Investing using the 'Rule of Numbers' method: L
Post# of 1584
Posted On: 09/26/2016 2:27:01 AM
Investing using the 'Rule of Numbers' method:
Let's say Joe Bob has $1000 to invest in the market. Its not more than he can afford to lose, and any losses wouldn't affect his standard of living.
Joe Bob is somewhat new to investing but he wants to invest with the hopes of at least doubling his money.
Using the 'Rule of Numbers' method, Joe Bob would invest $900 in 9 different companies. Why $900 and not $1000? Simple. Fees. The average cost of each transaction is $10, so if he has $1000 to spend, $100 is actually paying for the purchase leaving him with $900 to invest.
You see, he could invest $990 in one company (minus $10 fee), hope for the best, and see where it goes. If it was a great investment, he could make a pretty good return on his initial investment.
But.. and theres a big 'but' here..
If he invested his entire balance in one stock, and that stock fails, does a reverse split, goes under, ends up being a pump and dump, etc etc.. he just lost $990 in one fell swoop.
On the other hand, with the 'Rule of Numbers' method, investing in 9 different companies allows room for error, poor DD, failed companies, etc etc.
Example:
Stock ABCD is selling at .0005. Joe Bob wants to invest his entire $990 in it. He has a great feeling. Lots of hype brewing in the investment forums online. People promising 'too the moon!'.
After fees, he would own 1,980,000 shares. Sounds great! To double his initial investment, the share price has to go to just over .001. Possible? Of course. anything is possible in the OTC.
On the other hand, if he invests $900 (minus fees) in 9 different companies and theyre all at .0003:
Each company would equate to 333,333 shares. In total, Joe Bob would own 2,999,997 shares; that's 1,019,997 MORE shares than if he invested in only one company for only $90 more.
See where I'm going with this?
Now lets say Joe Bob simply sucks at picking good stocks and 6 of his 9 investments fail leaving him with only 3 stocks which are about to move up:
Stock 1 goes from .0003 to .001. $333 profit
Stock 2 goes from .0003 to .005. $1,666 profit
Stock 3 goes from .0003 to .014. $4,666 profit
After selling, Joe Bob has $6,665 in his account.
Here's the best part:
Even though SIX of joe Bob's investments failed, he still was able to pull off a profit. Seeing he's not very good at picking good stocks, which scenario do you think is better for him?.. Invest everything in ONE company? Or invest in several.
This method also makes the most of our time. Instead of investing in one company and waiting for PR's and updates, by investing in several companies with several different time tables, it affords us the opportunity to possibly experience more PR's and progress for the same amount of time.
Obviously, the 'Rule of Numbers' method doesn't guarantee profits. All 9 companies could fail. Anything can happen in the stock market. But by doing DD, heavily researching each company, contacting the companies and asking questions, by NOT investing more than he can afford to lose, and by investing in more than one company, he provides himself a cushion.
Note:
All of these numbers are examples. It would work by investing in two companies instead of just one. That's the great thing about investing. It can be tailored to our individual needs and resources.
Note2:
I believe many investors do not want to take the time to research several companies and would rather risk their entire investment in one stock.
Not investment advice. Investing is RISKY and you can LOSE IT ALL IN A SINGLE DAY!!
Let's say Joe Bob has $1000 to invest in the market. Its not more than he can afford to lose, and any losses wouldn't affect his standard of living.
Joe Bob is somewhat new to investing but he wants to invest with the hopes of at least doubling his money.
Using the 'Rule of Numbers' method, Joe Bob would invest $900 in 9 different companies. Why $900 and not $1000? Simple. Fees. The average cost of each transaction is $10, so if he has $1000 to spend, $100 is actually paying for the purchase leaving him with $900 to invest.
You see, he could invest $990 in one company (minus $10 fee), hope for the best, and see where it goes. If it was a great investment, he could make a pretty good return on his initial investment.
But.. and theres a big 'but' here..
If he invested his entire balance in one stock, and that stock fails, does a reverse split, goes under, ends up being a pump and dump, etc etc.. he just lost $990 in one fell swoop.
