Top Ten Reasons You Are A Stock Market Newbie

Summary: Just avoid everything in this 2-minute article and you’ll be okay

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10 signs you should not be allowed anywhere near your own money




10: You celebrate high prices, despite not being fully invested or at all close to net selling for retirement/consumption, and detest low prices (investment opportunities) under the same circumstances


9: You welcome every acquisition your holdings make, while ignoring historical facts about value destructive take-overs, re-alignment costs, incompatibility etc.

If acquisitions are as good as printing money why don’t you do one yourself?


8: You listen to company management and brokers. You base your positive feelings for a stock on broker comments and descriptive company comments, as if they had any reason whatsover to be anything but über bullish.

“We had a great quarter”

“The company says it had a good quarter and we agree. You should buy some more”


7: You always take positive qualitative statements at (at least) face value, but exclude negative reported and audited facts and numbers as one-offs or plain irrelevant.

“But, the company said 7 orders was a good number”


6: You fail to imagine the range of probable outcomes and focus only on the average (or blue-sky scenario)


5: You talk about single year key ratios (as if next year’s P/E ratio meant something, and as if you understood their implications and demands on the future 25-50 years)


4: You scream of joy when one investor buys shares from another in “your” company (in a bull market everybody buys, you should focus on why the incumbent/informed seller sells in a bull market)

Why does the most informed owner sell in a bull market?


3: You use the present tense (implying you know the next move) when describing price changes: “prices are moving up/down”, rather than past tense “prices have moved up/down”


2: You think “a positive story” is all a stock needs to claim a higher price, irrespective of its starting price.

“But, but, but, solar energy is the future”,

“But, but, but 3D printing… everything will be made through additive processes”,

“But, but, but biometrics is the future”

The but(t) of the joke is you



1. You think you are a long-term fundamental investor (when in fact you only follow trends and tips), and downturn dynamics don’t apply to you



You use leverage, despite being a certified stock market crash test dummy

You apply quantum mechanics principles; you think a stock will appreciate because you are looking at it, because you are reading its news

You’ve never experienced a market crash, despite a third one in just 15 years is in the making as we speak

Closing words: Yes, I think we have the stock market peak behind us. Yes, I am personally basically 100% short the Swedish stock market. Yes, I plan to accumulate long positions in select stocks all the way down as soon as they become reasonably priced (some already are, but probably will go even lower anyway). Yes, I own a fair bit of gold too. No, I don’t have any oil currently, but I’m looking to buy on dips.

Don’t try this (copying me) at home. Disclaimer.

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Thanks for bringing this to English.

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22 thoughts on “Top Ten Reasons You Are A Stock Market Newbie”

  1. What to do 10PM on a Friday at work?

    –Read Mikael

    (yes, it counts as work. . . and education!)

    Did you photoshop that image from your office with you + your two lizards on the big screen? If so, nice job.

    1. That picture is actually shot by one of my colleagues when I worked from home. That’s me and my two favorite plush dinos on my videoconference equipment from home.

      So, NOT a photoshop job.

      Thus, perhaps even nicer job?

  2. Very informative article.
    The pics are also pretty darn funny, definitely put a smile on my face. :)

    The graffiti one was surreal.
    You’re standing there naked, surrounded by graffiti and yelling, what the hell happened in that picture?

    That desk looks roughly as tidy as mine.
    The paper to the right of the screen, where you pose with your stuffed animals, looks like it was thrown in there by a tornado, lol.

    ”Just get there you s.o.b.!”

    And do I see there a hook for clothes?

    ”Hey wait, I am changing clothes in the office!”
    ”Wanna look?”

    lol. just keeps on giving and giving. ;)

  3. Haha I’m only in one of your categories =P I use leverage but that is because I have very little money rather than because I think it is a good thing to do in the long term, I’m pretty aware of the risks of leverage and had experienced them myself more than once.

    Actually I think I’m pretty strange, I have a better time and make more money on stock market crashes than in bull markets and I trade in very short time frames (from hours to days very rarely more longer term) and I have to fight my bearish views most of the time. These last weeks have been terrific for me I never understand why most people refuses to take short positions. Very funny article and pictures

  4. Hi Mikael, once again thank you for an interesting article.
    I wonder if you have any plans of making your investing completely public (like using Shareville)? Would be intersting to see your investments and portfolio on an instant basis with comments on what horizont the investment is and/or goal of the investment. I understand that you are somewhat doing this right now but maybe not to Shareville extent.

    Best regards

    1. Hi

      No, not really

      It would take focus from other priorities. I limit myself to mentioning the odd trade here and there rather than account for each and every one of them.

      Perhaps later, after the downturn, when I start buying in earnest I’ll publish my investments in a more structured fashion. For now, the only important thing is to weather the bear and prepare for the aftermath.

  5. Amazing post – your eloquence and articulation improve with each stride!!

    What would you say to people who want to observe the “mechanics” of investment without trading on open markets? For example, someone who has $5k in savings and wants to test out a product idea, join a syndicate etc?

    Perhaps getting your fingers burnt in the “real world” will give people perspective when it comes to the markets? I recall “The Richest Man In Babylon” alluding to such an idea. He lost his money at first, only to learn and recoup it afterwards.

    1. Mark Spitznagel is guided by that exact principle: The Dao Of Capital (a loss is but a lesson for future fortunes)

      The other day a friend of mine was perplexed when a stock he owned announced an acquisition and yet was down on the day. At the same time he himself would not make an acquisition in his own (restaurant) company, due to problems with staff, management, clients, regulation, incompatibility and unknown issues that are sure to surface after the purchase.

      He already knows that mergers aren’t a sure fire way to make money, but still hasn’t learned the lesson when it comes to stocks…

    1. Great video. It starts a little slowly but builds up giving something for everyone.

      I agree 100% with the video. All WORK will be automated, leaving only voluntary (creativity) exchanges, barter if you will, between people. “My time and creativity for Your time and creativity, where we set the exchange rate ourselves”

      The endgame will be self powered, self maintained robotic servants taking care of everything for everybody. For free. The transition period will be A GREAT DIVIDE between owners of robots and capital on the one hand, and jobless non capitalists on the other.

      It might take a revolution of sorts to go from the Transition to the Endgame.

  6. Hear! Hear!

    Glad to see some of my suspicions seconded by someone who actually knows what they’re doing :)

    I love the “quantum mechanics” bit — perfect description of begging/animating the market.


    (And h/t to Ludvig for sending me this way!)

    1. Hi Kyle.

      Thanks for reading and paying attention.

      I’ve been active on a Swedish stock market online gossip room lately. O.M.G. how I feel sorry for some of those guys. My list of Newbie Mistakes would only be the start there.

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