Elon Musk’s 2 Fundamental Tips for Long-Term Success in the Stock Market.
Elon Musk is an adept of the Twitter network on which he never misses an opportunity to share his thoughts, but also the successes of Tesla or SpaceX. This is something vital for his two main companies, even though they have no dedicated marketing budget.
So everything goes through Elon Musk and his ability to create buzz. It works quite well since Elon Musk has managed to gain 92 million loyal followers over the years.
This mode of communication has become so important for Elon Musk that he even decided to buy Twitter for 45 billion dollars. The reason? To protect the free speech so dear to Elon Musk. However, I also see in this purchase the way to ensure that he will always have access to Twitter to continue to spread his messages that serve his businesses.
This is not the main reason, but it is something that plays in my opinion.
While Elon Musk communicates a lot on Twitter, he very rarely shares advice on how he operates in the stock market. Recently, in response to a request from some of his followers, Elon Musk shared 2 fundamental tips for long-term success in the stock market.
These tips will seem basic, but often, simple messages like these are what you need to succeed. There’s no need to complicate things when the thinking is clear. This one is so clear and concise that it can fit in a single tweet:
Elon Musk’s basic advice is divided into two parts: the buying part and the selling part. Here’s how I interpret them:
1. Buy stock in several companies that make products & services that *you* believe in.
Elon Musk’s first piece of advice is to buy stock in companies that make products and services you truly believe in. That means you shouldn’t let other people’s advice push you to act. You need to incorporate the advice of others and everything else you read, but in the end, it will only serve to fuel your thought process.
In the end, you must decide for yourself. That way, you will never have regrets, because your choices will be made with a clear conscience.
When these companies are going through tough times, and they will, you will be more likely to stay a holder if you have confidence in their products and services. If you buy stock in a company you don’t believe in for the long term, you’ll quickly panic and sell at a loss.
Worse, you will be tempted to not take responsibility for your choices and blame others for your decision to buy stock in that company. The key is to always be able to take responsibility for your investment choices. That’s what this first piece of advice from Elon Musk says.
His approach is similar to that of many investors, including Warren Buffett, who chooses companies that he understands and is fully aware of. This allows him to take a long-term view as he explains:
“Our favorite holding period is forever.”
2. Only sell if you think their products & services are trending worse. Don’t panic when the market does.
Elon Musk’s second piece of advice has to do with selling your stock. A lot of people are going to get carried away by the masses. When everyone panics and the markets fall, they will panic and sell. Elon Musk is telling you here to only sell when the fundamentals that drove you to buy the company’s stock are no longer there.
If the stock price of a company you’ve invested in falls violently, it’s not necessarily related to the company itself. The fundamentals may remain the same, but the market is in a bad place. The company will see its share price correct, but that doesn’t mean you should sell and panic.
This is where taking the long view is key.
I would even add here that when everyone is panicking, you should be greedy for stocks of companies that you fundamentally believe in. If you believe in these companies, you have the opportunity to strengthen your positions at a discount. You will benefit greatly in the future.
Elon Musk ends his tweet with a sentence urging you to play this strategy for the long term. These 2 fundamental tips will help you succeed in the long term in the stock market. The advantage here is that you don’t need to be an expert to apply these tips and make profits. All you need is patience and foresight.
Two qualities that seem simple on the surface, but which many investors fail to demonstrate over time. It’s up to you to make sure you have them. If you succeed, you will be able to make growing the fruit of your work invested in the stock market.
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