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How To Tell If You’re Addicted To Stocks

How To Tell If You’re Addicted To Stocks

by | Jan 31, 2021 | Investing in stocks, Value investing

This blog post is for fun – and then again, it’s dead serious. 

I remember a wonderful spring day when a friend I hadn’t seen for years was visiting Copenhagen. We had studied together in New York almost two decades earlier. 

We were sitting at a winery in Copenhagen, drinking a glass of Chardonnay before dinner while waiting for some more people to join us.

At a moment when she was on the phone to explain our exact wine-drinking location, I discreetly logged into a stock market app on my phone.

“You’re checking the stock market,” she said when she got off the phone, and she sounded completely appalled.

At that moment, I felt like one of the crazy characters in a Woody Allen movie. I could see myself through her eyes. I was like the crazy stockbroker who could only do two things: cheat on his wife and yell “sell” into a phone.

Well. Maybe it was a bit odd to check the stock market. We hadn’t seen each other for so long. She had a lot to tell me. New country, new boyfriend, new career, and a baby. We had to catch up on a decade or more. 

I wanted to enjoy the Chardonnay and the warm spring day, and I wanted to hear all about her adventures. But the market was falling, and that opened the possibility for some interesting option trades that I had been waiting to do.

If only I could sneak away for 15 minutes…

It’s so tempting to check on the stocks, and once you check, you can get sucked in.

Have you ever felt that way? Have you ever checked on your stocks at an inappropriate moment? 

Why does this even happen?

I’ll tell you why. When you check your stocks, you get a dopamine kick.

It’s similar to what happens when you check your social media, but much stronger, I would argue.

Seeing your stocks go up affects your primitive brain more than seeing someone like your post.

Some of us even get a kick when we see the stocks go down, because we know that’s when we make money. 

The line between checking and getting addicted to checking is a blurry line. 

How do you know that you’ve become addicted? Well, here are five signs to look for…

1. You Check the Market Right When the Exchange Opens – Every Day 

If you’re knocking at Wall Street’s gate even before it’s really open, and doing that every day, it’s a sign. 

It’s fine to check the stock market prices, but you should also be able to tolerate forgetting about it occasionally or doing it later. 

2. You Check Your Portfolio Even on the Weekends 

You checked the portfolio Friday at market close, and you know the market is closed on Saturdays and Sundays, but it’s just so nice to see those numbers on the screen. All those wonderful green numbers – or even the red ones. 

You’re actually looking forward to Monday so the digits start moving around again.

3. You Think There Are Too Many Official Holidays

You get annoyed that the market is closed on holidays, and you’d rather be at work than at home with the stock market closed. You just won’t verbalize it.

Speaking of work, you’ll check the stocks at work too. That’s when the market is open, so you have to right?

4. Life Outside the Trading Platform Feels Dull

You find it hard to focus on reading a book or watching a show.

Even social media seems boring compared with the numbers going red and green.

Some social events feel like a bore too. You’d rather get back to making money.

5. You Check Stocks In Bathroom  

Oh, I’ve been there. Remember FAANG stocks getting crushed in late 2018? 

I tried hiding from my kids on Christmas Eve so I could buy some Apple stocks that suddenly reached my target price.

I didn’t succeed because my kids were banging on the door and being impatient about Christmas and presents.

After that I promised myself NEVER to do that again.

The Road To Recovery

Did you recognize any of these signs?

If so, then you need rehab.

You have to learn that you can make sound investment decisions without constantly getting a stock market fix. 

In fact, your investment decisions will become sounder if you take a step back.

So how do you take a step back?

1. Enter Your Trades as Limit Orders in the Off Hours

You don’t have to enter your trades when the market is open.

In fact, it’s better not to, because all those numbers running up and down sends a signal to your brain that you should act on it.

You’ll be a better investor if you’re less updated. That’s something you’ll have to experience over time to know, but for now you just have to trust me.

2. Go Cold Turkey For 30 Days

Just like with a sugar addiction, you need to reboot yourself by stopping the actual intake for a while.

When I say cold turkey, I mean that you shouldn’t check the market at all in 30 days – not even when it’s closed.

You have to learn that nothing will implode if you’re not updated for 30 days. 

