney.
And this is all brought to you by different technical analysis. So RSI is right now showing that it's extremely overbought. If you don't know what RSI is, you can pull up the I tab and it'll educate you on that.
So as an example, these are just tools that a lot of technical analysis people will use, and you can literally use it too and figure out what it means without having to go through all the work of learning it yourself. On top of that, if I go down even further on some of these different companies, you can see short sale analysis. This is huge.
If companies are starting to short a position, it could be a red flag that the company might start going down. You can also take a look at short interest. So if you look back at the GameStop and the AMC Mania, it's because a lot of people weren't taking a look at the short interest that were piling up, but that also came in. handy when we also saw shorts getting liquidated to result in a short squeeze. Now, if you didn't really get any of that, it's okay.
I think I'm just going to save that for like an even further extended advanced tutorial for stock market investors. But for the most part, man, this really is going to give you all that you need. All right. So let me just walk you through the process of what I do if I was interested in buying a new asset.
So for me, I like buying US-based stocks. What I can start with is looking at a heat map. This year is going to show me all the... different industries right now and give me an idea on how some of them are performing for the day. In order for me to grow my portfolio, but still stay a bit more diversified, I've been leaning into some bank stocks.
For this, I would just click on banks and see how they've been performing. Now, on a day like this, I would still buy. If you are holding stocks for two to five years, it doesn't really matter if you buy today or tomorrow. If I buy it today and it goes down, it makes no difference.
If you're holding it for a while, it's not going to change the long-term outcome. But if you're someone who's day trading, it's going to matter more to you. Now, a few stocks that I had on my radar, I mean, Chase is a really safe stock that I could go into.
But if I wanted to find one with a bit of a lower market cap, I like Capital One. So Capital One's ticker is COF. I can go ahead and see how they are doing on the charts here. And I can go ahead and add this to my watch list. I have my line set up.
Now, if I wanted to go ahead and buy this stock after doing my research, I would just go ahead and click on the bottom left of the screen trade. There's a lot going on here. If you're a newer investor, just go on the top right hand and turn it into light mode.
And this way you can simplify things further. When it comes to order types, you have your limit order, your market order, your stop limit, your stop and your limit if touched. and your market if touched and other tools where basically if the stock price starts falling you can have it automatically start selling at different positions now generally when i'm buying a stock i do just put in a market order it keeps it simple you're not gonna get the best possible price but allows you to just get your entry and forget about it now level up from the market order is your limit order so this pretty much means any time the stock hits a certain price it'll trigger your buy So if anytime you're trying to buy a stock for the lowest price, but it keeps pumping up, sometimes your market limit might not hit.
Now, this is when you want to be careful, especially if you see huge volatility where stocks are moving up very, very fast and they're rising because you may never be able to buy in. So that's why if you're just trying to buy it, you don't want to worry about it. A market order is what you would want to look at. Now, in this instance, I'm filming this in after hours.
So normally what would happen is it would trigger when the market opens tomorrow. All right. So right now I want to buy just one share of capital and financial. I have $111 in this account, but right now their stock price is trading at $135. So it means I'm going to be a little bit short.
All right. So with my account, I actually am just about $20 shy and it's encouraging me to use margin. So this is where you can pretty much take out. a loan, you pay interest on that amount.
And if the stock price happens to fall, you go into something called liquidation where they'll sell off that amount and you'll owe whoever gave you the margin loan money. For me, I don't want to do that right now. And if I deposit or transfer money from some of my other exchanges back into Moomoo, it's going to take a few business days. So I'm just going to go ahead and show you how I would buy at least ASO, one of my favorite stocks here. I just go ahead and press trade.
I would press buy. For me, I'm just going to do a market price. We're going to do one share.
And then I'm going to go ahead and put in my trading password. So I have my market. It has an estimated amount. So if it triggers tomorrow, it's going to buy around the $66 price.
I'm going to buy one of these. And then currently it'll tell me just the account detail. It'll tell me what I'm doing, the time in force and the price. So from here, if I press confirm, all right. So from here, I have an order that is set.
