Hey guys, it's Sasha And today I Want to share with you the seven most important rules when it comes to investing in stocks. These rules are critical for solid long-term investing returns. Now here is an important: Preamble Every single rule on this list is stupidly simple I Am not about to sell you the magic formula for making 100 returns guaranteed on buying the latest meme stock. but what I will do is I will show you how hard it is to actually follow these super simple rules because every investor thinks that investing is just super easy.

I Am guessing you already know all of these rules, but the fact is, the vast majority we're probably talking over 95. Scratch that. 99 of retail investors will fail at following these rules over the long term. And the point of this video is to try and explain how to follow these rules because that is the really difficult bit and I really mean it.

It sounds so, so easy. But then the time sounds when you have to follow one of these rules and you go and act like a complete dumbass doing exactly the opposite, doing the wrong thing. So let's start with the first maybe the most obvious rule: Buy stocks when they are cheap now I Know what you're thinking No. Sasha You had me waiting for a whole minute to tell me this glorious nugget of information.

But here is the thing while buying stocks. while their cheap sound super easy, this is the one rule that the vast majority of retail investors break. Because here's the thing when a stock price is dropping, everyone starts panicking, acting like a complete idiot, and You Begin Hearing all of this like don't catch a falling knife because you know as the knife is falling, if you try to catch it with your hand on the way down, you will cut it. And then there's the never-ending expectation that of course, stocks are going to fall a lot more in recent times, If you've listened to any of the conversations about the stock market that this is exactly what's happening.

Stocks fall 10, and of course that is the start of much worse for it's gonna go down to 20, then they fall 20. And of course everyone knows for sure that it's going to fall down to 40 Now for 40 and everyone says this is the end of the world, is going to go down by 80. It never stops. Just remember that the relative movement and the stock price is an irrelevant, completely irrelevant trick when it comes to making long-term investing decisions.

If you are investing as opposed to gambling, your assessment should be comparing the current stock price to what you think a fair valuation of the company is. and if you think the current price right now is significantly undervaluing the business and you believe that there is a reasonable likelihood that the market will eventually agree with this based on your future projections, and you believe that the risk profile around your projection is reasonable, then that's all that matters. It doesn't matter one iota what the stock price was yesterday, what it was last year. It doesn't matter unless the reason for the stock price falling changes.

Fundamentally, your view on what the fair evaluation for the company is changes your understanding of the company's fundamentals. Right now, loads of companies are selling at huge discounts compared to their evaluations at some point during the last three years. Now, some of those companies are junk. Don't get me wrong, some of them were massively overvalued for no good reason.

During covert. Sure people will come jumping near bankrupt companies like Bed Bath and Beyond and Tattoo Chef right here on. YouTube Peloton was really popular. the company that makes very expensive clothes hangers.

It was valued at over 50 billion dollars, but the whole Market is down. still down right now. and there are many good companies out there that are also selling at a massive discount. And those stocks in some cases have huge upsides.

But boy do people like looking a gift horse in the mouth. You go and look at the stock and you think it maybe has a 150 upside based on your valuation. You sit there thinking but what if it falls a little bit more and I could instead get 160 upside And then the price rebounds and you think it's a dead cat bounce. So you wait for the obvious four that's going to come and then six months pass and you realize that it wasn't a dead cat balance after all.

and the stock is now double what it was when you were being greedy. So yeah, buying stocks when they're cheap sounds easy, but most people will fail at this rule as we've seen recently over and over regardless. which brings me to my second rule. and you probably can guess what is going to be sell stocks when they are expensive.

And at this point you're probably thinking this video is a massive waste of time because the Assassin says you should sell stocks when they're expensive. How incredibly insightful. But here's a funny bit. this rule is even harder than the first one, especially in the last few years when so many young investors have decided that being an investor is a bit like joining a fan club of a company that you are investing in.

You have these fan clubs all over Twitter of people who are the main cheerleaders of every stock. They talk about it non-stop every day. There's all these videos coming out multiple times a day. You know exactly what I'm talking about.

They'll sing endless Praises of the company in an echo chamber. It is illegal to say anything negative about the stock that you are a member of a fan club of. Every other company sucks completely is the worst. but their company's don't stink at all.

and people have this belief that to be a long-term investor, you have to hold to the stock no matter what. You see all of these idiots and social media declaring they will never sell. There's a whole meme going around of the word huddle, right? which stands for hold on for dear life. But the simple investing fact is, if you think a stock is overvalued, then you shouldn't be investing in the stock.

That's it. End of the story. Every stock can be overvalued, Even the stock of a company that you are invested in or you you are a big fan of. Sometimes a stock can become overvalued because the share price just happens to go up so much.

I Remember when many companies that I was invested in had their share price explode in 2021 for example, and I was selling out of many of my long-term positions? Not because I didn't like the company or something changed and my perception just because they hit my Target price? I Sold Nvidia I Think that stock went up something ridiculous like 900 in three years? I Sold Adobe They went bananas at 500 or whatever. If you don't have a price at which you will sell a stock, you are not investing, you are just in a fan club. Sometimes though, you'll sell because the Target price has actually changed. Maybe it's the macro environment, Maybe your view in the industry, your view and the company changes.

