7 Principles of Successful Investing

The journey begins ...

You don't want to miss today's short video (under 3 minutes)! It's an important primer on the holy grail portfolio – something Dr. Smith will be referring to a lot throughout the course. 

When you complete the course, you’ll be 10 years ahead of every new investor. So, get ready to start your journey to successful investing.

"Who is this guy?"

When invited to participate in Dr. Richard Smith’s 7 Principles of Successful Investing, one participant asked, “Is he going to tell me to dump my crypto?”

First, no. He’s not.

But it brings up a good point. Who is this guy, and why should you listen to him?

In his own words …

I started investing when I was completing my PhD dissertation on new mathematics for decision-making under uncertainty. I figured I could apply my smarts to the stock market and clean up. Instead of cleaning up, I was nearly cleaned out. I did, however, discover something of immense value during that process: There’s a big difference between the theory of risk and the reality of risk.

I’ve spent the last two decades building on what I learned, and I’ve helped tens of thousands of investors make better investment decisions. Today, I’m building next-generation financial technology and providing great education for independent-minded individuals who are committed to succeeding on their own.

Investor, know thyself … and know thy markets.

Know thyself?! Isn’t this supposed to be a course on the secret to investing success?

Like most successful investors, Dr. Smith tried every imaginable system of investing in search of the one that would work perfectly. What became clear is that his behavior within each system is what determined how successful he was.

In this lesson, you are going to learn why behavior matters. Then you get to take a personal risk tolerance assessment to learn about your own behavior.

With an understanding of your behavior, you can answer two crucial questions:

• What kind of investor are you – conservative, moderate, or aggressive?

• What’s your time horizon – short-term, intermediate-term, or long-term?

“What should I buy?” is one of the most common questions Dr. Smith gets. There’s no “right answer.” There’s only what’s right for you. Knowing what kind of investor you are and your time horizon allows you to take the first step in building your own portfolio.

Also, he’ll talk about The RISK Rituals – a framework you can use to assess any situation that involves risk.

Disclaimer

Dr. Richard Smith’s investing courses and workshops are intended exclusively to provide information and education to help individuals better understand investing and the markets. However, this information is not to be construed as professional advice as to the buying and selling of securities or other investment instruments. In no event does Dr. Richard Smith express any opinion with respect to, or make recommendations regarding, the purchase or sale of any particular security or other investment instrument. There is a very high degree of risk involved in trading securities, and buying or selling decisions are solely within the personal discretion of each individual. Please refer to Dr. Richard Smith’s Terms and Conditions: https://drrichardsmith.com/terms-and-privacy-policy/.

Believe in What You Buy … but make sure someone smarter than you believes in it, too.

It’s time to invest. Where do you start? There are thousands of stocks to choose from, not to mention cryptocurrencies.

Save incalculable amounts of time and money and "outsource" your work to the world's top investors. Find out what they’re investing in and narrow your potential choices.

Plus, Dr. Smith will talk about how cryptocurrencies can figure into your personal portfolio.

After interviewing the greatest investors of our time, author Jack Schwager discovered one thing they ALL had in common: a commitment to risk management.

What is risk management? According to Schwager, 90% of risk management is knowing when you’re going to sell before you buy.

If ALL great investors are committed to risk management, and 90% of risk management is knowing when to sell before you buy, then you’ll need an exit strategy before you buy anything.

In this lecture, Dr. Smith talks about when it pays to be risk seeking and when it pays to be risk averse.

What's the difference between the winners and the losers? According to a legend in the world of trading, Jake Bernstein, “The winners don’t need the money.”

How do you invest like you don’t need the money? We’ll unpack that concept – it's not what you may think. It has a lot to do with your sleep number – the point at which your losses will keep you up at night.

You’ll also learn how uncorrelated investments can help you sleep like the winners.

And finally, you’ll get a sample portfolio put together using the principles and methodologies covered in the first lectures.

If you want to use the tool Dr. Smith uses in the lesson, you can sign up for the RiskSmith app free.

In this lecture, you're being promoted to CEO of your portfolio.

You'll learn that the key to being a good CEO means:

• Knowing your dScore – the amount of money you should expect your portfolio to be down at least once per month

• Maximizing your reward-to-risk ratio

• Focusing on things that matter – the value of your portfolio, not the price per share

If you want to use the tool Dr. Smith uses in the lesson, you can sign up for the RiskSmith app free.

Part 2 of being a good CEO is about picking the right team – in this case, the stocks in your portfolio. For the same reason you don't want 12 quarterbacks or 12 pitchers, you don't want only Bitcoin or only tech stocks in your portfolio.

How do you pick the best team (good, uncorrelated investments)? That’s what today’s lesson is all about.

You’ll use histograms and heatmaps to analyze volatility and correlation. These graphs may seem overwhelming at first, but Dr. Smith reminds us that we are learning something new. The more you use them, the more comfortable you’ll get.

If you want to use the tool Dr. Smith uses in the lesson, you can sign up for the RiskSmith app free.

In this lecture, we look at the third leg of your three-legged stool of success. The first leg is “good assets,” the second leg is “uncorrelated,” and the third leg is “you” – or your behavior.

Practicing is the key to you getting comfortable with these new concepts. Using what we've learned so far, Dr. Smith builds another portfolio of 12 good, uncorrelated assets and analyzes them using histograms and heatmaps.

He also looks at developing good habits around the information you consume. The 24-hour news cycle can create feelings of fear and greed that lead to bad decisions. Consciously planning how you consume information is crucial for success.

If you want to use the tool Dr. Smith uses in the lesson, you can sign up for the RiskSmith app free.

You’ve made it to the final principle, You Are the Intelligence. That's a big deal!

In this lecture, Dr. Smith reviews the first six principles, demonstrating how they all work together and culminate in the final principle – turning the reins over to you.

Using technology as a tool that can help you invest like the pros, it's time to take what you’ve learned here and create a holy grail portfolio that inspires you.

If you want to use the tool Dr. Smith uses in the lesson, you can sign up for the RiskSmith app free.