If I go back into the accounts tab and I go into orders, you'll see this here. Currently, it's submitting and most likely it will fill tomorrow morning. When the order is filled, you're going to see filled or canceled.
And then if you go into the history tab, you'll also be able to see your buying history here. Now, just real quick, here are some additional features that I really value on the app. You have your earnings calendar. So anytime a company is about to report earnings and they go up.
above their estimated earnings, we can often see a price increase happening. All right. So an example of this is if we go back into the company and we scroll down and we go into financial estimates, we have revenue and then we have EPS, which is earnings per share.
That blue line is the actual earnings report. And the estimate shows what most analysts believe the earnings should be. So simple way that we see prices moving upwards is when a company is about to report earnings and you're bullish that they are.
far exceeding the estimate of their earnings, usually we see the reflection of that happening with the stock price. So if you wanted to learn even more about earnings per share, Moomoo then has even more educational content surrounding that with this light bulb here. So all this stuff is fantastic. You can get an idea of some upcoming companies, and this is usually what you'll be seeing if you walk past CNBC or CNN and they're talking about stocks. Following that, you have economic data, which goes over the most important dates where we get reports on...
the us core inflation or how retail sales have been and even more news now my favorite is actually more towards the bottom where i can see trend projections of certain companies. So as an example, Adobe. So trend projection is going to give me an idea based on just MooMoo's numbers. So we have institutional trackers, we have rating changes, we even have different investment themes.
So if you wanted to invest into the semiconductor world, here are going to be a list of some of the best stocks within that category. Now, if you're someone who just learned about TA and you're like, wow, that makes sense. And it's something that I want to take advantage of.
You can go ahead and look for certain patterns that you really prefer. So if you're trying to find a bullish pattern. We can go into bullish. And if you really like a double bottom or an arc bottom, if I clicked on one of these, it's going to actually pull up the companies that fit the exact parameters of what a double bottom is currently setting itself up to be. So at the bottom of this list, we have Roblox.
Right now it's having a double bottom. You see that blue line? Choice Hotel, same thing here.
We're going to see a double bottom, except it's just a lot more spread out. All right. So how do you make money in the stock market?
Well, it's so simple, guys. Obviously, if you buy in at a low price and you sell at a higher price, That's where it happens. Take as an example, I got this Ford stock.
Okay. It was actually one of my free stocks from Mumu a while back. I'm up 9.44% on this amount.
It's a whopping $12.82. I'm just shy of a Chipotle burrito bowl with guac, but that's completely okay. So if I wanted to go ahead and actually make money in the market, I would go ahead, open the stock. I'd press sell from here. I can do a limit or a market.
And there's also a ton of conditional orders. I know we didn't go through all of them. But basically there are stop limits.
So if a price falls to a certain limit, you can save yourself before it crashes, like things like that. For the most instance, I don't even set up a lot of these conditional orders because there are times where a stock will dip. It'll trigger it.
It'll sell it before it goes even higher up. So for me, I play the long-term game. And if I were to make money from the stock market today, I would just go ahead and press market so that it sells when the market opens, whatever price it's at, I will choose the quantity. I have one share of this. It's estimated to be about...
$12.81. I'm going to confirm it. And then from here, if I go into my main account and I go into my orders, I'll see that this is submitting.
So I'm filming this a little bit later at night, 9 PM. So when the market opens tomorrow morning, this should go ahead and initiate and trigger. All right.
So now that we have a better idea on how to buy stocks, how to utilize this app and some of the research tools that came along with it, let's go into talking about different investor strategies. This here is so important because we're going to get an idea on how to level your risk management, how you should play the long-term game of stocks. And towards the end, guys, I did not forget about it, but we're going to be going over all the tax implications where you can maximize how much money you make in the stock market, knowing just a few little tricks here and there.