During those 30 days, you can arrange for someone to let you know if any of your positions fall more than 20 percent or if the market crashes.

After going cold turkey, you can easily go a day without checking. 

3. Force Yourself Into Another Neutral Addiction

Maybe now is the time to watch that Netflix series everyone is talking about? 

There are three kinds of addictions: negative, positive, and neutral. 

A negative addiction takes a toll on your health, your finances, or your relationships. 

This would be something like smoking, gambling, or having extramarital affairs.

A neutral addiction doesn’t harm anyone, but it doesn’t do any good either. This could be watching Netflix or checking your social media accounts. 

A positive addiction would be running or going to the gym. 

If you could find a positive addiction to replace your stock market fixation, that would be perfect, but it might not be realistic to replace that dopamin kick with chewing veggies.

So the next best thing is a neutral, pleasurable choice like a Netflix series. 

Afterwards, you can always take a cold turkey break from Netflix because you’ll have strengthened your willpower and ability to abstain. 

If you want to learn about solving intellectual puzzles and investing with a strategy, you can read my e-book Free Yourself here. 

Ten Crazy Signs of a Stock Market Bubble

Ten Crazy Signs of a Stock Market Bubble

by | Jan 24, 2021 | Investing in stocks

How do you know if there’s a stock market bubble?

The thing about asset bubbles is that you only know for certain that they were there when they’ve popped.

But still, there are signs that you can look for.

What are those signs?

I’ll take you through the top 10 signs that are showing right now.

1. Individual Companies’ Stock Soaring

As Tesla’s stock reached new heights in January, Tesla’s founder Elon Musk became the richest man on earth. 

“How strange,” he wrote in a comment on Twitter, and a second later: “Well, back to work.”

Even he is astonished at what’s going on.

Tesla’s market cap is higher than Toyota, Volkswagen, GM, BMW, Daimler, Honda, and Ford combined, despite the fact that their combined revenue is 36 times higher than Tesla’s. On top of that, Tesla is struggling to make a profit. 

Tesla’s P/E has surpassed 1500. A reasonable level for an average company would be 15.

A P/E of that level means that you pay 1500 USD for 1 dollar of earnings.

2. IPOs Skyrocketing 

IPOs are more frequent in times when the stock market is doing well. That makes sense. Who would want to sell their life’s work in a depressed market? 

However, what’s unusual is the way the market receives IPOs these days.

Shares in Airbnb more than doubled on the first day of trading in December. They went from 68 USD per share to 148 USD per share.

Even new issues of small companies with no revenue might shoot through the roof. A lot of it is due to private investors gambling that it will shoot up precisely because it’s an IPO.

3. Bloggers and YouTube Stock Channels Exploding  

YouTube videos that promise “hot stocks to 10x your money” can get half a million views in days. 

Newbie investors quit their jobs to make Y0uTube videos about stock investing. They can make a better living off the ads from their videos – even if they have nothing more to say than to explain how to open an account and buy Tesla shares.

This tendency is a sign that people are searching for this information and that advertisers are willing to pay a lot to get some airtime with the stock-interested audience.

4. Your Cab Driver’s Favorite Subject Is His Stocks 

I remember some taxi rides before the financial crisis that puzzled me.

I was a news journalist, and I took a lot of taxis going back and forth from press meetings to the newsroom.

The cab drivers in 2007 and 2008 loved talking about flipping houses and how much money they made buying houses, renovating them, and selling them.

The barista, the hairdresser, and the cab driver have another favorite subject these days. They love talking about stocks where they made a quick buck.

They’re investing their savings, betting on a quick gain, and exiting. They aren’t investing for their retirement. They’re gambling and betting on a quick in-and-out to make money in a few weeks. 

5. Lots of New Trading Accounts  

Robinhood, a trading platform popular with teenagers, opened more than 3 million new accounts in 2020.

In my home country of Denmark, Nordnet, a platform that targets young people, gained 80,000 customers in 2020 and increased the total number to 200,000. It’s really impressive if you think about it. 

6. New Investors Talk About the Old School Having Lost the Touch

Warren Buffett had a tough time during the dotcom bubble. 

