Okay folks, so there's the saying that you could have the best ship in the world. The best ship. Better than everybody else's ships. You can go and brag to your friends that your ship is so much better and their ship sucks.

You could have the best ship in the world, but if the captain of that ship doesn't know where to go, well, the ship is just going to drift around aimlessly. And when a captain goes out to sea, there's many, many things that aren't in the captain's control. Whether there's an engine failure, whether there's huge tides, whether there's a massive massive hurricane coming, or even whether there's a mutiny on the ship, But you see, the captain still needs to have a clear plan and a clear direction to guide the ship through all these issues in order to what well get to the final destination in a similar way. We are all captains of our own account.

Yet when it comes to the stock market, what happens? A lot of people go and they have no clear direction. They don't know what they're doing, they have no philosophy to live by, and they don't know exactly what the destination even looks like. Folks in this video. I'm going to give you a violent step-by-step philosophy for growing your account in 2022..

this is a no Bs no nonsense philosophy that I myself aim as closely as possible to follow. This is a simple philosophy for high conviction trades that I believe will help you grow your account dramatically and also allow you to sleep without sweating. Okay, so step one of the philosophy: Find 30 plus stocks that you're interested in in diverse sectors. That doesn't mean buy 30 stocks, it means find 30 stocks across different sectors that interest you and provide ample diversification.

Ideally, you have some big caps, some medium caps, and some small caps, and ideally you have actually different industries. for example: financial services, tech, different sectors of growth tech, health care, entertainment, Telecom, manufacturing, Energy. Whatever sectors you're bullish on, make sure that you pick 30 stocks from a myriad of different sectors. You probably already have at least 5 to 10 stocks that you know very well, but ideally this list of 30 stocks is a list that you've compiled slowly over time.

took you at least a month or two to build any sort of knowledge in them, and these are stocks that you have a fairly decent grasp on it. Obviously, you're not going to be able to follow 30 stocks very very closely to a tee, but these are your 30 top stocks in different sectors that are diversified very well. Put them on a damn list. Check them twice, make sure that you see which ones are naughty or nice, and if the ticker Mara has been on it, just know she's been very naughty.

And once you've been doing this for long enough, eventually you'll start curtailing your top 30 stocks to match more of your own projections and risk tolerance and allocations that you see as the most fitting for your highest conviction stocks. You probably have five to ten stocks in your top 30 that are the highest conviction, and you'll allocate that appropriately. More on that later, but there's no one-size-fits-all answer to the step. If you're in Ziptrader You, you know that I have a huge focus on growth tech in different sectors.

Whether that's crypto, mining, electric vehicles, Ai, Next Gen, data analytic platforms, whether you're talking about e-commerce in developing markets, or you're talking about 3d printing, those are many of the favorite companies that I believe are going to have some of the most outsized growth in the upcoming years. If you look at the top ones in the Aa plus rated price target listings at Trader, you stocks that sit highest on my conviction list are stocks like well: Palantir, Chargepoint, Lucid Sofi, Upstart, Amd, But you'll also find some diversification with other companies like a Boeing, a Visa, or an American Express. But the thing is, the reason this is no one size fits all is because your own list of stocks to choose from is going to be based on your own projections for the future, Where the best growth is going to come from, but also how much risk you want in your portfolio. The more uncertainty and unclear the potential of a stock is to the rest of the market.

The more reward you get if you're right, but the more punishment you get if you're wrong. So you have to curtail your picks in this step to stocks that make sense based on your own personality and your own risk tolerance. You can't just pick stocks that other people are picking because you have a different risk tolerance and outlook than them and you probably also have a different price point. And that leads me to number two which is set a fair price Target So you can make endless videos and write endless books about how to set a price target and people have.

But for the purposes of this breakdown video, my best advice to you and the best thing that I could say within a minute time span is start by crafting a simple spreadsheet like you've seen in many my videos and like you're seeing here and forecaster companies: expected revenue growth rates shares outstanding, expected dilution and then churn that out to come up with a fair value based on a fair multiple that you're seeing in a lot of the other stocks in said industry that are more mature but also ones that are in the same stage as your company so that you can see what the fair value is at the current present moment based on where the other companies are trading. In terms of the calculation, the fair value using this formula is simply the revenue divided by the shares outstanding multiplied by the multiple. So you divide this by this and then you multiply it by whatever multiple. you think is appropriate.