So when it comes to building your portfolio, there is active investing and passive investing. Active investing is where you're actively into the stock market. You're constantly checking prices and it could work. I've seen people make a ton of money, but I've seen a lot of other people who do not have the time.
prefer passive investing and still make money that route too. When it comes to passive investing, it's more of what I like to do where I'll do a lot of my research upfront. I will buy the stock and then I'll hold it for a couple months and then maybe sell it and then hold off or reinvest back into another position at a later time.
When you're actively investing, you need to keep some risks involved in mind. This includes wash sales. So if you go ahead and sell a stock position and then you buy it back within a 30 day period, it could be considered to be a wash sale. where you don't get the tax advantages of you taking a tax loss. Now, active investors can range from being day traders, scalpers, people who are literally trading by the minute, or even if you're a swing trader, you could be an active investor.
Rather than investing every few months, you're buying and selling every few days. Now, with active investing, generally, it is more time intensive. So if you have a full-time job and you got kids, you may not want to.
be glued to your phone, investing into stocks at all times. But if you got the time on your hands and you generally enjoy doing it and you find that you are good at doing it, I highly encourage you to continue pursuing your passion there. When a passion makes money, you can't really complain. Now, PDT rule, this is important.
So back on the Moomoo app, we actually saw in my specific account that I could only make three day trades every five days. This here is the PDT rule that stands for pattern day trading. So this rule comes into effect when you have less than $25,000 in your brokerage account.
So if you are able to fund it with more money than that, you can avoid this. And then on your brokerage account, you have the additional tools of being a full-on day trader. So knowing all of that, regardless of which investing strategy you decide to deploy, a lot of people assume that you just buy into stocks and you forget about it, or you go all in and you buy it all at once.
But this is another strategy, which I've... definitely recommend most beginners to explore. This year's dollar cost averaging, also known as DCA. It's in this strategy where you invest a fixed amount of money into a particular asset at regular intervals over time. So if I wanted to buy some Nvidia stock, but I wasn't sure if it was going to crash maybe tomorrow or in a week, but I really want to buy the stock to hold it for many, many years, I could space out my purchase where if I wanted to put a thousand dollars into that stock, I could put in a hundred.
dollars for 10 days straight. Or if you want it to take even more of a conservative approach, you could dollar cost average into things like index funds. So if you're really risk adverse, I could go ahead and put a thousand dollars into the stock market, but instead of deploying it all at once, I would then split it up where I put in $250 in one month and then second month, another 250. And by month four, I'd have deployed that $1,000 into a more conservative basket of stocks. So anytime I reduce that risk, which is what I'm doing here, I'm reducing reducing the amount of money that I can make.
But I believe this still here is great for most beginners, especially if you're someone who happens to get a bit more emotional, which is something I did when I first entered the market back when I was in community college. From there, you can also enter a long position or short position. So all the different trades that I was making earlier on my phone were long positions where I was betting that the stock price would go up at a later time.
You can also do something called shorting. So this is pretty much betting on the fact that the stock is going to go down over time. You're going to be borrowing stocks.
You're going to be buying it back at a future date. And this has higher risk because you can lose a lot more money if the stock happens to go up in price. But it's also a strategy where you can make money in a bear market when things seem like everything is crashing.
Now, if you're a beginner, I don't recommend you to get into shorts. Just ignore that. Focus on long positions.
And as you build investor confidence and you get more experience, that's when you can. look more into that. Next, we need to talk about risk management.
This here is so important, and this stems from four points. If you fail to prepare, you are preparing to fail. When it comes to investing, have a game plan.
You need to understand your goals, your motivation, and even your budget on how much you can allocate towards investing. A lot of people get so excited to enter the space, they deploy all their capital, and then boom, when the market goes down, they sell at the bottom. They're like, okay, this is why I don't invest in the stock market. I lost money, everyone loses money. Then at that point, you're just spiraling.
So here are some questions that can help you build your own game plan. One, what are your financial goals? Two, why are you even investing?