On the other hand, with the 'Rule of Numbers' method, investing in 9 different companies allows room for error, poor DD, failed companies, etc etc.
Example:
Stock ABCD is selling at .0005. Joe Bob wants to invest his entire $990 in it. He has a great feeling. Lots of hype brewing in the investment forums online. People promising 'too the moon!'.
After fees, he would own 1,980,000 shares. Sounds great! To double his initial investment, the share price has to go to just over .001. Possible? Of course. anything is possible in the OTC.
On the other hand, if he invests $900 (minus fees) in 9 different companies and theyre all at .0003:
Each company would equate to 333,333 shares. In total, Joe Bob would own 2,999,997 shares; that's 1,019,997 MORE shares than if he invested in only one company for only $90 more.
See where I'm going with this?
Now lets say Joe Bob simply sucks at picking good stocks and 6 of his 9 investments fail leaving him with only 3 stocks which are about to move up:
Stock 1 goes from .0003 to .001. $333 profit
Stock 2 goes from .0003 to .005. $1,666 profit
Stock 3 goes from .0003 to .014. $4,666 profit
After selling, Joe Bob has $6,665 in his account.
Here's the best part:
Even though SIX of joe Bob's investments failed, he still was able to pull off a profit. Seeing he's not very good at picking good stocks, which scenario do you think is better for him?.. Invest everything in ONE company? Or invest in several.
This method also makes the most of our time. Instead of investing in one company and waiting for PR's and updates, by investing in several companies with several different time tables, it affords us the opportunity to possibly experience more PR's and progress for the same amount of time.
Obviously, the 'Rule of Numbers' method doesn't guarantee profits. All 9 companies could fail. Anything can happen in the stock market. But by doing DD, heavily researching each company, contacting the companies and asking questions, by NOT investing more than he can afford to lose, and by investing in more than one company, he provides himself a cushion.
Note:
All of these numbers are examples. It would work by investing in two companies instead of just one. That's the great thing about investing. It can be tailored to our individual needs and resources.
Note2:
I believe many investors do not want to take the time to research several companies and would rather risk their entire investment in one stock.
Not investment advice. Investing is RISKY and you can LOSE IT ALL IN A SINGLE DAY!!
(1)
(0)
View My Board Here:
http://investorshangout.com/Joeys-Investment-Board-91611/
Invite Only
There is a VERY HIGH degree of RISK involved in trading and investing. Only invest what you can afford to lose.
Disclaimer:
As used herein, the terms "You" and "Your" shall mean you, individually, the reader, and each other party on whose behalf you may use the contained information at any time.
All references to "My", "I", and “The writer of the above post” shall refer to the creator of the username Joey68.
Do NOT invest unless you are prepared to sustain a total loss of the money you have invested plus any commission or other transaction charges.
There is a very high degree of risk involved in trading and investing. Past results are not indicative of future returns. I assume no responsibility for your trading and investment results. You should NOT rely on the information in the above post to make any decision or take any action.
ALL OF MY STATEMENTS, including but not limited to, POSTS, MESSAGES, PRIVATE MESSAGES, and RESPONSES are OPINION and NOT fact and are for entertainment purposes only. Do your own research and make your own decisions based on your own conclusions.
ALL OF MY STATEMENTS, including but not limited to, POSTS, MESSAGES, PRIVATE MESSAGES, and RESPONSES are NOT advice, and are NOT designed to substitute the expertise and judgment of a professional. It is your responsibility to seek investment advice during all stages of your investments. It is your responsibility to evaluate the accuracy, completeness and usefulness of the information in the above post.
I am NOT a professional.
I do NOT work for you.
My posts are NOT investment advice. I am not paid to post.
There is no correlation between the number of posts I write per day and your assumed success of a company.
It is NOT my responsibility to inform you of my own personal investment decisions.
It is NOT my responsibility to inform you when it is time for you to buy, hold, and/or sell a position.
I have no control over, and am not responsible for the actions of others who copy, store, edit, change, prepare any derivative work of or alter in any way any of the content provided in my posts.