It gets a lot more complicated when you get into the actual earnings if your company is profitable or not, and if you want to compare the actual multiples based on different multiple conditions, and again, there's no way that I can do justice for this in a single video. There's a million different philosophies to setting price targets. There's a ton of free content online and in Zip Ziptraderu. Of course, we have a ton of content on not just how to do your due diligence in a very, very violent way, but how to value companies using spreadsheet analysis.

How to take into consideration technical analysis to factor in exactly how a fair range of the stock is negotiated, and different ways to compare different price targets for different companies. But again, there's a lot of information online and a lot of different ways to get to that price target. But the key is that you have to have to have to be price target or you have to be very confident in your price target. You don't have to be price targeted.

I don't want you to be a price target. I want you to be a person who sets price targets. But you get my point. Step 3 is buy one 30 or more below price Target.

So this is a big issue for lots of folks. We see a company we like and we want to pay any price for it because ooh, shiny. If your price target on something is a hundred dollars and you see it trading at 105 dollars, where the hell is your margin If the stock's at 90 and you see a trade for 100, where is really the margin there either? You only got 10 of upside and dysphoria. Cycles can get that down a lot lower than 90 dollars.

You only have 10 dollars of upside and there may be a lot more upside in a completely different setup somewhere else that you could better deploy that capital. You want to get something that's a good deal and to me and to me, 30 off is a good deal. Now the other side of the coin is there's a lot of people that will like a stock when it's near its price target and then it'll drop 30 and actually fit the criteria here. And then they'll say, well, i don't want to buy it because what if it's a triple layer dip.

But here's the thing. if you're not confident in buying the dip when you see it as a fair deal, that means quite simply, you're not confident in your analysis and you need to go back to step two, which is, find a accurate price target. It's fine to just buy a little bit in nibble as it dips below 30 percent. But if you set a price target and you don't think that it's worth the price target, you shouldn't be having that price target.

Buy the dip when it dips appropriately. Add more. If it dips more, you should be buying systematically and unemotionally. Who cares.

if it's a triple layer dip. Great. Buy more. You don't want to buy more.

Well, you didn't like that stock very much to begin with. Number Four: Be aware that you need to update your price target based on earnings and new information if it changes the data and the numbers of your estimates. If it's justified, you have to be willing to change the price target. Now, that doesn't mean change the price target based on where the stock is trading.

If the stock went up three four hundred percent because ooh, all the hedge funds are buying it because they're exploiting those up trends. Well, that doesn't mean that the stock is worth a lot more. It means that you got lucky and it factored in your price target a lot faster than it should have. And similarly, if the stock gets beat down massively because ooh, hedge funds are shorting it or ooh, interest rates or whatever, then that doesn't mean that the company's worth less because all of a sudden the market wants to short and distort it.

Upgrades or downgrades on your price target have to be based on what the company is actually doing or at least the industry. If it doesn't affect the revenue projections or the earnings projections of your company, then it should not affect the price Target just because Joe Blow said you're going to be a bag holder and you're an idiot if you hold the stock because now it's down. Well, that is not a good enough reason to downgrade a price Target. If you're uncertain in your price Target because it's down, that's fine.

Go ahead and go back to the data. but if the data still justifies the higher price target, you have to be true to your analysis. A Price Target gives you a bearing on what something is worth regardless of fud or favor, so you can't use what's happening in the emotions of the market to judge the company's value or else the price target is useless. It's also a good rule of thumb that if you have to update a price target more than twice a quarter, you probably don't have a good enough grasp on the company.

I struggle with this. everybody does if you're uncertain of what the price Target is. I found it's just better to get rid of the Price Target and just drop the conviction play. If you're debating what the fair value is, especially during good times, well, you're definitely going to be debating it during bad times.

So instead, stop that disaster before it happens and drop the conviction play. if you don't understand what the price should be. Okay next number five. So this one is another one that a lot of people have.

A very, very difficult time doing. And that is trim when something is getting euphoric. And add, when it's getting fearful, how many times have you heard somebody say, oh, you got to let your winners run, Just let them run forever And then when they drop, they're like you held the fallen knife. Yeah, loser.

now holding something Because ooh, Moon isn't a justifiable reason to be in a position. You have to have a clear plan to be in that position. And in this case, with a high Conviction play, that means a price target. If something has passed your price target, it's time to start trimming.

If something has gotten very, very close to your price target like three days or three weeks after hitting it and you thought it would take six months, then it's also time to start trimming. There's been a few examples where we set price targets on plays and they hit the price target a lot faster than expected, or at least near the price target a lot faster than expected. And hey, it was time to take profits early because it didn't make sense in terms of a deployment standpoint to hold that position because if it went back down and it went back down 50 and took a year more to recover, then that wouldn't have been a good use of capital. Take the profits when it makes sense.