The number of attendees at Berkshire Hathaway’s annual meeting dwindled. One person even had the guts to take the microphone and ask if “he didn’t have enough brain cells to pick one or two tech stocks.”

Value investors are scorned whenever there’s a bubble. When you invest with reasonable valuations as criteria, you’ll miss out on some of the fun when the going gets exuberant. 

If you hear people say that Warren Buffett has “lost it”, you should actually pay attention. It’s a sign. The market is foaming with greed. There’s no longer patience with a reasonable approach. 

7. A Penny Stock Can Soar 6,000 Percent on a Misunderstanding

In January, Elon Musk said that he’ll stop using Facebook’s WhatsApp and instead migrate to the donor-based, open source messenger service called Signal.

Signal is not on the stock market, but another company called Signal Advanced is.

Signal Advance’s stock surged from 0.60 USD to more than 60 USD in a few days. It has since settled, but the fact that it exploded on a misunderstanding says a lot about both the frothy state of the market as well as the psychological makeup of Elon Musk’s and Tesla’s fan base. 

8. “This Time It’s Different”

Whenever there is a bubble, there’ll be justifications and some kind of theoretical explanation of why gravity has stopped working.

It happened in 1929 (the excuse was modern inventions), during the dotcom-bubble (the excuse was the internet) and before the financial crisis (this time the excuse was that migration to the cities justified forever-rising real estate prices in certain areas).

It’s also happening now, with the main line of argument being that interest rates will never go up, and therefore there’s no alternative to investing in stocks. 

These arguments can sound as far-fetched as conspiracy theories, but their proponents are very verbal and insistent.

If you hear someone explain that “it’s different this time” or “times have changed”, pay attention. It’s one of the signs.

9. Shiller P/E Above 30       

The Nobel prize-winning economist Robert Shiller warned that markets can become irrationally exuberant. The Shiller P/E ratio measures the market’s level of sanity or insanity.

Right now it’s above 30 – which it has only been three times in history: During 1929, during the dotcom bubble, and now.

In 1929 it reached 30. Right now it’s at 34. 

Did you know that it took 29 years before the Dow Jones reached the same level it was at in 1929? That means you’d be almost 30 years older before your money was worth the same.

10. Buffett Indicator at All-Time High 

Warren Buffett says that the single best measure of where valuations stand is comparing the market cap to GDP.

The Buffett indicator takes the very broad index called Wilshire 5000 and holds it up against GDP. 

What does it show? Well, it’s never been higher. It should be around 50-75. If it reaches above 90, the market is in bubble territory.

It’s not only above 100 – it’s around 200.

It has never been that high before.

Maybe it’s not so strange that Warren Buffett holds around 130 billion dollars in cash (or cash equivalent).

What do you think? Is Warren Buffett being prudent, or has he lost the touch? 

You’ve probably figured out that I’m on team Buffett. Which one are you on?

Don’t forget to read my free e-book that explains my whole investing process – including my favorite way to calculate what a company is worth. You can get it here.

Five Emotional Advantages to Investing in Stocks

Five Emotional Advantages to Investing in Stocks

by | Jan 17, 2021 | Mindset, Newbie, Value investing

When talking about the advantages of investing in stocks, most people talk about financial profit and returns, but cool cash is far from the only thing you gain when you invest. 

 A lot of people have a specific financial goal.

Maybe they invest to be able to retire comfortably. Maybe they invest to be able to afford a certain type of home at some point. Or maybe they invest to become financially independent.

Whatever the specific goal, there is probably another reason why you invest: the emotions you will experience when you reach your goal.

It might be a feeling of security knowing that you can retire comfortably. It might be a feeling of having more choices. Or it might be a feeling of having more control over your life.

The good news is that those feelings will begin to emerge a long time before you reach your financial goal.

The feelings will begin to settle the moment you take charge and begin to invest in a serious way.

Obviously, the feelings you experience will depend on how you invest.

If you invest in a way that resembles gambling in a casino, the feelings of stress might deepen.

Investing based on some random thing you pick up listening to a podcast or reading a post in a Facebook group might turn your emotional life into a roller coaster ride as the stock market moves up and down.

But if you invest in a way that is grounded and reliable, if you follow a strategy, and if you research before picking a stock, you’ll experience feelings of freedom, control, and security a long time before you reach your financial goal.