Errors and Omissions expected. The writer of the above post accepts no liability or responsibility for any errors or omissions contained in the above post or contained within this Disclaimer.
The writer of the above post shall NOT accept any liability for the accuracy or completeness of the information contained in the above post, for any reliance placed by any person on the information contained in the above post, or for any damage or loss, however caused, in connection with the use or reliance on any information contained in the above post.
The above post may contain links to websites owned and operated by third parties. These links are provided for informational purposes only and are NOT endorsed by the writer of the above post. The writer of the above post has no control over the contents of any linked website and bears no responsibility for the accuracy, legality, or content of the external site or for that of subsequent links.
YOU ACCESS ALL LINKS ENTIRELY AT YOUR OWN RISK.
The writer of the above post makes no warranties or representations, express or implied about such linked websites, the third parties they are owned and operated by, or the information contained on these websites.
The writer of the above post accepts no liability for any damage or loss, however caused, in connection with the use of or reliance on any information, material, products, or services contained on or accessed through any such linked websites.
There is a VERY HIGH degree of RISK involved in trading and investing. Only invest what you can afford to lose.
http://investorshangout.com/Joeys-Investment-Board-91611/
Invite Only
There is a VERY HIGH degree of RISK involved in trading and investing. Only invest what you can afford to lose.
Disclaimer:
As used herein, the terms "You" and "Your" shall mean you, individually, the reader, and each other party on whose behalf you may use the contained information at any time.
All references to "My", "I", and “The writer of the above post” shall refer to the creator of the username Joey68.
Do NOT invest unless you are prepared to sustain a total loss of the money you have invested plus any commission or other transaction charges.
There is a very high degree of risk involved in trading and investing. Past results are not indicative of future returns. I assume no responsibility for your trading and investment results. You should NOT rely on the information in the above post to make any decision or take any action.
ALL OF MY STATEMENTS, including but not limited to, POSTS, MESSAGES, PRIVATE MESSAGES, and RESPONSES are OPINION and NOT fact and are for entertainment purposes only. Do your own research and make your own decisions based on your own conclusions.
ALL OF MY STATEMENTS, including but not limited to, POSTS, MESSAGES, PRIVATE MESSAGES, and RESPONSES are NOT advice, and are NOT designed to substitute the expertise and judgment of a professional. It is your responsibility to seek investment advice during all stages of your investments. It is your responsibility to evaluate the accuracy, completeness and usefulness of the information in the above post.
I am NOT a professional.
I do NOT work for you.
My posts are NOT investment advice. I am not paid to post.
There is no correlation between the number of posts I write per day and your assumed success of a company.
It is NOT my responsibility to inform you of my own personal investment decisions.
It is NOT my responsibility to inform you when it is time for you to buy, hold, and/or sell a position.
I have no control over, and am not responsible for the actions of others who copy, store, edit, change, prepare any derivative work of or alter in any way any of the content provided in my posts.
Errors and Omissions expected. The writer of the above post accepts no liability or responsibility for any errors or omissions contained in the above post or contained within this Disclaimer.
The writer of the above post shall NOT accept any liability for the accuracy or completeness of the information contained in the above post, for any reliance placed by any person on the information contained in the above post, or for any damage or loss, however caused, in connection with the use or reliance on any information contained in the above post.
The above post may contain links to websites owned and operated by third parties. These links are provided for informational purposes only and are NOT endorsed by the writer of the above post. The writer of the above post has no control over the contents of any linked website and bears no responsibility for the accuracy, legality, or content of the external site or for that of subsequent links.
YOU ACCESS ALL LINKS ENTIRELY AT YOUR OWN RISK.
The writer of the above post makes no warranties or representations, express or implied about such linked websites, the third parties they are owned and operated by, or the information contained on these websites.
The writer of the above post accepts no liability for any damage or loss, however caused, in connection with the use of or reliance on any information, material, products, or services contained on or accessed through any such linked websites.
There is a VERY HIGH degree of RISK involved in trading and investing. Only invest what you can afford to lose.
Scroll down for more posts ▼