Learn How To Buy Stocks Like A Boss (Customer vs Owner)
"Buying stock is how you turn from a customer to a boss."
First I'd like to thank Suany and her sister, my podcast listeners (and blog readers), for allowing me to be of service to them. This topic on stock was specially requested from them. That being said, I hope I do it justice by providing some clarity in the information you're asking.
I want to talk about...
What is stock and why is it so important for us to invest
How to find a stock to purchase and How to buy it
And a call to action. . . .You know I have to give you some homework.
Let’s start by the basic question of what is stock or to be more specific, what is a share in a stock? I typically explain it with this example. Let’s say you want to start a huge company in making masks for example. Now you don’t have a million bucks to create this big production of masks, but you know this business is worth a million dollars. So you figure out that the fastest way to make this money is to allow people to invest in your company, let’s say $1 and if enough people invest that $1 you will get the Million you need. Now, that dollar of the company that you sold to everyone is called a share in your company. Now what does that dollar get them? It gets them a piece of ownership in your company. If your business does amazing and your business becomes worth $50 million, now you are not selling your shares for $1 anymore, you’re selling them for $50 a share because your business is worth so much more now. And because you selling your shares for $50, anyone that invested that $1 in your business had the value of their $10 share go up to $50. And that’s the over simplified concept of stocks and shares in stocks.
Now I want to re-explain this concept, using some real numbers and changing the perspective making you the shareholder. So I know some of you might be sneakerheads or know someone that likes to have the latest sneakers (or tennis shoes ). And specifically one of the most popular brands is Jordans. Now think about this, OK, so I just googled how much Jordans cost and the Air Jordan 3 Retro SE is currently selling for $200 for 1 pair. Wow. Now if you buy those Jordans you’ll LOOK cool. I’m not gonna lie. People may look at you and say, that’s wassup. Oooooooor...I looked up how much one share in Nike stock costs (and if you don’t know, Nike owns the Jordan brand). At the time I'm writing this, one share in Nike is worth $88.37. Now, I need to explain this clearly to you. You have the option of either buying Jordans for $200 or own a piece of the Nike Company for $88. In fact, for the price of those Jordan you can buy 2 shares of Nike for a total of about $177. Yes, you can own two shares in the company for the amount you paid for a pair of Jordans.... That’s Crazy right. ?!?!?!? I need you to think about that for a bit... And by OWNING a piece of the company next time the new Jordans are sold, you will make money when everyone goes crazy to buy those next Jordans because your stock will go up. And if you decide to buy Jordans, which I hope you don’t and I hope you buy Nike Stock instead, but if you do decide to buy another pair of Jordans now you would be investing in your own company... And that’s how you turn from a customer to a boss... From a customer to an owner... from a customer to an investor. And that’s how you think like a boss.
Now let me tell you this story. Now this is a true story, so I taught myself about stocks a few years ago. I learned the basic concept of stocks, which is everything I’m telling you right now. Now stock can get a little more complicated, but that’s all I knew at the time… I knew that I could own a piece of a company and I said, OK, I’ll try it. After I got my income tax I took like $200 that I accepted that I could risk losing if I do it wrong and I bought 2 shares in two different companies. I specifically looked for stocks that were less than $100 each and a quick rule without getting complicated is to invest in companies you believe in. So at the time I stopped my cable and went to HULU and Netflix and I loved Netflix so I bought a share for $100. Just like that. With the other $100 I bought Snapple stock. So let me explain, my wife loves Dr. Pepper, I mean loves Dr. Pepper, and Snapple owns the Dr. Pepper brand, and it was less than $100. So I bought it. And I forgot about it...
To invest in stock you have to plan on leaving the money there for about 10 years…
Now After this Corona virus, everyone has been talking about how people are staying home watching Netflix so I decided to check what the value of my one share was. It went up to $425. Yup from $100 to $425. And the Dr. Pepper Snapple stock went from 100 to $147. So in total I went from owning $200 worth of stock to owing $572, now it may not sound like a lot, but who else is out there doubling your money like that. I didn’t do too bad. Now even more than that, I want to tell you what happened to my mind with these two stocks. One, I was fine with my wife buying Dr. Pepper because I was like “ Keep buying because that’s a company I own” which was different from me thinking, more soda? and two, since I bought Netflix, they have increased fee’s I think 2-3 times and when everyone else was complaining I was happy because money was going to my pocket every time the stock went up.
What I’m trying to tell you is to please keep watching the “Tiger King.” LOL. - No, just joking. I want to say, be an owner! There is nothing I did that you can’t do. And I did that with the information you‘ll have by the end of this blog post.
Which is a perfect segway to...
How do YOU buy a stock?
How do YOU choose what stock to buy?
And what are the risks?