I have no crystal ball, and I can’t tell you exactly how your life will change. But I can tell you what changed in mine when I began investing in stocks as a value investor.

Here are five emotional changes I have noticed in my life: 

1. Less Stress

Previously, I was always in a hurry. 

I got irritated over small things, like a traffic light changing to red. I felt life was like an assembly line that I couldn’t keep up with. I was always behind, and any small change or delay messed it all up even more. 

Today, I have a feeling of time abundance. My time is mine, and I decide what to do with it.

Whenever I go somewhere, I make sure to plan extra time, so I’m no longer in a hurry going from A to B. I notice small wonders, like sounds of birds chirping or the laughter of a child – and I notice them while waiting for the traffic light to turn green.  

2. Less Grumpy 

Previously, small matters would make me grumpy.

Standing in line at the store, other people were obstacles. I hope I was polite enough, but my attitude was ‘don’t-even-think-about-asking-me-if-you-can-jump-the-line”.

Today, I know my local cashier by name, and I know she invests in stocks. I chat with the people I recognize. Strangers have become three dimensional, and I have more fun interacting with them. They aren’t just obstacles to avoid on the assembly line of life. 

3. Better at Protecting my Boundaries

Previously, I let my boss walk all over me.

When I announced my first pregnancy, he responded with a stone-cold face and told me that I should spend the maternity leave thinking about whether I was working at the right place. He basically told me that I was no longer welcome. Forget about congratulations, flowers or greetings from the workplace after the baby’s birth. I didn’t call attention to it. I let it all slip by. 

Before coming back from maternity leave, I was demoted and told that I was starting from scratch because I had been on maternity leave. In the end, I was fired while on my second maternity leave.

The signs were very clear from the beginning. I should have gotten up and left at the first sign of discrimination. 

Why didn’t I get up and leave? Because I needed the salary to pay my bills. 

Instead, I let myself be humiliated, and letting that happen gave me a feeling that it was the only way to live life. I stopped putting up sound boundaries in other parts of my life. 

Today, I have very clear boundaries. I check in with my feelings as guides. If something doesn’t feel right, it probably isn’t.

I leave the situation or the relationship and I don’t look back.

4. Better at Living Like a Minimalist

Previously, I had a hard time letting go of stuff.

I’m talking about all that stuff we collect throughout life. The pants that don’t really fit. The high-heeled shoes we never got around to wearing. The coffee machine we stopped using.

I was afraid of needing it later on.

Today, I let go of everything that I don’t use or that doesn’t bring me joy. I know that I can always buy what I need later on. When I pass the stuff on to friends or charity, I know it’ll bring joy and be used. 

I know that having a clean closet and a minimalist lifestyle is a lot more valuable than the stuff itself. 

5. Better at Enjoying My Own Company 

Previously, I felt jittery in my own company.

It was hard for me to be alone for more than a few hours. I felt like I was missing out on something all the time. 

Today, I really enjoy my investing practice.

It feels like playing chess with the world. I’m trying to figure out the next move before it happens. You could also say that researching a specific company feels like solving a riddle. 

I can easily spend days on my own with my investing “hobby” because it is satisfying on an intellectual level. 

It has given my life a new layer.

If you want to learn about solving intellectual puzzles and investing with a strategy, you can read my e-book Free Yourself here. 

Three Ways to Stop Being a Victim and Start Creating True Wealth

Three Ways to Stop Being a Victim and Start Creating True Wealth

by | Jan 9, 2021 | Mindset

If you want to create wealth, you have to go get it.

It isn’t just going to happen to you.

You must believe that you have the power to create it. You have to take a position of responsibility.

Now, most people don’t do that. Most people live unconsciously. They let life happen to them, instead of creating the life they want.

People give away their power to create the life they want, and they don’t even know it.

Many people play the victim in life –  and that takes away their power.

Here are three things that you must stop doing now if you want to regain control. 

1. Stop Blaming 

It’s no one’s fault but yours. You chose it. 

Do you entertain the blame game? Do you have the habit of pointing the finger at others?

People blame the weather, their boss, their parents (oh, this is a big one), their health, the economy, the stock market, racists, bigots, the elections, the government, chauvinists, customer service, their partner, their spouse.