Maybe the quarterly results keep telling you that you need to change your forecast. You need to adjust your understanding of what the future for the company might look like. Whatever the reason, if you stop seeing an upside in the stock, why are you invested in it? Some people get upset because sometimes this means selling at a loss and people think it's the worst thing ever. But remember that bit about how the share price and the passes are relevant.

Some people will sit on the shares of a company because they don't want to convert a paper loss into a real one. There is this mentality that if you sit on the stock, maybe you'll go back up at some point for some unknown reason and then then you'll sell and the loss won't be as bad. But you know what? It could just keep going down and down and down while you're waiting to reduce your losses instead of being able to invest in something that you think should on average be going up. Which brings me to my next rule.

You will lose money investing in stocks and again, this one sounds so easy. But if a lot of investors seem to think that the way investing works is, you have to have a big win on every single investment you make on every single trade. People have watched way too many movies and think that investing is all about these big calls that come in big and you go. You know you go.

big or go home. but here is something you need to know. Even the best investors in history. The best investors ever with the best long-term track records will still get 40 plus off their calls wrong.

If you want to invest in the stock market, you better be okay with losing. It's like a game of snakes and ladders. You gradually progress through the game, but you are gonna hit a few snakes along the way. Some people sometimes might avoid it, but generally speaking the game is pretty big.

The board is pretty big. you're gonna hit them snakes. It's important to know before you hit a loser that you are going to hit some of those losers a lot because people absolutely lose their when they have a loser in their portfolio, their mind goes completely nuts. They start breaking the second rule and not selling despite every bit of data and evidence telling them that they should not be invested in a loser.

They doubled down on the loser buying the dip because you know maybe it's going to go up. They hope the stock price goes back up. It's all. It's all something that sounds really funny.

But just go and look at what happens every single day on Financial YouTube channels. Nobody wants to show you their losers because it sounds so bad, right? It's the man. It's a Monday morning Gambler effect. You know that guy in the office who comes in and tells you about the big bet that they made over the weekend that won at odds of ten to one or whatever and they made oh so much money.

and every Monday morning that guy comes in and tells you about that big bet. and if you listen to them, it kind of sounds like this guy is the luckiest Gambler in the whole world because they don't tell you about the 20 other bets that they lost that weekend. It's super important to understand that you will lose. I've had a loser as one of my positions uh, went down since I started on YouTube I Saw Palantir at a loss some time ago and I've had plenty plenty before that and I'm going to have many more.

Some of the big positions I'm currently invested in today in my portfolio today will turn out to be losers guaranteed, but this is where the next rule comes in. Stop buying because it's up and stop selling it when it's down. Now this rule is almost a subset to the first two rules, but it's so important that I wanted to bring it out on its own. I'm going to explain because this is what I see happen all the time In the last few days Bed Bath and Beyond the company that is on the verge of bankruptcy suddenly saw their share price go up by 200 and suddenly all the media started printing articles about them.

All the YouTubers started making videos about them. it's all over social media and all the gamblers suffering from Fomo went and started buying up the stock after it started going up after it was already up and then the stock after. These guys are all buying, it goes in dumps by 50 in a day. Now we're all human and humans have a set of rules coded into our brains.

Those rules help us survive, help us figure things out that we've never seen before. One of those rules is extrapolation. We see a trend, a few data points, and we naturally make an inference that the trend of those data points will continue is very natural. And people see a stock price going up and up and up, and they fear that they're going to miss out on this massive opportunity.

They don't give a what the company's valuation is, they don't have time to figure it out. They don't have any idea what a fair value for the stock is. Sometimes they don't even know what the company does, they just go and buy the stock because it's been going up and exactly the same thing happens on the way down. in December Tesla share price crashed down to 100 a quarter of what it was a year ago.

Whatever. A PE of around 25 based on the last quarter's earnings for a company that is growing at 50 a year. and everyone on CNBC Everyone on YouTube was saying that you just wait until the share price Falls to sixty dollars. A lot of people were selling at a hundred dollars because the stock was going down.

There were fund managers coming out taking huge short positions publicly at a hundred dollars because you know the stock is going down. so it will of course continue going down. But here we are and the stock is now at over 2 hundred dollars. I'm recording this video now.

it could it could fall again. I Am not saying that it won't but it seemed that everyone was so utterly convinced that the stock would keep on falling further and further and further just a month ago. And yet here we are. So please do not pay attention to these random fluctuations in share price.

Don't make investing decisions based on which way The stock moved yesterday. Which brings me nicely to my next rule: the Moon. In the last few years we've had these crypto Bros shouting the latest Doctor token is going to the Moon Remember all those imbe seals where they're laser eyes and their social media profiles? Where did they all go anyway? Then we had these Nfts buying a entry in a ledger with a link to a page where there was a JPEG of a monkey wearing a funny hat. You couldn't make it up.

