TLDR;
This video explains effective strategies for split purchasing in stock investments to maximize returns. It emphasizes the importance of timing, split ratio, additional purchase timing, and patience. The video advises buying when stock prices have significantly dropped, determining split ratios based on personal risk tolerance, making additional purchases when the account return is substantially negative, and maintaining patience during market fluctuations.
- Buy when stock prices have fallen significantly.
- Determine split ratios based on personal risk tolerance.
- Make additional purchases when the account return is substantially negative.
- Maintain patience during market fluctuations.
Four Factors for Beginners in Stocks [0:28]
The video outlines four critical factors for beginners in stock investments: purchase timing, split ratio, additional purchase timing, and patience. It suggests that beginners often make the mistake of buying when stock prices are already high due to hype, which usually leads to losses when the stock price corrects. Instead, it advises starting to buy when the stock price has fallen more than 50% from its high.
Determining the Split Ratio [1:21]
When first investing, allocate about 33% to 50% of your investment amount. The key criterion for determining the split ratio is to invest an amount that you would be comfortable with even if the stock price rises immediately after your purchase. If you are highly confident in a stock, you might invest up to 70% of your capital, but always keep around 30% in cash for flexibility.
Timing for Additional Purchases [1:56]
Avoid buying more stock immediately after a small price drop. Instead, consider making additional purchases when your account return is significantly negative, between -2% and -50%, depending on the stock's volatility. For stocks with low volatility, a -20% drop might be sufficient, while highly volatile stocks may require a -50% drop before buying more. The goal is to lower the average unit price effectively.
The Importance of Patience [3:05]
Beginners often lose patience when a stock falls by about -2% and then invest in other rising stocks. It is better to buy when the price has fallen by 50% to effectively lower the average purchase price, so you should ride the wave even more diligently then. You shouldn't invest in other rising stocks additionally.
Investment Account Example [3:44]
The speaker shares their investment account details, mentioning a portfolio of 200 million won in US stocks and 50 million won in Korean stocks. They emphasize buying when stock prices fall to lower the average purchase price, which has significantly increased returns even in stocks with prior losses.
Case Study: FNGU [4:09]
The speaker explains their investment strategy for FNGU, a triple-leveraged ETF, with a plan to invest 100 million won in three installments. The first purchase was 30 million won at $250 (50% down from its high), the second was 40 million won at $1,330, and the third around $880. When the price further declined below $40, they bought more using savings from a side job, which lowered the average unit price. Eventually, the stock price rose, resulting in a 300% return.
Case Study: Tesla [5:12]
For Tesla, the speaker planned to invest 10 million won in three installments. The first purchase was 3 million won at $180 (more than 50% down from its high), and the second was 3 million won at $150. They were planning a third purchase at $100, but as the stock price continued to rise, that opportunity didn't arise. The initial investment was set at 3 million won to avoid regret if the price continued to rise.
Varying Investment Amounts Based on Purpose [5:59]
The amount invested in Tesla was different because the speaker aimed to generate most profits through long-term investments in quality US stocks. The 10 million won investment in Tesla was intended for short- to mid-term gains. The investment amount should vary depending on the investment purpose.
Conclusion [6:24]
To maximize returns, it's crucial to buy in installments when the stock price drops. The criteria for dividing the investment amount should be based on chart support levels, personal account return rates, and a mindset of not being disappointed even if the price rises after the initial purchase.