Now once again, there is a lot more I can say about stock, and I am definitely over simplifying a lot of this, but I want to give you the basic information to get and invest like... RIIIIGHT NOW!!!!
OK So buying stock is very easy, especially within the last 2-5 years. Here’s the secret... There’s an app for that. There are so many apps that allows you to invest. Now the top 5 apps for stock purchasing that basically free to minimal cost as per nerdwallet.com are YOU INVEST by JP Morgan Chase, The Stash App, Acorn, SoFi, and Robinhood. Now they pretty much all work the same thing. You go to the app and register, You put your account information and verify the account, and you move money over to buy stock. Just like that. No hassles and they are pretty much free to buy, a few years ago it wasn’t the case. Now, do your homework and the apps because each one has small things they offer but they all help you invest.
Now when it comes to choosing stock, please don’t over think this. Buy something you believe in or something you buy often. If you buy Jordans, buy Nike. If you drink Starbuck all the time, buy Starbucks, If you eat McDonalds then... Well you get the point. My initial intent is not to make you rich overnight. I want to empower you to invest and own. Buying a home could take some time, but buying a stock in HELIX, an energy company, is just $1.59 a share. Now, this is investing so please expect to leave this money here for 10+ years.
This is also money you can leave for your kids. Another thing I did is that I bought a share in Disney for my son which I plan to leave for him in case I die. And this was before Avenger, Disney Plus, and Black Panther (Wakanda for ever!). In the future I can explain how to find more specific stock when it comes to making money, but for now, just buy a stock you believe in first.
To lay out the risk for you. It is possible to lose the money you invested. Only invest money that you would be fine losing. Toy’s R Us closed because Amazon was delivering the majority of kids toys and they couldn’t afford to stay open anymore because no one was shopping at Toy’s R Us anymore. So anyone that had money invested in Toys R us lost it. I want to make it clear. YOU cannot OWE money to stock. You cannot go so negative that you are in debt. The biggest risk is that the company can go bankrupt and file for bankruptcy and you lose the money you invested in that company. So with that in mind. Invest in companies that has stood the test of time. For example, the Targets, the McDonalds, the Apples, you can even invest in your favorite chocolate company for you ladies that have that sweet tooth. Be wary about the Ubers and the Spotify’s because they’re fairly new. Now I’m not saying not to invest in them, just be weary. For me, if I lost my money when I bought those two stock, it would’ve been the best $200 I lost in learning how stock works.
Oooh, one thing I haven’t mention is where to look for stock prices. My go to website is Yahoo finance page and just type the name of the company and it’ll give it to you. Or every one of those apps I mentioned has a place to search for stock prices. And now a days phones even comes with apps to follow stocks. Apple has one called, well stocks.
Now before I give you my call to action, I want you to know. Stock and investments are a whole big world. I haven’t spoken about Mutual Funds, fraction of stock, investment vs trading, or even how to read those boxes with all that stock information in the stock page. My plan is for me to continue to talking about stock throughout my podcast episodes where I can do deeper dives slowly. And if you have specific questions, please email me at pain2progression.com and ask whatever specific question you want. I’ll be more than happy to answer them.
So, I purposely told you exactly what you need to purchase your first stock if you haven’t bought one. If you haven’t guessed it, I want you to purchase your first stock right after you hear this episode. Go to one of the apps and if someone referred you, you may have gotten a $25 referral money. If you haven’t been referred, ask around and have someone referred you and I know Robinhood is giving around $25 to the referrer and the referred and invest Robinhood’s money. Or invest any small amount that you will not have to worry about. $20, $35, $100.
Now I am aware that Coronavirus is still out there and if you don’t have the money now, then I completely understand. But If you are still working and you find yourself saving a small chunk that you would’ve spent in Chili’s or BBQ’s, Just buy one stock with it. Please do it as soon as you can. My objective is for you to feel like bosses, for you to think like owners. Stop being customers, stop being puppets and making them rich. Own stock and make yourself money.
A scenario I envision for example is for your friends to come to you and say... "Man I got those new Jordans, did you? And you say no. And if they laugh at you, I want you to chuckle inside knowing that you bought Nike stock so technically they working for you now... Boom.. Mike drop.
OK pain to progression family, hopefully this is information you can use to feel empowered. I’ll see you Wednesday where I’ll take more of your questions. You can send me your questions at my Pain To Progression Facebook Page or my email address at Pain2Progression@gmail.com
Now, I really hope this information makes you feel empowered with options. Knowing that you don’t just HAVE to be the customer. This information is also for you to please share so others can feel that same way. Also, please subscribe to my podcast on apple podcast and rate and review it. That will help apple share my podcast to more and more people... Paying this information forward is how you will help the people that grew up like you and me move up and do better. Let’s take this information and flip the world upside down. See you next time my P2P Family.