The problem with this is that you’re avoiding taking responsibility for what’s going on. You’re giving away your power. You’re playing the victim.

By the way, if you know someone who does this, run away.

They might blame their mother today, but tomorrow it’ll be you. Those in proximity of the victims are targets, so they don’t have to face their own faults. Watch out!

2. Stop Justifying

If you ever went to a prison and asked the inmates about the crimes they’ve committed, you would discover that they’ll spend a lot of energy justifying what happened.

‘It’s not such a big deal’. ‘He hit me first’. ‘She was a bitch’. ‘I needed the money.’

Only rarely will you hear a convict express true remorse and assume a position of personal responsibility.

Think about that the next time you try to justify something you’re not happy with. You’re really trying to justify why you didn’t get up and change the situation. 

What people often say about money is: ‘Money’s not that important’.

If you ever hear anyone say anything like that, you can be sure that they’re broke. They’re justifying why they don’t have it, and in doing that they are pushing it further away. 

If you had a friend who said that you weren’t that important, would you hang around a lot? Same with money. If you don’t appreciate it, you won’t attract a lot of it. 

3. Stop Complaining 

When you complain about something, you’ll attract more of the thing you are complaining about.

When you complain, you’re stuck in the situation, and you stop thinking about solutions.

Complaining is the worst thing you can do if you want to change your life. Complaining is a black hole that will suck up all your energy – and the energy of those around you.

The worst thing about negativity is that it’s very contagious. If you ever spent time around a complainer, you’d soon notice how you began to agree about life’s misfortunes and soon you’d begin adding to the list of complaints.

If you hear someone complain – run.

If you can’t run, just say ‘uh huh’ while you think about something else, and change the subject when you can. Sorry if that sounds rude. We all have a responsibility to protect ourselves against diseases – also those of the soul. 

You Can’t Have Both

There’s no such thing as a rich, happy, successful victim.

They don’t exist.

So you have to decide which one you want.

Do you want a great life? Or do you want to gripe and grumble? 

Which is it going to be?

What do you do if you catch yourself complaining, criticizing or blaming?

No worries. You get a second chance. You get to change your mind.

Just catch the thought or the sentence and delete it. Snap your finger, slap your face, or do some other gesture to wake you up and change your state.

Say, “I take that back.” Or, “Delete, delete, here’s what I want to say instead.”

Find your own way to do it. You get to have fun with it. 

So are you ready to take responsibility of your happiness and your finances?

You can learn to invest in stocks with me.

A great place to start is by reading my e-book that you can download below.

Don’t forget the e-book Free Yourself.  It’ll teach you how to calculate how much a company is worth. You can get it for free here. 

How to Make a Successful Financial New Year’s Resolution

How to Make a Successful Financial New Year’s Resolution

by | Dec 29, 2020 | Your money

How did last year’s New Year’s resolution go.

Maybe you just forgot about it as the champagne bottles were packed away and life resumed.

What’s going to make this year any different?

How do you make your decision stick?

No worries, I’ve got you covered. 

Here are ten steps for successful goal-setting to make 2021 your breakthrough year. 

1. Make It Be Measurable and Specific

New Year’s resolutions are often vague. Real goals are specific and measurable.

It’s the difference between saying,

“I want to start running in 2021”

and saying,

“On September 26,, I’ll run the Berlin Marathon in less than 3.5 hours.”

Ask yourself, what specifically do you want to achieve this year?

By how much do you want your fortune to grow?

When talking about investing, it makes sense to set up long-term goals as your primary goals. Let’s say 5-10 years. It makes you less vulnerable to fluctuations in the market. So let’s begin there. 

How rich do you want to be in five years? In ten years?

Be really specific. 

2. Be Ambitious 

Big goals are a lot more compelling.

Cultivate your inner Napoleon. At least your inner Napoleon Hill, the mastermind behind Law of Attraction.

He says that ambitious goals are like strong fires, while small goals are weak fires.

There’s not a lot of energy in mediocre goals.

You have to be a bit audacious to become motivated.

Set a goal. Then double it. Or quadruple it.

How does it feel now?  

3. Have a Strategy 

If you’re training for a marathon, you’d better have a running schedule.

