Amanda Stanhaus

Tag: winner

Bonus & Berkshire Hathaway B Stock

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I was not expecting it, so why not invest it?

I have a bonus check with my name on it!

A nice surprise to have my hard work pay off. Keyword: surprise.

I’m splurging on something that could grow!

I won’t be lengthening my legs. Ouch! Plus, my man has told me he wouldn’t like me as much if I was model-tall. He must be Crazy in Love!

I’m buying Berkshire Hathaway B stock. One step closer to my other main man, Warren Buffett!

(Hi Warren— chat over cherry coke sometime? Tweet me @xobettie!)

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

Behavioral Finance

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My man becomes a nervous nelly before weddings. Mr. Style Savvy has even worn one navy and one black sock. Thankfully, I caught this mismatch before any damage to his picture perfect reputation was done.

Fingers crossed, he’s too busy thinking that could be us one day. And like clockwork, by the time we are on the dance floor, we’ve danced his worries away!

I don’t blame him. Thinking about the past and the future can bring out the weirdo in all of us. And we can become total wakadoodles when we contemplate the past/future of our finances.

A Random Walk Down Wall Street’s chapter on behavioral finance is as eye opening as He’s Just Not That Into You.

Random Walk Takeaways:

“There are four factors that create irrational market behavior: overconfidence, biased judgements, herd mentality, and loss aversion.”

“It seems that other people’s errors actually affect how someone perceives the external world.”

“Losses are considered far more undesirable than equivalent gains are desirable”

“Many behavioralists believe that overconfidence in the ability to predict the future growth of companies leads to a general tendency for so-called growth stocks to be overvalued.”

Obviously true assertions:

“Men typically display far more overconfidence than women, especially about their prowess in money matters”

“Male investors traded much more than women, with correspondingly poorer results.”

Action plan:

1. Avoid herd behavior

2. Avoid Overtrading

3. If you do trade: Sell losers, not winners

Thanks A Random Walk Down Wall Street for the tips. Here is the copy I read.

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

How does Mr. Buffett Consistently Pick Winners??

“To invest successfully over a lifetime…what’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”

Warren Buffett,  Preface to The Intelligent Investor.

(click on the bold-faced vocab words:))

Warren’s favorite framework is value investing. Benjamin Graham wrote the definitive book, The Intelligent Investor.

Here are the book’s highlights:

Speculators and Investors are NOT the same!

“The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices.”

Diversification and Margin of Safety are best friends. Both make investing comfy.

Diversification is an established tenet of conservative investment. By accepting it so universally, investors are really demonstrating their acceptance of the margin-of-safety principle, to which diversification is the companion…And a  true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience.”

Buy at the right price (time) will cause you to laugh (cry) to the bank.

Regardless of market swings, the way to profit from pricing is, “to buy stocks when they are quoted below their fair value and to sell them when they rise above such value.”

Want the most money? Be Brilliant.

“The maximum return would be realized by the alert and enterprising investor who exercises maximum intelligence and skill.”

Interest piqued?  Here is the copy I read.
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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)