The Pragmatic Investing Pyramid
Method To The Madness
The Pragmatic Investing Pyramid
It’s time to pull back the curtain and reveal exactly how I make all my investing decisions.
The Pragmatic Investor sticks to what works. The problem is there are thousands of different strategies that CAN work for certain people.
But simplicity is key, and that is why I have narrowed down my investing ethos into three key ideas, which combined create what I like to call…
The Pragmatic Investing Pyramid.
Pretty simple and self-explanatory, but let’s explain it nonetheless.
And if you make it to the end of this post, you will also receive a special gift…
Macro Moves Markets
Macroeconomics is the foundation of everything. Only by truly understanding economic forces can we hope to determine the direction of markets on larger time frames.
There are limitations to how much we can predict, but I do think there’s enough data available, even to the retail investor, in order to predict recessions with some accuracy.
Thankfully, I have found an outstanding source of macro intel, which has helped me create my patented Macro Matrix.
Cash Is King
Bear markets are a response to economic recessions and dislocations, but when the S&P 500 drops by 20%, that doesn’t mean every stock in the index drops by that much. Some companies may weather the storm better, and some might even thrive while markets collapse.
Ultimately, even when multiples are contracting, it’s hard for a company that is steadily increasing revenues and, perhaps more importantly, cash flow, to lose value.
When investing, you are ultimately buying a cash-generating asset, and this will determine the fundamental/intrinsic value of a stock.
This is why fundamentals are key to my research process, and why I have built long-term stock portfolios that you can track right here.
Technical Analysis Is Not Astrology For Men
TA is a controversial subject, and believe me, I have been on both sides of the fence.
Now, I am a Pragmatic Investor, and while I acknowledge the limitations of TA, I also admit that is a very powerful tool.
Moving averages, key areas of volume and tracking price structure is something tonnes of investors/traders are doing, as well as plenty of algos run by hedge funds.
To suggest that the price will not react aggressively to certain levels, at least in the short term, is naive.
This is why I use TA, and have actually developed my own Algorithm, which can be extremely helpful in determining short-term trend changes.
You Will Need Help in Your Journey
Investing is a hard, but rewarding road. Making the right decisions today will set you up for the future.
Investing will help you retire comfortably, support your loved ones and even fulfil lifelong dreams.
Everything I do is geared towards achieving financial success, and I share it here with you so that you can too.
Still here? Perseverance is rewarded at The Pragmatic Investor, so here is an exclusive 20% discount, so that you can enjoy all these insights
Each of the layers of my Investing Pyramid helps me build up my investing system, and each of these is in turn supported by one of my strategic partners.
The Macro Matrix
The Macro Matrix is what I call my list of 10 indicators that I watch in terms of determining economic health and the likelihood of a recession.
It is my attempt at trying to predict and preempt the business cycle.
I track and update these indicators every week, but I would never be able to without the great data and insights provided by MacroMicro.
Gain real-time insights, intuitive charts, and powerful analysis tools to optimize your investments. Their data-driven platform focuses on market cycles and global trends to help you make smarter decisions. You can also access exclusive reports, explore key trends, and join a vibrant community of professionals.
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End Of The World and YOLO Portfolio
Valuing companies can seem overwhelming at first. There are plenty of different ways to do it and it can be hard to know where to start.
That’s okay. If you follow my work, you will receive in-depth reports on stocks on a weekly basis, where I cover all aspects of the investing process in detail.
My End Of The World Portfolio is specifically designed to protect your wealth, and it is filled with stocks that will thrive even during harsh times.
On the other hand, our YOLO Portfolio is filled with high-potential stocks that will supercharge your portfolio gains. (With higher risk too, of course)
But whether I’m looking for a dividend Aristocrat or the next NVIDIA, I always use data and insights from Seeking Alpha.
Access coverage on more stocks than major Wall Street firms, with diverse bull and bear perspectives. Use customizable stock screeners to discover hidden gems and top-rated picks. Rely on AI-powered Quant Ratings to consistently outperform the market.
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Swing Trades
Trades are short-term plays I like to take, generally based on technical analysis, but also often supported by some form of a catalyst or fundamental.
The key to these Swing Trades is having a clear understanding of our risk/reward ratio. This is why I always suggest a stop-loss and take-profit.
When it comes to looking at short-term trades, I rely heavily on my personalized Algorithm, which I developed on the Trendspider platform.
Save time and money by consolidating your research and trading tools into one platform. With professional-grade features, real-time data for 65,000+ assets, and powerful charting capabilities, TrendSpider is accessible to everyone.
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So, what next?
I have laid out above the basics of my investing strategy. I have personally been in the game for around a decade, and I enjoy being an active investor and trader, but also believe in the importance of buying and holding for the long term.
This is why I have a long-term portfolio and trades, and always stay up to date with the lastest macro developments.
That doesn’t mean you have to do the same. I encourage you to find out what works for you, while also encouraging you to stay tuned to my upcoming reports.
If you’re still very new to this and don’t know what to do, I’ll make it simple, by giving you a list.
Find out what type of investor you are; determine your objectives, risk tolerance and overall strategy. Even if it isn’t 100% hashed out, you need to have some idea.
Fund a brokerage account and start investing. Buy something and see how it makes you feel.
Stay up to date with news, find investing ideas and educate yourself online. There are countless great substacks here, such as this one, or any of the ones I recommend.
In order to take your trading and investing to the next level, consider using some of the tools I mentioned above. Keep costs in mind, and make sure you are getting a good return too. (This is also an investment decision)
If you have any questions, reach out to me! I’m always happy to talk to subscribers paid or free.
Still here? Perseverance is rewarded at The Pragmatic Investor, so here is an exclusive 20% discount, so that you can enjoy all these insights
*Some of the links on this website are affiliate links, meaning I may earn a commission if you click through and make a purchase, at no additional cost to you. This helps support the site and allows me to continue providing content. I only recommend products or services I genuinely believe in.
**The information provided on this website is for informational purposes only and does not constitute financial advice. Always do your own research and consult with a licensed financial advisor before making any investment or financial decisions.
I really enjoyed your breakdown. I appreciate your emphasis on macroeconomics and cash flow. They're crucial. I'd love to hear more about how you've applied your approach in real-world scenarios.
I've also found that company-specific factors can sometimes trump broader market movements. For instance, we've seen tech giants like NVIDIA defy overall market trends this year. It might be worth considering how to weigh these individual factors in your framework.
I'm intrigued by your tool recommendations. While platforms like MacroMicro and TrendSpider can be valuable, I think it's also valuable to check what insights you can glean directly from SEC filings and earnings calls. Sometimes the original source gives you that extra edge.