Investor Quote of the Week

Quote Meaning

This quote is saying that if you're an individual investing your own money, you should focus on making long-term, thoughtful decisions rather than trying to guess or gamble on short-term price changes.

In other words, invest with a plan and a clear goal, not just hoping to get rich quickly based on market trends or hunches.

It's easy to become a speculator; just look at what happened to GameStop stock below:

Lots of wild price movements in the stock even if the business itself is in a lot of trouble financially.

Stay on course, think long-term, and invest based on solid fundamentals instead of what talking heads on TV gossip about.

Nugget of Wisdom

Time is your best friend.

In investing, "time" refers to how long you hold onto your investments before selling them.

The idea is that the longer you keep your money invested, the better your chances of making a profit, because investments tend to grow in value over time, despite short-term ups and downs.

Why do stock investments tend to go up in value over time?

First and foremost, the company's location is important.

If you’re investing in the US, then that has proven to be the case.

If you’re investing in the UK or Hong Kong, that hasn’t always been the case.

In most cases in the US, though, due to strong capital markets, a strong currency, and a history of innovation, all those things help price discovery and allow for a strong stock market relative to other places around the globe.

Stocks also tend to rise to match the rate of inflation in an economy, keeping your purchasing power at least the same.

In general, however, I expect a real rate of return (after inflation) of around 3–5% per year for US stocks in the long run, as long as the US maintains its dominance in the world economy today.

The lesson is:

If I were you, use time to your advantage.

Every month, invest in a basket of individual stocks you like or buy the whole market index in increments every so often as long as you can afford to.

Mistakes to Avoid

Stay away from “complex” stocks.

If you don’t understand an industry, stay away from it.

You don't need to jump on the next "big thing," like AI or biotech, if you don't understand it.

Pick stocks of companies you understand. If you happen to use their products, then you, as a consumer, will understand their business model a lot more.

There are many ways to make money in the markets, but chasing things you don’t understand isn’t a good long-term strategy.

Stay safe, and stick to what you know.

Stock of the Week

Union Pacific Corp. (Ticker: UNP)

Company Description

Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States.

The company offers transportation services for grain and grain products, fertilizers, food and refrigerated products, and coal and renewables to grain processors, animal feeders, ethanol producers, renewable biofuel producers, and other agricultural users; and construction products, industrial chemicals, plastics, forest products, specialized products, metals and ores, petroleum, liquid petroleum gases, soda ash, and sand, as well as finished automobiles, automotive parts, and merchandise in intermodal containers.

Union Pacific Corporation was founded in 1862 and is headquartered in Omaha, Nebraska.

Profitability Metrics

5-year average EBIT margin: 40%

5-year average net-income margin: 28%

5-year average return on capital (TTM): 12%

Growth Metrics

Revenue growth 5-year average (year-on-year): 3%

EBIT growth 5-year average (year-on-year): 2%

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Talk soon,

Sam