Are You Buying Your Stocks at a Discount?
Hey there everybody and welcome to another edition of my podcast. Today I want to talk to you about finances. So many of you have been reaching out to me and saying Arman are we going to be talking about finances any time soon? And yes, we are. Today is the day my friends. But I what I want to talk to you about isn’t overarching financial stuff, I want to talk to you about that in future episodes.
But for the sake of the listeners, who have been to my events, who have read my stuff, who listened to what I had to say, what I want to do is, I want to talk about something, about some current events that are going on, that will help you in navigating not only in these times but also in the future.
And I am specifically going to talk to you about the stock market today. Because if you understand the stock market, whether you are in it or you are not, if you understand what is currently going on it is really going to help you understand finances in general and investments in general.
You see, the Dow Jones industrial average, SNP500, NASDAQ, all these stock indexes that have been falling lately. And so over the last few weeks and few months, the numbers have dropped and there is all this fear out there, oh my gosh, are we going to recession? Is everything coming to an end? And all this typical talk that starts when the market starts going down.
Now before I say anything, first of all, I want to make sure you guys understand timing the market does not work. Nobody can time the market. And even the people who appear like they’ve timed the market correctly, well look, it’s easy to call it one time, or two times. But if you look at any investor or any advisor or anybody over a lifetime, no one can possibly time the market. Because it’s not based on reality half the time, it’s based on different things that you cannot possibly predict.
Now there are some who are better at timing the market than others, certainly, but there is no timing the market. So I am not trying to help you figure out how to time the market here, at all. And anyone who tries to do that, by the way, doesn’t listen to them because they don’t know what they are talking about. That’s the first thing.
My Advice Comes From My Experience as an Investor, Not as a Professional
The second thing is, I am not an advisor when it comes to stocks and stuff like that, so I am not trying to give you stock advice. What I am trying to do here, is I am trying to teach you a little bit about finances, a little about investments, and make you understand how investments in general work, and in these current times, what is going on.
See last week, I was invited to a round table by the Orange County business journal, where I have some businesses, and they’ve invited the top 20 CEOs in Orange County, and had us all in-room and talking about various different things. And one of the topics that they brought up, is they brought up the topic of what’s going on these days with the stock market.
You know, should people be scared, is there beginning of a recession, is the stock market going to fall, are we in a bear market, is it still a bull market. What’s going on? Where are we at? And the answer I gave is, look the bottom line is whenever the stock market drops, it is a buying opportunity for you.
How to Research Stocks to Invest In
It means that stocks are on sale. But only if you are focused on the long term. So anyone out there who is listening to this podcast, let’s say you are 70 years old, and now you are living off your investments, meaning every month you are pulling money out of your investments, and you are focused on short-term, this may not be for you.
If you are 100 years old and you think you are only going to live to be 104, this advice is not for you. This is for people who have money in the market, right, or who have money to invest, that they don’t necessarily need to take back in the next couple of months, or the next couple of years even.
I always say you should not be in the stock market unless you not planning on touching your money in 10 years or more. Because look, look at any cycle in the market. You look at the worst cycles and best cycles.
At any point, in history, if you were investing and not planning to take out your money for ten years or more, you would have always won. Unless of course, you put your money in one stock and it was a bad stock, bad company, that’s a different story. But that’s not a good way of investing anyways.
Invest for the Long-Term
But when you look in general, it is almost impossible to lose money in the long-term if you are investing for the long term, not for the short term gains. And yes, if you put money in today, who knows, the market can crash tomorrow. I don’t know, I can’t time it.
But what I know is this, my wife went to the palm desert last weekend, and she went to do some shopping at the outlets there, right. And when she got there, she was all excited about the sales, oh my gosh, look at the prices here. You know these, these shoes are 50 percent off, and this purse is 40 percent off, and she was excited and she went on a wild shopping spree, and bought all this stuff, and texted me, and tweeted me and sent me a pictures of all this stuff, bought me a bunch of stuff, bought herself a bunch of stuff.
She was all excited about this stuff being on sale. So then, why is it that you guys get all upset when the stock market puts on a sale? Have you ever thought about that? The outlets put out a sale, Nordstrom put on a sale, it’s the half-yearly sale. And everyone gets all excited, everyone runs down to go buy the stuff from Nordstrom. You know, Ralph, grocery stores, Albertsons, whatever.
They put on a sale, everyone runs down, let’s go buy tomatoes because they’re 50 cents a pound. And then when the stock market puts on a sale, everyone is oh god, let’s run away. What do you mean let’s run away? It’s a sale. When it’s a sale, it’s time to buy. Now, again, you can only buy when there are sales if one, you can afford it, and two, if you have money for long-term investments, not short term stuff. We are not gambling here.