Three, where do you want to end up? Four, how long can you invest into the markets? Five, what is your time horizon if the market decides to take a dump? Six, how much of your income can you actually allocate towards investing?
seven, what is your preferred way of investing into the market? Now that right there should at least be a good starting point so that you get a better idea on what you're looking for and the dream outcome that you desire when it comes to being an investor. I know several years ago, my goals back then was completely different from now.
Right now, I want a more safe, conservative, slow growing stock market portfolio where back when I was like 24, 25, I wanted to make a million bucks from the stock market as fast as possible. And if I had invested in 10 to $20,000, yes, it would hurt a lot if I lost it. But if I was risking that to make a million, I'd be okay with losing that at that time.
So really just get clear on what your goals are, because it's from there where you can start building up the actual trajectory on what you need to do in order to meet it. Second thing I highly recommend that you do before investing into the stock market is making sure that you eliminate any kind of debt that you might have. I personally believe long-term though, everyone is going to come out on top, especially if we're talking about a time horizon of anywhere from five, 10, or even 15 years.
But if you have a ton of debt, like high interest credit card debt, and now you're trying to go into the next new thing of investing into the market with money that is already tight, you may want to reconsider. Look, debt can be crippling. And this is something that I want you guys to focus on before you decide to invest into the markets.
This is because if you have 20 to 30% in interest on your credit card debt, but then you're trying to invest to the market and say, you put it into S&P 500, you make an average of 10% back. you're still paying more money on the debt that you owe to these other companies. Now, if you have debt like auto loans and mortgages, and that's under control, that's already accounted in your monthly budget. I'm not talking about that.
I'm talking about if you got a payday loan, if you got some high interest credit card debt that you could pay off right now, that is personally what I'd focus on first. But like always, personal finance is personal. If y'all want to go ahead with your way, you can go about it. But I know for me, debt comes first, focus on building up the cash reserve, and then start going into investing.
So we pretty much segued into number three pretty well, but that's also having a rainy day fun. At this time, we're going through some unprecedented moments with the economy. And a lot of people are even getting laid off at the time of me filming this video. Having a rainy day fund is going to help you to stay less emotional in the market.
If you ever need to liquidate your assets, you can do it without having to do it in a panic because you actually need more money. Now, a rainy day fund just accounts for expenses. So if you know your car and your house and the food accounts to about three to $4,000 a month that you spend, you want to plan ahead where you multiply that times six.
So that's six months of a rainy day fund where you could survive first. So in this instance, it would be $24,000 you'd want in a savings account put aside. just in case. Personally, for me, just seeing how volatile the markets and the world is right now, I know I'd sleep a lot better having at least a 12-month rainy day fund, or at least knowing that I could cut down on expenses significantly. 12 months really is pushing it.
I just want to make sure you guys are set up for the best chances of success, beginning with the basics here. If you want to ignore all that, by all means, that's completely fine because I still do see the opportunity growing within the stock market. But like I said, you always want to be a bit more conservative and also prepare for the worst. Last but not least, you need to identify your risk profile. So everyone's risk tolerance is going to be different.
And this is going to depend on how much income you have coming in, what age you are. If you have people or kids depending on you and you're the breadwinner for your family. The general rule of thumb for at least the stock market is that if you're a young person, say you're in your 20s, under your 30s, you could put even 80 to 90% of your money into stocks and you could save the other remaining percentage for more safer investments such as high yield savings accounts, CDs, bonds, or even other mutual funds. Now, if you are much older, say you just got out of the workforce, you did your 30 years, you got your pension, you got your retirement, your social security, all that coming in. You may not want to go all full in on the most low cap, risky penny stocks out on the market.
You might want to play it more chill where you could go ahead and just deploy even 20 to 40% max of the cash that you have sitting and leaving the rest in some of these other safer investments. So regardless, just understand your own risk profile, get an idea of where you're headed and understand that. all this stuff tends to change too.
So right now, as an example, I have no kids right now, but if I do end up having kids in the near future, my risk profile is going to change significantly. My risk profile is also going to be based on how much income I have continuously coming in and where the state of my business might be. The main purpose of this though, is to at least just get a reflection of where you are yourself.