You can’t show up on September 26 and expect to be successful.

You’ll have to know how many days a week to run, when to train intervals, when to train stamina, and when to rest. You need to know what kind of food to eat before long runs. You’ll even have to plan what to wear when going on long runs. 

The same with investing.

You need a plan and a strategy.

How are you going to invest? Which strategy will you follow? Value investing? Passive investing? Day trading? Momentum investing? Copy trading? Pick a strategy. 

You’ll also need to plan how much money you’ll save for investing purposes.

4. Set up Subsidiary Goals

If you’re training for a marathon, it’s a good idea to measure your progress with other running events than the major one.

You’ll want to sign up for a half marathon and even shorter runs throughout the year to see how you fare in a competition and how fast you’ve become.

When you’re investing, you want to measure your progress at least every quarter.

Investing is a slow sport. Kind of like watching grass grow.

You don’t notice any difference from day to day.

But if you take a picture of a plant, you’ll notice a huge difference over time.

So take stock of stocks, so to speak. Track your progress by measuring your wealth. It’s enormously motivating. 

5. Commit Yourself  

You’ll only be successful if you promise yourself that you’ll stick to it whatever it takes.

You have to make that promise to yourself. 

Whenever I’ve accomplished something in life, it’s taken sheer determination and a promise to really do it.

If you’re not committed, like really committed, you won’t have success. It’s that simple.

6. Have a Purpose 

You have to know why you’re really doing it.

Let’s take running as an example again.

Hopefully, you don’t run just for the sake of running.

Hopefully, there’s a bigger purpose, which could be an intent to live a long and meaningful life without lifestyle diseases that could cripple you.

The same with investing.

Ask yourself why you invest. “To make more money” is not an answer. That’s like saying you run to become faster.

Ask yourself why you want to make more money.

When you get a new answer, ask yourself why again. Keep on doing that until you reach the last answer. In the end, you’ll reach your true purpose.

It might be avoiding stress. It might be having more choices in life. It might be securing a future for your children.

The purpose is different for each of us.

For me, it’s a combination of things. It’s about creating generational wealth so my children and grandchildren (to come) can make the best choices without being restricted. It’s also about securing my own freedom and finally it’s also about wanting to influence the world through my investments.

7. Visualize Your Success 

If running that marathon is your goal for 2021, visualize yourself crossing that finish line.

Hear the cheering, feel the sweat and adrenaline. Notice how you feel. How is it going to change your life? Affect your relationships? Your mood? 

If investing is your goal, see yourself reaching your target. Notice how it feels. Who are you going to be when you get there? Reaching goals changes our inner script. It changes who we are psychologically. 

Visualize it until you actually live it. Taste it. Believe in it. 

8. Face the Monster

Avoidance is also a choice.

If you don’t run, you are voting for lifestyle diseases.

If you don’t invest, you are voting for poverty.

Create a worst-case scenario. What’ll happen if you don’t take action? Visualize that too, and decide that it’s not who you are anymore.

I visualize my own diseased mother who spent her last decades on government subsidies, locked in an apartment, suffering from a bad hip and rheumatism. Being unable to afford a taxi, a meal at a restaurant or any extra help. Being very dependent on her children for support.

I’ll never put my boys in that situation.

That’s not who I am.

Therefore, I invest and take care of my finances.  

9. Get Educated       

If you want to run a marathon, you’ll probably read some blogs and books about the best nutrition, the best running schedule, the best running equipment. 

You’ll want to avoid making beginner mistakes that may result in you getting injured and failing to reach your goal of running the marathon. 

The same with investing.

You need information so that you can be the best investor possible and avoid making silly mistakes that could cause you to lose your money.

Ever considered taking an investing course?

Maybe now is the time. It’s money well spent. 

10. Get Some Running Mates  

Running is more fun if you join a club and find people to run with.

The same goes for investing.

You’ll stick to it if it becomes a social event and if you meet people who will hold you to your new standards.

This is another reason for taking an investing course. This is where you’ll meet your peers.

So.

Where does your journey begin today?

Right here with me.

You begin by reading my e-book.

Then you join my Facebook Group. 

Don’t forget to read my e-book Free Yourself. You can get it here.