How to Calculate Risk Tolerance
The stock market is not a place to go to gamble. Now, some of you do gamble at the stock market, and that’s fine. If you got money to lose, go lose it. I don’t care. But my number one rule at stock investment is, first of all, is that you do not invest money that you cannot afford to lose. Never put money into the market that you cannot afford to lose. There are much safer bets that you can make. And if you are going to put money in the market, that you cannot afford to lose, then you better make sure that you have really, really, really good advisors who help you make sure that your money is going to the right places.
Now, that also, by the way, means that most of your gains are going to be gone because to get gains you are going to have to take risk. Right, and that’s what the stock market is all about. But at the same time, the people I talk to are the people who are investing money, that if they lost, their life wouldn’t be over. Now maybe it’s the money you are planning on having a great life with.
You know, today you are maybe 30 years old, and when you are 50, you will have a boat and a private jet, and all that stuff, and you banking all that money, is getting it for you. See that’s a different story, then who someone’s actual lifesaving are in there, if your mortgage or your rent money, for next year isn’t there, that’s a completely different story. Or if you have the personality type, where if you lose money, you are going to be really upset. The stock market is not for you.
The stock market is for people, who are willing to lose money and they would not lose sleep over losing money. Because let me tell you my friends. As a coach, as a business coach, a life coach, someone who cares about people deeply, the best advice I can tell you, is don’t ever put yourself in a situation where you are doing something that’s going to cause you to lose sleep.
Now, as you know, I am not a big fan of sleeping a lot. But I am a huge fan of quality sleep. See, when you go to sleep at night, you want to live the kind of life that’s going to allow you to sleep calm, easy, in a nice way that you could really enjoy life. Why would you do things in life that are going to cause you to go to sleep worried, scared, stressed? Don’t give yourself that kind of life. Create yourself a kind of life, where you are living as the person who can go to sleep at night, every night, being calm and peaceful on the inside, because you know you are doing the right things.
Don’t Take Risks That Are Too Much For You to Handle
You are not taking risks that are too much for you to handle, and if tomorrow morning you wake up, and all of your investments are gone, which by the way, has happened to me, even though I timed the market correctly, I timed it slightly incorrectly for example, and literally I had my entire investments wiped out in a single morning, before I even woke up.
Imagine that. Now you know why I don’t like to sleep in. I mean it’s incredible. It happens. But the thing is you have to wake up and go, oh I lost all my investments. Damn, that was…, shoot man. Man, I wished I’ve changed my investments yesterday. Oh well, what I am going to do today? Alright, and then you just go on with your life. If you are not there, you shouldn’t be putting money into the stock market. It doesn’t belong there. But now that I have identified who you are, who are investing money for the purpose of future gains, and you are willing to take some risks, and you have high-risk tolerance, then listen.
This is the time to buy. Now, this time, I don’t know when you are listening to this podcast, but when stocks are going down, that is a buying opportunity. By the way, sometimes when they’re going up, it’s a very good buying opportunity as well. But what I don’t like to see, is all the fear in the market, and all the fear out in the world, when the stock market starts to drop.
Corrections in the Stock Market
Now, first of all, let me explain to you. There are these things called corrections. What correction is, is a simply this, let me explain it to you, not the way analysts explain it, but the reality of it. You have a lot of professional investors. They watch charts, they look at the numbers, they’ve got computers that are bigger than my entire warehouse, that look at these numbers, they look at trends and stuff, and they are professionals at this.
This is what they do for a living. And one of the ways they make money is this. They understand that a stock goes up, sometimes they have to have a little dip. So what they do, they look for excuses, not real things that are actually going to hurt the economy, but excuses.
They find little excuses and when they see those excuses they say, aha, if this excuse becomes big news, the market is going to drop. And so what they do, they sell their stocks, right when they see that excuse coming, they get out of the market for couple of hours, a couple of days, a couple of weeks, a couple of months, and what they do, is they hold their money, and the excuse comes around, the media make a big deal out of it, and boom.
The market starts to drop. The market drops, and they know it’s fake. They know that it’s just an excuse. That thing isn’t really a representation of how the economy is going to do in the long-term. Because you’ve got to realize, stocks are based on long-term. They are not based on today or tomorrow. So even a big company, like say Apple, I like to talk about Apple a lot because I love what they do, or what they have done in the past.
And even if they have one bad product launch, it doesn’t affect things in the long run. Unless you believe as a company, they are starting to fail. See, that’s a different story. But if you think that’s a short term failure of one product launch, but guess what, the long-term is still okay.
But guess what? The stock is going to drop based on that little problem. So they get out, right when they see the excuse, and they sit around, waiting with their money. And the stock drops, like Dawn, dropped like 15 percent or something. So 3000 points drop, and then they wait, they wait, they wait, and then boom.
They buy and that’s why the market goes up again. Now, who loses and who wins in those situations? Here is the deal. The people who get scared are the ones who lose. Because the people who get scared, and some of those are the listeners out there because what you guys do, you see the market falling and you get out.
