When I was at the fair yesterday, I was talking to the lady behind the counter at Fisher Scones. We both were excited about the free Coca-Cola bags, and she made sure to get one for every employee of hers. She told me she was a big collector of Coca-Cola, and I asked if she held the stock.
She said no but would like to and would like to learn how to. I told her it was one of my holdings and that I purchased my first shares right before the pandemic. She thought that was cool but also brought up the fact that many people lost everything during the 2008 crash. So she has been scared to even think about investing.
Facing Market Volatility as an Investor
I told her once more that I invested right before the pandemic and witnessed the bleeding of my portfolio right out the gate. Even though it wasn’t severe like the 2008 crash, it was still a lesson I would never forget as I had to learn to trust all that I had learned over the years prior before getting serious about investing. I told her that if she ever started, she should learn about blue-chip companies at first and go from there.
I then asked her if she ever imagined a world without Hershey or Coca-Cola, and she said no. I told her it’s not that these companies can’t go bankrupt, but it would take a mighty lot for them to and are often the companies that beginners get their start in if they ever invest in individual stocks.
Why Blue-Chip Stocks Are a Good Starting Point
Companies like Pepsi, Coca-Cola, and McCormick are great companies to learn from because, right off the bat, most people know what they do, even if they aren’t aware of how to invest or read financial balance sheets, for example. They can tell you most of the products that Coca-Cola owns or what kind of products McCormick sells.
I told her that new companies and the ones that have come on the scene over the last decade but you don’t know much about are the ones you want to be really careful about
For example, Nvidia: I know it has to do with computer chips, but I know nothing else about that space, so I couldn’t tell you whether management is making good decisions for the company or not, or if the next product is going to either contribute to the balance sheet or wreak havoc on it, or if sales are decent for that space or if the company has no room to grow in that space because innovation is no longer viable due to limits in computer chip technology.
I also don’t own any Tesla, even though they have become profitable. For one, I don’t really care for Elon Musk, and two, I just don’t know enough about the company except that I really liked the car at one point and wanted to own one next to an Audi for my first car if I ever decide to own one.
The Dangers of Investing Based on Hype
But for most people, they either jump into the market off the hottest meme stock, latest popular stock or don’t have skin in the game to understand the nature of the market. ( Understand that for the most part it should be used to get your hands on quality businesses that are available to the public.)
Most who don’t invest listen to their fear and the stories from others who either never invested or lost their shirts. They don’t ever stop to think about the other side where some people weathered the storm and are now sitting on large portfolios due to not selling out of positions that were stable and solid in terms of business fundamentals even in 2008.
Not many have the stomach to sit on their hands while their Coca-Cola or Pepsi position is bleeding, even though the fundamentals of the business haven’t changed. They will sell out at a loss and then go around telling people over the years that the market is a scam and that it can’t be trusted.
Lessons from the 2020 Market Crash
Many did that during the 2020 crash. I know someone who even started to invest after mocking me for investing but then came to me to learn how. They even bought Coca-Cola at the same levels I did. The same exact investment they mocked.
The difference is that I spent time learning and reading as much as I could years prior, and I even sent them the sources I learned from. But I knew that this person was only ‘investing’ because they were trying to compete and not feel inferior with their skills.
Eventually, just as I predicted, their ego got the best of them, and they began buying stock in companies that I warned them about. One of the companies eventually received a class-action lawsuit, and this person signed up for it, upset at their losses.
Why Ego Has No Place in Investing
But I told them it likely would go nowhere and that even if it did, shareholders get their piece first. They then went on to buy cryptocurrencies and got caught up in the Sam Bankman-Fried debacle, with their assets being frozen on various platforms.
They got upset at Elon Musk for opening his mouth on Twitter about a certain coin, causing massive drops in their holdings. They even told me that gold was better than productive assets because they listened to certain finance channels on YouTube.
Yet when it was all said and done, they sold out of everything, even Coca-Cola, and last I heard, they just hold cash and precious metals after also being scammed out of $1500 on a fake crypto site.
Their story isn’t unique; in fact, it is common among many who think they can outsmart the market or just hop into any hot stock that is touted online without research. Meanwhile, Coca-Cola is up for us in a big way and continues to provide my household with financial growth.
The Key to Long-Term Investing Success
I don’t say that to boast. I say that one must not only have skin in the game but also be willing to read and research and step outside their own ego. The market will take money from any dummy or fool and send them back to their mommy crying. It isn’t a fool’s toy.
The good news is that if you are reading this blog or any other level-headed blog, you won’t be the one the market sends home crying as long as you continue to learn and do your own research and step outside of ego.
Think for yourself instead of listening to redditor349 on which stock you should invest in because you want to negate all responsibility for yourself so you have someone else to blame if things go sideways.
Final Thoughts
Remember you learn best by having responsible skin in the game and continuous learning as you grow further into your journey. Warren Buffett and Charlie Munger are and were masters at this.
Also, remember that when you read my blog or any article on here or someone else’s, do not take them as investment advice. We are not your financial advisors. Don’t invest in something just because it is written about and you trust the author. Still do your own research as well as seek out professional advisors if the latter is needed.
The Broke College Student 
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