If you decide I'm good to invest in the market, there are safer ways to do it. Like I said, you could dollar cost average into index funds to play everything even more conservatively into a basket of the top 100 companies that are sure to stay afloat regardless of whatever recession that we go through. Or, you know, if you want to play it a bit more crazy, you can go the social arbitrage route. You can start day trading with leverage on margin, shorting every stock that you see.
Now, would I recommend that? Definitely not, but I'm just giving you guys an example. All right.
So stock market taxes, this is all actually very simple. Big thing you got to know about is capital gains tax. Now, there are two different types of capital gains tax.
There are short-term capital gains, long-term capital gains. So say I had $10,000 in profit from the stock market, from stocks that I bought previously. If I decide at day 364, okay, before a year passes, I would be taxed at the short-term capital gains rate, which could be double in some instances compared to long-term capital gains tax rate. Now, if I happen to wait just that one day, I sell those stocks, which earn me $10,000 in profit, I would then get taxed at the long-term capital gains rate, which is roughly half the amount.
So if my short-term capital gains tax was, as an example, 40%, I would owe $4,000 to the government and my take-home would be $6,000. If I have a long-term capital gains rate and it gets cut in half where I owe the government 20%, I would only have to pay them $2,000 and I keep $8,000. So you'll see the huge difference there.
Now where a lot of these tax professionals will gloss over is the fact that if you're making money, you're making money folks. Short-term capital gains and long-term capital gains was literally created by the government to make you guys hold your assets for a longer period of time. So don't let taxes control how you invest.
Yes, I believe holding assets longer term, you have a better chance of success and you get taxed at a lower rate. But if you're really good at- day trading or making these short-term swing trade plays and your net profit ends up being $50,000, you're still coming out way farther ahead. You're literally making money rather than the little amount of taxes that you would save. So keep that concept in mind.
You are only paying taxes off of the money that you make. So anytime someone complains about taxes, I always say, look, at the end of the day, you are still making money. And this is coming from someone who's paid over millions of dollars in taxes to the federal and state government.
of where I live. And even with that, yes, crime rate has not gotten better and the holes in my street are still there. Now, by the way, there is a strategy where you can maximize the tax advantages you get, and this is called tax loss harvesting.
So I've done this many, many years, basically at the end of the year, before that fiscal year is done, you can go ahead and sell some positions at a loss. Those losses will allow you to offset the taxable gains that you may have in the upcoming year. So as an example, I had maybe $20,000, $30,000 in stocks that went down significantly from those high-risk meme coin plays that I was rushing into. I sold those knowing that they probably won't ever go up. And in the future with the new plays that I'm making, if I make gains of $100,000 and I have to pay $40,000 in taxes, I can then offset those $40,000 that I owe to Uncle Sam with the losses that I had from the previous year.
So if you're not too sure about this, I'd... Consult your own tax attorney or your local CPA and accountant. Now from here, if you really want to avoid as much tax as possible, you need to go through creating something called called a Roth IRA or even going through your own 401k retirement account.
All right, so the way this works is if you have a Roth IRA and you contribute after-tax dollars into this account here, you do not get an immediate tax deduction. However, the advantage lies in when you do withdraw your funds out of this account. when you turn 59 and a half years old. Now the account needs to be open for at least five years. And if you do withdraw it before 59 and a half, then you are going to face penalties.
So now the biggest difference lies in between a Roth IRA, which is contributions of after-tax dollars. And then you also have your traditional IRA and your 401k, which takes in contributions of pre-tax dollars. What this means is if you're going to make less money in the future, it might be better for you to explore these accounts because if you're making a lot of money now, you're gonna be in a higher tax bracket. All right, so ladies and gents, if you did enjoy this long entire video, be sure to drop a like down below. If you made it till the end, let me know you're a real one.
I go through all my comments and I do these secret words where I know, okay, someone actually watched all the way till the end. They found value. And if you comment down below starfish, I'm gonna know you're a real one for that.
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