Well listen, by the time the market is already falling, it’s almost always too late. So now what you do? You sell your stock, at a reduced rate, right, during a sale, during a Nordstrom sale, instead of during that Nordstrom sale going out there buying some shoes and buying some clothes, instead what you are doing, you are selling your stuff.
This means you are selling your stuff at a discount and then you keep your money at the sideline. And guess what? When the market starts coming back up, you don’t jump in right before its starts coming up, you are jumping after it’s coming up and pass what it used to be, and get to the next higher level, and guess what? You are just in time for the next cycle, where the investment professionals are going to kick your ass.
So the bottom line is this when you look at a market, and you are looking at prices falling, always see them as a long-term opportunity for you. That’s why they say, buy low, sell high. Now, personally I believe the easiest thing to do, is I have a method for stocks that I talk about.
That would be on a separate podcast, where we discuss finding companies that you know something about, that you think other people do, where you have personal experience with, and that’s how I recommend buying stocks. But if you want to have major headway, in investments, and make sure you can sleep easy at night, one stop trading so damn much.
Stop Pretending You Are a Professional Trader
Unless you are a professional trader and that’s what you do, and you’ve got that as a job title. You’ve got that on business cards that say, professional trader, stop pretending like you are a professional trader. I mean, what are you doing making 50 transactions in a year? Just back off. You know, make a couple of transactions here and there, buy for the long term, focus on 10 years from now.
And I am not saying you are not going to get huge gains in six months or so, or a year. But focus on 10 years and you will be able to sleep easy at night. And then, times like these will be times where all you say is gosh I wish I had more money so I could buy. And what happens when you buy stocks and the stock market falls even more?
You get excited, you are like yeah, yes. Right, at night when you to sleep, you don’t go to sleep, oh my god I lost money, I lost 10 percent. No, you go oh my god, tomorrow they have an even bigger sale. So, as long I have some money sitting around, I can buy even more. And the market falls even more.
And then you start saying man, how could I work harder and make more money, because in these times, if I had an extra thousand dollars, I could buy stocks that used to cost 2000 dollars. And that’s the mentality that you want to have. That’s what I did in 2007/2008 when everyone was in a panic, I kept celebrating. In fact, one of the ways I celebrated was, right I did this for my wife, I started buying stock with her, she had her eye on, instead of treading for her. And at first she was really excited, she was like oh I love this, you know.
An Example of My Wife Buying Stocks at a Discount
You know getting stock at a discount rate. So I’ve got the first batch at a discount. And it drops. I get the second batch at a discount and it drops more. The third one drops some more. The fourth one drops some more, the fifth one she was like, don’t touch my money. She was like, leave my investments alone. You don’t know what you are doing. I said honey, listen, it’s for 10 years, and blah, blah. This is when we’ve been together for only a couple of years.
So she didn’t understand that this stuff could actually work. She didn’t quite believe in me, but what she did is, she told me to stop trading for her. And I did. And now you look back at the stocks that I bought, during that massive dip the market went through, and you look at some that days that I bought some, and that stuff has arisen so much, it’s out of this world.
Some of them have gone up more than 10 full times, or even more than that, 50 full times. But it’s because everyone else was panicking, I was celebrating the buying opportunity. And that’s what I want you to do. And then when you see everyone celebrating, and everyone is like yeah the sock markets great. When you start hearing that a lot, stay in for a little bit longer. But guess what? Poop is about it hit the fan, my friends.
Because when everyone starts saying yeah, yeah, yeah, yeah, it’s good, it’s good, the professionals say aha, time for us to pull our money out. Scare the heck out of these suckers, when the market goes down, they are going to pull all of their money out, go buy themselves boats if they can still afford it. Some of them are not going to pull their money out. But many of them will. And then what we will do?
We will buy the stocks at a discount again. And that’s the way it works. So, look at these things that are going on the economy today, as buying opportunities, which more importantly than anything else, it’s going to make you happy. That’s what we want. We want happiness. Money is great if it brings you happiness. But money by itself without happiness doesn’t help you that much. So, it’s not about your stock price going up, it’s about you creating happiness in your life in the short term, medium-term and the long term. Hey everybody out there.
As you know, I love you guys, I love influencing people, so please share this podcast with the people you love, and get other people to start listening to my podcast. The podcast is rising through the charts and I love to see that because it means we are influencing even more people.
Just yesterday we set another record high, for the number of downloads and I am excited to see this thing growing. So, please get out there and tell everybody about it, and always remember I am here for you, I am here to serve you. This podcast is about you.
Not about me. So if there are things that you want to hear from me, please make sure you communicate with me and tell me. Alright, and I would be happy to address those things. I love you all and go out there, and first of all, enjoy the sale that’s going on. Even if you are not going to participate. Maybe do some window shopping. Look at how cheap some of these stocks are. How excited, windows shoppers of the world out there. And go out there and lead with your heart.