Emotions are the enemy to outsized returns when investing. We all have heard the Buy Fear – Sell Greed mantra. Intellectually we know this. Emotions get triggered as the value of our account rises & falls and headlines are shouting at us how much better or worse it will get.
Please remember that for news outlets – emotions – Fear and Greed – sell subscriptions. Therefore, when your account is at its lowest value and the newspapers are telling how much worse it will be, it is time to buy. Conversely when your account is at its highest value and your really happy and the media is telling you how good the market will be looking forward – sell something.
The best solution I have found to adapt to Buy Fear – Sell Greed, is knowledge of what we own.
- “Know Your Company” to the fullest of your ability.
- “Know” as much as possible, that the fundamentals of your company are sound. It is a simple thing. No or low debt and positive cash flow. It is hard, but possible, to go out of business, if you have no debt and positive cash flow.
- “Know” management is working for a mutual benefit – Yours and Theirs.
It is much easier to hold, accumulate or buy when the media is shouting that the world as you know it is closing down.
LOTM divides companies into two groups – Core Companies and non-Core companies.
We suggest risk management approach using dollar-cost-averaging where core companies are concerned.
Where non-core companies are concerned, use a stop-loss process.
This approach gives you the opportunity to sell some non-core positions when they are starting to fall and the ability to buy into core positions after they have fallen.
There is a second element to managing fear or greed. That element is to take some action and know why you are taking that action. Action instills a feeling of control that can override the feelings of fear or greed. The two risk management tactics above, allow us to act in a controlled manner. If we act in a controlled manner our fear or greed recedes. We are in control and can do what is necessary. Even tiny baby steps of action drives fear and greed back from an emotional response to an intellectual response.
The market is a volatile beast. 2022 is going to be a very volatile year in the market. I suspect more so than most. Both ways – upwards and downwards. Be prepared mentally so you stay within your intellect.
Soluna Holdings (SLNH)* is a core position company for LOTM. We believe the ability for the company to grow fast for a long-time is very real. We believe the company is as of yet undiscovered. There is potential for the “stock” to increase over a number of years for a tenfold increase in share price. $10 to $100 is possible in this company. Maybe it takes ten years to do this. That percent gain over ten years averages out ok. Of course, the shorter the timeline, the happier we are.
But here are two things to consider. Will you own the shares to the ten bagger goal and how much will you own through the process. Will the price move change your life style. These questions are not geared towards everyone. Many don’t have the desire, focus or interest to work towards this goal. For those who dream of accomplishing this goal, Know your company.
Knowing your company:
The video below is a view into Soluna that most have not seen. This video talks very little about crypto mining – the reason most of you might own this stock. This video talks about batch computing, data centers, curtailed electricity (what does that even mean?). The market for utilizing curtailed energy is much bigger than crypto mining. Soluna is a small but rapidly growing company. It has about 35 employees at year-end 2021. They expect to triple that number of employees in the next six months and double it annually for periods they cannot answer. This is the Blue Sky/Green Field of growth. If you have a clear idea of what your company is building towards, you have a greater confidence in why you own it and why you might want to buy more on the declines and sell less on the rallies.
When the share price drops, my goal is to have you feel greedy in wanting more shares at the cheaper price. Why because that is how you manage time in the market. Buy more shares, the cheaper the “company” can lower your cost. Don’t think of the $$ value of the position, but consider that lowering your cost, shortens the time to reach the ten-bagger. If not a working to lower your cost, consider what the impact of a bigger position might do to change your family’s life if it moves to a double or a ten-bagger price.
Each purchase at a price lower than your cost reduces time to reach your ten-bagger number and builds critical mass. There are lots of ways to tax manage, scale out or start new position from your core positions once the price rallies. That is where “belief” and “knowing” comes in. You have to believe and know the rally will come. This belief or knowing comes from Knowing Your Company.
