Habits Of Successful Investors

We all know watching YouTube videos does not make you a great investor. Nor does any of the below activities that are very popular with investors like me.

  1. Watching Stock Price/Chart
  2. Reading Twitter Threads
  3. Reading Financials News
  4. Listening to Podcast
  5. Subscribing Premium Investing Contents

Most of the above activities are just noise.

So, which habits make investors successful? The answer is simple.

  1. Read, read and read.

Reading is the only way to win in investing. I tried that; however, here is where I failed. I read a lot of investing books, Financial News, Blogs post. You name it. Hoping that one day I will be a better investor. Don’t get me wrong. I did learn a lot about investing in general like Market behavior, Financials statements, Psychology of Investors and a lot more. These are all good stuff, but non of that directly helped me pick a winning stock.

The point of investing is to earn more money in the future. And we all are fighting against each other to beat the market, non of the above readings does any good on that front.

Honestly speaking, I will never pick a winning stock with my current habits. I can have wishful thinking or be lucky, but that was it.

What the heck should we read?

Per one of the recent Bloomberg article, Warren Buffett bought Occidental Petroleum shares after reading its quarterly report.

Ladies and Gentlemen, that is the key here!

As Charlie Munger once said “Opportunity comes to a prepared mind”, Warren Buffett was all equipped with the industry, and product knowledge & he was able to take action once the quarterly report expresses good operating and financial result or expected to produce better operating and financial result in the future.

If you take the quarterly report out of that equation, Warren would never make that investment.

It is not accurate to compare the immediate result with the recent action, but for the sake of making my point, Occidental Petroleum is up 122%, while the S&P500 is down 13% Year-To-Date.

Boring but Useful!

What was there in the Occidental Petroleum Corporation’s quarterly report?

If you are curious like me to learn the content of that quarterly report that made Warren take action, you are not normal! I am just kidding.

Per Q4, 2021 Occidential Petroleum Corp Earnings Call, Vicki Hollub – President, CEO & Director, said “Our focus on consistently delivering outstanding results, combined, with our steadfast dedication and patience in improving our balance sheet, has positioned us to begin increasing the amount of capital returned to shareholders. Our new shareholder return framework, which we will detail today, includes that is sustainable in a low-price environment. We are pleased to implement this new framework, beginning with an increase in the quarterly common dividend to $0.13 per share.

Vicki Hollub

In summary, 2021 was a year of continuous operational improvement, which drove record free cash flow generation, rapid debt reduction, and a return to profitability. All this is happening in the low-price environment, while the stock price is hovering at the multiyear bottom.

Operationally, all 3 business segments excelled in driving their robust financial performance, OxyChem delivered record earnings for the second consecutive quarter. Multiple drilling and completion records were set across their domestic and international businesses as their production for the year averaged 1.167 million BOE per day. That’s 27,000 BOE per day higher than their initial guidance. Their reserves for year-end 2021 increased to 3.5 billion BOE, representing a reserve replacement ration of 241%*.

*If you are not oil expert like me – (BOE is a measure of hydrocarbon volume (typically used for natural gas) in terms of the barrels of crude oil that would have the same energy content. BOE is typically used as a way of comparing natural gas volumes to crude oil when measuring reserves or production. The reserve-replacement ratio (RRR) is the amount of oil added to a company’s reserves divided by the amount extracted for production.)

Now, the oil price is sky high, their profitability and cash flow has increased as well. This happened to be a great catalyst for the recent stock performance.

Looking at it in a rear-view mirror, it seems very obvious, but, I ain’t Warren Buffett!

My point is that unless you read the quarterly and annual reports, there is no way you will discover this valuable information. They are certainly not available in twitter threads or in YouTube videos or in blog posts.

You certainly have to read, but you will have to read the right stuff.

The more I learn about investing, the less confident I feel about beating the market.

My investing goals are slowly sifting towards avoiding the obvious mistakes rather than making a great investment.

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