10 Things I Wish I Knew Before I Started Stock Market Investing (How to Invest in 2023)

So I've seen these videos pop up with video games, right? "10 Things I Wish I Knew Before Playing Starfield" or "World of Warcraft" or whatever, and it sparked a bit of an idea. Now that I've been investing in the stock market for, you know, a little while, why don't I go through the 10 Things I Wish I Knew Before I Started Investing? Because, well, I made a lot of mistakes when I first started out. I'm not gonna lie, teenage Brandon did some very dumb things.

So in this video, let's go through the list of things I wish I knew before I started. Also, before we get started with this video, I do have a little bit of exciting news, but stick around to the end of the video and we'll go through that because it's a little bit off topic. But for the moment, let's get into the top 10 things I wish I knew before I started investing.

Number one, will come as no surprise to you guys that have followed the channel for any period of time, is that you can actually look at what the biggest, best investors in the world buy and sell every single quarter. Now, I never blindly copy what they do, but this is certainly handy for creating a watch list of companies to then go into a little bit more digging on.

So, for those that don't know, each quarter, all the big money managers with over a hundred million dollars in assets under management file form 13F with the SEC, and that tells you what's in their equity portfolios. Then, from looking at the previous 13 after the current 13F, you can thus determine what they're buying or selling.

However, in reality, nobody actually does this because there are some really good websites out there that just do this and they're completely free to access. So the one I always go to and I use in my videos is called Data Roma. There's also another really good one which is called Whale Wisdom, which also gives you their options positions. Or Ticket.com is a third one that I use, which can give you international holdings as well.

So that is definitely the first thing that I wish I knew. Then, second on the list is another big one. Trust me, day trading doesn't work. I was one of those guys once, believe it or not, when I was a teenager. I wanted to get rich quick, and I started looking into the stock market. This ETF business seemed way too boring, and I started following some YouTube channels that looked at fancy charts and were doing this thing called day trading.

I'm going to tell you right now, day trading doesn't work. If day trading works so well, why aren't any of the world's best investors day traders? How come they're all long-term investors? The sad reality is most day trading channels are just elaborate funnels towards some sort of scammy course, private Discord, or membership group where you can get exclusive trade signals. But it's all crap; it doesn't work. Be a long-term investor, get away from the 15-monitor setup, and go and give your mum a phone call instead.

All right, let's move on to point number three. This one definitely stung me early on: waiting for a crash doesn't work. They say time in the market beats timing the market, and it is true. Absolutely nobody can accurately predict stock market crashes. Nobody can predict interest rates, nobody can predict inflation, nobody can predict global pandemics, nobody can predict anything.

So don't get caught in the mindset that you know a crash is right around the corner. Unfortunately, we just don't, so we stay away from getting sucked into the macro. Instead, we just find stocks that are in our circle of competence that have fat moats, competent management teams. We run our valuation models, and then we wait for the shares to dip below our margin of safety price. And that's when we buy. It's a robust system. We don't just wait until the market falls off a cliff and then assume businesses across the board are just cheap. It simply doesn't work like that; you can't predict it. We need that robust framework.

Okay. Point number four: not all brokers are created equal. I think we've probably all learned this lesson over the past few years with various scandals and bankruptcies that have occurred. But I'm trying to get my message across; I'm trying to change everybody's perspectives here. It is actually okay to pay for brokerage.

Think about it like this: Brokers are businesses, right? They need to make money, and if you aren't giving them any money, then you are not the customer; you are the product. So, as we know, now a lot of zero-cost brokerage sites will sell order flow onto a market maker. Literally, a market maker firm will pay the zero-cost broker to process their customers' stock market orders. Why? That seems a bit counter-intuitive because the market maker can then take the opposite side of the deal and make you pay a higher cost, and they profit from the difference. This makes it more expensive for you, and it's beyond the control of the broker.

So ultimately, your broker isn't even processing your trades. So that's the catch with a lot of zero-cost brokers out there. Also, usually with this model, you do forego other features. Too many zero-cost brokers have no physical branches; their customer service is usually bare-bones or outsourced. They try and push you towards higher trading frequency or riskier products like margin loans and options trading. The list goes on.

At the end of the day, every broker is different, so do your research, read through their FAQs, but try to get out of the mindset that paying a brokerage fee is always a bad thing; it's really not.

Okay, moving on, here's another thing I wish I knew about investing before I started: the hardest thing about investing is the mindset. This is something that I never really paid attention to. All the books had chapters on temperament and mindset and patience, but I tend to just gloss over it. Definitely not the right strategy in investing.

Having the patience and the ability to step away from your emotions and having the mental fortitude to keep showing up decade after decade is extremely important, and it is the hardest part. Truth be told, it's not actually that hard to find great companies that are growing well, that have big moats, great management. The hard bit is having the patience to only buy them when they're at a discounted price and then keeping track of that investment over time, ensuring the business stays great and continues compounding.

So for new investors, the thing I would recommend is to commit yourself to at least a 10-year time frame. As Buffett would say, don't hold something for 10 minutes unless you're willing to hold it for 10 years. That's the mindset that the best investors have.

All right, then the sixth thing I wish I knew before I started: if your stomach is turning, don't do it. If you're unsure, don't do it. If you don't understand the business, don't do it. Buffett's rule number one is don't lose money. Successful investing is as much a game of avoiding losers as it is hitting winners.

In my experience, most of my losses came when I rushed into a position that I didn't fully understand because I felt the fear of missing out, and then I got punished for it. Right? But remember Warren Buffett's "too hard" pile. Even Buffett, literally the best investor that has ever lived, still puts most businesses he looks at in his "too hard" pile. We need to do the same. Stay close to what we know and what we understand. Stay within our circle of competence, but at the end of the day, if something feels off, just don't continue.