Trim as it makes sense. Rarely will I argue for trimming all of your profits off the table unless you hit your full price target. But if you have a huge flurry of euphoria into your stock all of a sudden and it happens a lot faster than expected, take some profits off the table trim before the price target. If you have to, and on the opposite side, when people are fearful and people are scared and people think your stock is trash.

If a stock you liked it 100 is now trading at 85 or 75, don't think Okay, I was wrong. it's a trash stock. Think oh good. time to add some moula.

Let everybody else be fearful and scared and little babies while you're going and sitting and adding on those dips. Charlie, I don't feel confident adding during fear. Okay, well again, if you don't feel confident adding during fear, then you have to go back to step number two and maybe even step number one because if you don't have any conviction in the stocks that you valued, you chose the wrong stocks or you didn't do the work to actually build that conviction. And lastly, take profits when hitting a price target.

If you bought a stock at eight dollars and set the price target to 20 and now it's at 20, what do you do? Take profits in a situation where it's hit that price target and you've justified an upgrade to the price Target, fine, trim some off the table and let it run to the new price Target. But if you've done the numbers based on what the company's doing, not the stock, but what the company's doing and you can't justify a increase and upgrade in the price Target, take your damn profits off the table. But surely I read that it's going to the moon. Okay, but the Moon is not a quantifiable location, at least not in the market.

There's not a stage where it says okay, you've reached the moon Now Now on the other side of the spectrum. If you have a stock that you valued at a certain price and then you had to go and downgrade the price Target and you're also red on the position. Well, if you're already at that new downgraded price Target, well go ahead and sell out of the position, even if that means at a loss. I don't like the whole mentality of oh, I have to wait until it breaks even.

Wait a second. Why do you have to wait until it breaks? Even if you don't believe it's worth that break even price anymore, Go ahead and redeploy it in a stock that actually has upside Where you believe it is worth that upside. You could probably even tax loss, harvest some on that old position that you lost money on. so no harm, no foul or less harm, less foul.

I have to break even on this stock is an emotional idea. It's not a logical one. I have felt that as well. Oh, I have a bad stock.

I'll just wait until it's not a bad stock anymore. But why that capital could be better redeployed somewhere else? You should never be down, Never ever ever be down on a stock that you don't believe is worth more than the current value? Okay, I want to finish you off with some good housekeeping and some clarifications. Obviously, you could write a whole book about each of these steps, but some of these housekeeping tips are essential to talk about. So number one, I would aim to in the long run, have at least 15 stocks invested in so over the course of five years.

For example, on average, you have at minimum 15 stocks that you're exposed to at any point. Obviously, some market conditions are going to be very, very cash heavy because you're having all of these stocks that are way over their price targets and you don't see any good deals. But if you're in a lot of different sectors, there should be some sectors that have very good deals in other sectors that don't at any given point. So most of the time, if you have a full list of 30 plus stocks, you should have at least 15 that you're holding on average if you're in a situation with a new account.

Obviously, that doesn't mean just go buy 15 stocks. Go panic, Buy them. What it means is find the stocks now and then as they become good deals, start buying them start slowly adding into them. You don't need to have five million dollars to put into the stock market, put fifty dollars in, put five hundred dollars in, and then slowly and consistently add to your highest conviction place, but have at least fifteen minimum over the long run.

Also okay, and actually encouraged to allocate the highest conviction stocks heavier. You are only one person, and you're not going to have all this time to learn every single nut and cranny about every single stock on this list. So you probably have maybe four or five stocks that you really know really well, and you really believe in more so than the rest of the market. So those top five stocks? your favorite stocks.

You could allocate a lot more to them, and you could have one or two that you allocate the most to if you have. If you have dirty stocks, then Tesla and Alphabet and Charge Point and Valentine uh, combination of small caps and large caps are your favorite. Hey, go ahead and allocate more to them, but I would still aim to not let the top five take up more than 30 of your portfolio. Some people would say that's even a lot, but I see what a lot of retail traders do is they'll go and they'll buy one or two high conviction stocks, and they'll take up 90 of their portfolio and one of them fails.

Well, what happens while they get destroyed and they're like, yep, stock market's a scam. It's rigged. Yes, it's rigged, but we can also push back by rigging it With a simple philosophy: the ocean is rigged not to let you cross it, but ships let you cross it next. To reiterate an earlier point, it's okay to take profits as soon as you've hit your goal.