So, we all want to be wealthy right? If you don’t want to do it over 40 years, a traditional way of thinking, a way to shorten the timeline is through lowering your cost &/or building critical mass. Know your company. We are working with time and space here.
The video below is not exciting. It is not selling you through emotion. You will get to know John Belizaire on “his” path to becoming wealthy. Know what Soluna is doing and know that yes, this company could grow its stock price ten-fold in ten-years or less. Probably a lot less than ten-years. That is just a personal opinion. Sorry, if this sounds like cheerleading. It is a wealth building concept that I am selling. Soluna is just the current opportunity. Opportunities are like buses. They come around the corner frequently. Deciding where you want that bus to take you is my question.
Note: the shorter your time line, the more you will what to use technical analysis. It is a different agenda than Wealth building in the system described above. There are many paths to building wealth. The most important factor is to choose a path that is in harmony with how you think and feel.
Know Your Company:
Insider’s Guide to Energy featuring Soluna Holdings CEO John Belizaire
56 minutes long video dated Jan 10, 2022
What Does Soluna Holdings do?
Soluna utilizes curtailed electricity to power near-generation-site data centers that does computerized batch processing doing near-machine learning computing, crypto-mining, scientific research, drug discovery research, animation utilizing blockchain computing, credit card related data processing and other cloud-based applications.
Characteristics of LOTM’s approach to Wealth Building.
When looking at people who have built large-scale wealth, many people have done so through a large share ownership position in one company.
Examples of big single company wealth builders in America:
- Bill Gates through Microsoft (MSFT)
- Jeff Bezos through Amazon (AMZN)
- Elon Musk through Tesla (TSLA)
- Mark Zuckerberg through Meta (Facebook [FB])
- Warren Buffett through Berkshire Hathaway (BRK.A)
- There is an unlimited list of examples. Many core investors and key employees you have never heard of, have become very wealthy through these same companies. Yes, this is speculating, rather than investing, trading or gambling. Dare to be.
In this recent linked Video, Bill Miller III, shares with us why he is more than 50% personally invested in Blockchain and Crypto and his reasoning behind why he is so concentrated in Blockchain/crypto, He also mentions the fact concentrated positions are how the very wealthy get wealthy.
Miller had a great run managing assets at Legg Mason prior to setting up his own asset management firm. Pre-2006 investors likely know of Bill Miller III from his time with Legg Mason.
This is our LOTM approach or model to building wealth.
We concentrate ownership into a small number of companies.
Characteristics & Factors we look at upon initial purchase include:
- Better than Average Valuation combined with a
- Stronger than normal forward Compound Average Growth Rate (CAGR).
- Quality of Management,
- Barriers to Entry,
- Capital Structure,
- The Blue Sky / Green Field opportunity
- Balance Sheet,
- Consistency in Revenue Generation and Profit Margins.
- Technical analysis of the stock for scaling both in and out maximize effect of price movement.
- Selling short more inefficient competitors as a hedge in difficult market or difficult industry conditions.
I want to give you something to think about before Monday’s, Soluna Monthly update.
Soluna’s market cap is still tiny when viewed on a longer time horizon.
Maybe we’ll get lucky, and the price will fall! Then we can buy more shares cheaper! It is a way of thinking, isn’t it?
I am not say to you that this is an easy path to wealth building or even that Soluna is “the company” to do it with. It is simply a path that has worked for many people. It is up to you to decide it this makes sense for your financial situation.
Best to us all! T.
You can Read, you can watch Videos, but nothing beats Personal Interaction for accelerated learning.
This game has levels of understanding that could take a lifetime of Trial and Error to learn.
Available for Coaching, Training or Mentorships
Contact Tom through the LOTM website or by email
Rate: $150 per hour / Monthly Retainer, Lowers Rate
LOTM Research & Consulting Service
* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
Please refer to our web site for full disclosure at www.LivingOffTheMarket.com ZTA Capital Group, Inc.
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