The worst thing is buying something that you don't fully understand and then getting crushed because there was some hidden issue in the financials that you just didn't see at the time.

Then from there, the seventh thing I wish I could have told myself: don't cut the flowers. The thing I've learned really over the past few years is that in investing, usually it's the two or three big winners in your life that will account for most of your overall returns. Buffett has made hundreds of investments in his career but puts his success down to about 12 key winners. He says, "In 58 years of Berkshire management, most of my capital allocation decisions have been no better than so-so. Our satisfactory results have been the product of about a dozen truly good decisions; that would be one every five years."

The key to our performance, I've now learned, is to hold on to the winners. If you've got a great compounder and it's in good financial health, I'm much more inclined to now hold than to sell, even if the share price has already run up a lot. Monish talks about this a lot too. Think Naspers with their Tencent holding, think Nick Sleep holding Amazon, think Buffett with Coca-Cola. Heck, even Benjamin Graham, the father of cigar butt investing, buying a cheap stock, then getting one free puff and then selling it on. He made most of his money on one single bet that he held on to, that being Geico.

Let the long-term compounders compound and don't cut the flowers to water the weeds.

Okay, with that said, the eighth thing I wish I knew before I started investing is that the best three books to get you started down the right path are "Rule One" by Phil Town, "One Up on Wall Street" by Peter Lynch, and "The Dando Investor" by Monish Pabrai. For me, if I read those three books first, I would have avoided a whole bunch of mistakes. "Rule One" tells you the steps you need to take and the numbers you need to check to implement the Buffett approach.

Then "One Up on Wall Street" talks more about the right mindset to be in and how to find great businesses and avoid silly mistakes. And then "The Dando Investor" revolves around the philosophy of "heads I win, tails I don't lose much," and explains how to value businesses and find a margin of safety in your investing. Three great books that I definitely encourage you to read, and I found them all really enjoyable too. They're not dry like some investing books can be. They're written in simple language and they definitely start you out on the right path.

Okay, with that said, we move on to the ninth thing I wish I knew before I started investing, and that is that five years is an incredibly short amount of time in the stock market. I think in the first year of investing, I would have bought and sold maybe 12 different stocks as one per month. But if you'd asked me whether I was a long-term investor, I honestly, I probably would have said that I was. It's so bizarre, I know. I wanted to be in it for the long term, but somehow, I was still making all of these trades.

So what I would suggest is really going back to what we were talking about before. Before you buy something, ask yourself, is this something I'd be comfortable holding for 10 years? And when you're analyzing the business, don't just think about the next few quarters. Always think about the next five to ten years of the company.

But another point I wanted to raise and why I would tell myself that five years is a short amount of time in the stock market is that you need to understand that in the first five years, you probably won't see amazing results. You really are just finding your feet and learning. For example, look at this chart: this is ten thousand dollars compounding at seven percent annually left for 40 years. It looks pretty good, right? Have a look at the exponential curve; it looks nice. Ten grand turns into 150.

But now let's zoom in and just look at the first 10 years, right? Nowhere near as impressive in the first five years particularly; you really don't make much money. So my advice to myself would be to treat the first five years as just a chance to get your foundation set and to learn. Set yourself up for the multi-decade long journey that is compounding.

And with that said, the 10th thing I wish I knew before I started investing is that it's actually really, really hard to beat the market. I've now had the privilege of speaking to many, many smart people and successful investors, and the more I talk to them, the more I realize just how hard it is to beat the S&P 500. A lot of these great investors only just come out ahead, and these are people with some, you know, seriously big brains on it.

So it really has changed my thinking over the years, and now I definitely have a sizable chunk of money parked just purely in passive investments to keep working away in the background just in case my active stock picking doesn't work out so well. The stats back up my hypothesis as well here; the SPIVA scorecard shows that 93% of funds have not beaten the S&P 500 over a 15-year period. It's really hard to do.

So if you're on the fence as to whether you actually want to put in the work and become an active investor, it might be worth taking a look at some of the passive investing strategies like dollar-cost averaging as well. Warren Buffett doesn't even recommend active investing for everyday people, and he's literally the world's best active investor, so that's saying something, right?

But with that said, guys, they are the 10 Things I Wish I Knew Before I Started Investing. Please let me know down in the comments some of your own tips and tricks. Now, before I sign off this video, I just wanted to let you know, so over, you know, I think it was a little while ago, the Australian Securities and Investments Commission, they did a crackdown on who can provide financial advice online, and I thought it was long overdue.

The idea was to stop, you know, scammers and that kind of thing doing, you know, paid trading courses and private discords and trading signals and that kind of scary stuff. So I think they did a good thing. But what I decided to do is that I would upskill, get my official qualifications, and I've actually teamed up with Guideway Financial Services, and I am now licensed to provide general financial advice.

Now, what that also means is that we're going to be completely overhauling our course products, so "Introduction to Stock Analysis" and "Stock Market Investing for Beginners" are going to be completely redone. And this is where you guys come in. So if you would like early access to some of those courses and you would like to help us with some feedback—early feedback for the courses—there's a link down in the pinned comment and also in the description.

So if you have the time, if you'd like to have a one-on-one chat with me and get access—early access completely free early access to those courses—then definitely let us know. Join that waitlist, join that early access list, and I might be in touch with a few of you because we just need to do a little bit of testing and make sure the course content is really up to scratch and is the best possible product for you guys before we actually launch it.

So if you're interested in that, please let us know. I'll get in touch with you, we'll have a face-to-face chat, and that'll be awesome. But apart from that, guys, if you enjoyed this video, please leave a like on it, subscribe to the channel if you'd like to see more. And with that said, I'll see you all in the next video.