Thanksgiving Edition: Long-Term Investing Rules And Suggestions

Nov. 28, 2019 2:24 PM ETBA, BP, CRON, CVX, DIS, EPD, JNJ, KMI, M, MMM, MO, NFLX, OKE, T, TSLA, XOM, CRON:CA90 Comments


  • Before you start investing and trading, you need to practice financial hygiene first.
  • The first investment is Cash. You should have a cash cushion for emergencies. The next is maxing out your 401(k) and IRAs.
  • Long-term investing is the foundation of wealth building. Trading should be separate from investing. When you are investing for the long-term, you are an owner.
  • The great advantage of Investing is time scale. Use time against traders and you can win.

I write a lot about trading because it's fun, done right can create wealth, but your financial foundation must be investing

People tend to confuse the two with potentially disastrous results. I have touched on a number of differences between the two ever since I have been writing for a larger audience. I feel that in the remove of Thanksgiving and the closed market today, it makes sense that I consolidate my thoughts into one piece.

Financial Hygiene

First, it is important to talk about financial hygiene, before you start risking money on trading, and even investing, there are several things you should work on:

  • Have enough cash on hand to cover your absolute necessities - rent/mortgage, food, insurance, etc. - for at least six months. I would shoot for 12 months, but six is the absolute bottom line.
  • Do you have credit card balances that are just carried from one month to another? You know the banks are charging you 20% for that, right?
  • Put your everyday bills on auto-pay. Late payments affect your credit score.
  • If setting aside cash for an emergency seems impossible with all your expenses, and you are running your credit, you are living beyond your means.
  • With 3.5% unemployment, perhaps you should look for a higher paying job, or look for some side consulting. Maybe you should really look at what you are spending your money on. Maybe you bought too much house. I know these are uncomfortable thoughts, but your friends aren't going to say anything or your family. Leave it to this annoying old guy to just give it to you straight; bankruptcy starts very slowly and imperceptibly until it happens all at once.

What to do?

  • Stop using your credit card. Use cash until you spend down your balance. Don't carry your

This article was written by

David H. Lerner profile picture
Proven quantitative & qualitative strategies generating consistent returns
I have been writing about stocks for about a decade. I take a multi-disciplined approach but I am not doctrinaire. I come from a technology background having a software consulting business for a number of decades and also took part in business development for tech media startups. I employ technical analysis when it's called for. I believe that market psychology plays a huge role. My favorite explanation for charting is that charts are essentially a psychograph of sentiment about a stock. Market participants rely on narratives to explain a stock's appeal. If you can identify a narrative or trend as it is forming that can pay outsized rewards. I have an eclectic style and it might take you a few articles to "get" me. We now offer a subscription service: Dual Minds Research. I am partnering with Serop Elmayan, a quantitatively oriented trader that takes an engineer's approach to setting up trades. The chat room opens at 5 am. I have already been up since 4 am scouring the news feeds, commodities, and futures to suss out how the day will start,  I provide live minute-by-minute updates on the standard indicators and a few that we surface on our own. The chat officially closes at 430 pm, but I will often check at around 8 pm to post updates. Our Community utilizes the Cash Management Discipline, a simple trading style that we use as a discipline to counter the wild volatility we have to deal with today. Trading ideas will be surfaced almost daily. Serop will only provide trades that he has determined to have a high probability of success. Check us out.

Disclosure: I am/we are long BP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own BP shares in my long-term investment account

Recommended For You

Comments (90)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.