Then we had AMC and GameStop and blah blah blah whatever. The latest thing is, there is a growing Obsession in the world of investing with things going to the moon. and here is a bit of very friendly advice for anyone who actually gets impressed by all the talk of investing a hundred dollars into some utter garbage in the hope that it will go to the moon and make them a millionaire. The Moon: 99.99 Eight percent of things that you told will go to the moon will never go to the Moon.

Last year a bunch of the general gamblers were telling you that worthless tokens named after Elon Musk's Dog are the next biggest thing. This sounds so ridiculous and if this wasn't true, it would sound really dumb right? All the big YouTubers told you to go and buy some Graham Stefan was on the hype train Andre Jake wasn't a hype train. a million other smaller YouTubers were in that same hype trade and then that Train derailed. And the saddest thing is that it was so incredibly obvious at the time.

And yes, I even made some videos at the time warning people. Then there was everyone tripping over each other with Fomo to short squeeze the hedgies and the moment AMC had 25, it went nuts. It was front page news of major newspapers I can't remember a single big YouTuber who wasn't licking the backside of the ape movement. And of course that show is now down 90 from when everyone was trying to tell you to buy it.

At 50 bucks, there are endless other examples. Every now and then there will be a company that will really take off from nowhere. It's rare most companies have the exclusive growth stage before they become public, but sometimes it does happen. and when it does happen, nobody pretty much outside the company usually has any idea is going to happen before it happens.

Most of the companies that do it are not the sexy popular stocks that everyone is talking about certainly not investor kids in a subreddit. So please do yourself a favor Never chase anything going to the Moon because believe it or not, but returns of between 10 and 20 a year on average from the stock market are actually really good. Please ignore the imbeciles with warped perceptions that investors should be making a hundred percent in three months or whatever. along those lines.

And while we're on this theme, you probably shouldn't be buying stocks. And yeah, this is such an unfortunate truth and I'm really sorry to break it, but in reality, this should be a rule for the vast majority of investors. Over 20 plus year periods around 95 have actively managed funds lose to the S P 500.. So 19 out of 20 investment funds spend their entire working days analyzing data.

They have armies of analysts with the most fancy education. They spend a load of money on computers and Ai and bloody blah. and they still make less money than if they just put their money in the S P 500 on average. So the unfortunate truth is that if 19 out of 20 fund managers suck balls at beating the market, it probably means that a bunch, uh, of you guys probably a much bigger bunch of you guys, including me, will probably also lose to the stock market.

now. I Know that you probably heard this one before and yet here you are watching a YouTube channel talking about investing and I'm betting that you hold at least some individual stocks I Do so. Although you know that you would probably bet better off just investing in the index, The chances are that you're gonna go and buy those individual stocks anyway. So given that you're going to do it, I'm probably not going to change your mind on that one.

but while you're doing it, I Just want you to think about it and to remind yourself that you are knowingly going out and buying individual stocks and what that implies. As long as you have thought that through and as long as that thought is at the Forefront of your mind, it might, it might just make you think a little differently about some of the choices you make and some of the ways that you manage your money. and as you get older and wiser, you might adjust your strategy I Know you think you would, but you know, let's see. part of that adjustment will be to stop your stock market.

Obsession And I know I am part of this problem I Sit here talking about investing in stocks and all of this stuff literally all the time. It's kind of my job, so you know that's why I'm doing it and you are here watching. But the truth is, people waste way too much time obsessing with the stock market and trying to consume content about stocks. People will often spend hours every day doing this, watching all their favorite channels.

and at the end of the day, those hours are spent in the hope of maybe increasing your investing return by a few percent. right? That's the sort of the benefit I Know that probably you're watching them for entertainment value, but you're probably telling yourself that you know there's educational, informational value in it as well. But here is what you should do instead: pick your strategy for investing, layout your approach, invest your money, and then use those two or three or whatever hours a day to go and learn a new skill. Go and start a side hustle.

Start a little side business. and if you invest 200 a month into your portfolio, say today and then you manage to increase your returns from 10 to 20 per year because you've been watching all of these YouTubers telling you their secrets. If that happens, then at the end of the year your 200 will become two hundred and forty dollars instead of being just 220 at 10 return. But you could just decide that you're happy with a 10 return like a complete numpty you know, not being super amazing with your investing and then you can go and spend all of that time on your side hustle.

Which then means that instead of investing 200, you could invest just 250 dollars a month, just 50 bucks extra into your portfolio. And after adding the 10, you're 250 dollars becomes 275 dollars. So your portfolio will be 35 better off. So your return there will be almost double the 20.

Think about it, then. just think what happens when the compounding effect hits as well. and suddenly when you actually think about it, you might begin considering your investing strategy in a very, very different way. If you found these rules useful, please don't forget to smash the like button for the YouTube algorithm.

Thank you so much for watching I Really appreciate it and as always, I'll see you guys later.