If you buy a stock and it hits the price target a week or a month or later. Fantastic. Take profits. If the market condition isn't conducive to that fine, have lower expectations, The market doesn't care about you.

You are irrelevant to the market if you think that Evs are going to do great in the next three years. In the first two years, they do nothing in terms of the stock price. Well, hey, that's the reality of the stock market sometimes. and there's a lot of different macro environmental conditions that can change how fast you get a return if you are right, So at the same time, instead of questioning, well, should I sell out of the stock because it's taking too long, instead go back to your Price Target and see is my price Target accurate And if it is, keep the stock.

If you have a better place to redeploy the capital, you can make that decision on a case-by-case basis. But you have to have a Price Target and you have to have a clear reason for why you're doing that based on the steps of this philosophy. The other thing is that if you do want to diversify the portfolio a lot more automatically without having to track a lot of different stocks up to 30.. you could also use something like a Vo or a Vti which followed the stock market, the S P 500, and the Total Stock Market, respectively.

and that could ensure that you're at least earning benchmark returns and you're getting that stability with the benchmark. Of course, that can drag you down if you're actually very, very good at setting price targets and you get the right market condition, but it can also stabilize you and drag you up if you underperform the market, which statistically I mean a lot of people do, So I'm not opposed to having Vo and Vti. part of risk management is smart diversification. If that means adding a benchmark, I'm not opposed to that, especially if you just have one portfolio.

You know, of course, using an index fund removes the price discovery part of this whole philosophy. So it's really just something that you buy and hold. But over the long run you can see that the total stock market does go up, so at the end of the day, I don't think that you can really go wrong if you're planning on having Vo and Vti in a very, very long term time horizon perspective in addition to the other stocks that you're trading on a high conviction basis. Building on that, make sure that you're aware of the risk of your portfolio.

It's up to you how much risk you take on if you buy all the best innovative tech companies like Kathy Wood and like a lot of the stocks that we talk about on the channel, you're going to have periods where they do terrible and then periods where they do great and periods where some of them actually end up not working out because a lot of them are so early stage that they're going to have the high risk of well not being able to meet the expectations. Now obviously, we hope that the highest conviction stocks that we do the due diligence on actually pan out very well. but you have to make sure that your risk assessment is well diversified so that you can take concentrated risks and have some of them fail and have something to do really well and come out doing really well. Overall, there's a lot of different ways to do that, but if you look at someone like a Kathy Wood, she underperformed the S P 500 this year.

Maybe she's going to do very, very well over the next 10 to 15 years probably. But if you can't have a year where you can emotionally underperform a major indices in the rest of the market, well having something like more exposure to different sectors or a benchmark like the S P is fine. The other thing is, don't have a lottery ticket mentality. There's so many people that will go and say, oh, I built my account on one or two stocks.

Great for them, but you don't see all the people that bought one stock, put everything in it and then lost all their money and then decided the stock market wasn't for them. Don't be a all eggs in one basket type of person. Lastly, and probably most importantly, tune out the noise. It's important to listen to other people's opinions to get different perspectives, but only to a certain point.

You need to pay attention to what the company is doing, what the sector is doing, what your analysis said is supposed to be happening, and then comparing it to what is actually happening in the company. Can't get your conviction from people on Reddit? You can't get it from people on Youtube. You have to build this conviction yourself. You can get ideas and perspectives from other people, but if you don't get the conviction from yourself, you're not going to be able to follow the other steps on this philosophy and you're going to make all the wrong decisions.

You're going to panic. Buy when it's too high, You're going to panic sell when it's too low. Anyways, folks that caps off this video. This is our last video of the year.

Hopefully it provided some value for you. I promise you, if you follow the steps to a Tms and you aim to follow it, you're not going to follow it perfectly. I don't follow it perfectly. it's a struggle, but if you try to follow this to a T, I promise you you're going to be much much more likely to do well over the long run.

Also, of course, if you are wondering what our price targets are, you want access to our daily morning briefings and Ziptraderu, or our step-by-step lessons where we actually go through very very in-depth about how to break down different types of trades and strategies and different types of setups? Well, I'll go ahead and put a link to Ziptraderu if you buy it within the next week. We still have that goodbye 2021 discount code that's going to be active Anyways, folks, it means a lot to have spent this year with you and I'm looking forward to an exciting 2022. Have a good one and I'll see you in the next video.