Blurring lines between Stock trading and farming — Seed (Part 1/3)

[Disclaimer: I have zero practical knowledge of farming, my thoughts are theoretical and personal. And 6+ years of trading US stocks.]

When I recalled the quote — “Money is not grown in trees”, I used to think Hell yeah, not in trees for sure. In last few years I realized that one has to plant those trees, shurbs or seeds to make money grow in them.

Your stock/trading account is a piece of farmland, your stocks are like the plants in your farm and your goal is to grow your stocks and harvest them.

Imagine, you have 1000 sq ft. of farm land, what would you grow? It would depend on some of the following factors (may be):

  • How much time you have to take care of your crops everyday? 1 hour/day, 1hour/week or zero touch.
  • Do you want to risk it for more profit, your risk appetite? Eg. Grow illegal crops.
  • Cost of seed, fertilizers you can afford.
  • Harvest every day or week or in a year.
  • Do you want to grow something like a tea plant, it keeps growing and have continuous returns.
  • And other factors…

All of these apply in stock trading, you need to find your seeds based on similar factors. Eg.

  • Buy Amazon, Microsoft or Apple- they are zero touch and you don’t have a lot of time for stocks.
  • Buy TVIX or SOXL, volatility indexes or 3X indexes because you want to risk it.
  • Buy a Pharma stock you believe in the research, if you have that risk appetite.
  • Buy dividend stocks if you want quarterly returns.

I would suggest you to be on a lookout for your seed.

“A stock or a company is a seed with an upward potential to grow bigger, larger and stronger.”

Let me walk you through some good examples of a seed:

  • For example, during this Covid-19 pandemic — Moderna (MRNA) or Invoia (INO) they both are front in line in vaccine development. If their valuation can go higher with this invention and good trial results they are good seed candidates.
  • Something which is 52 weeks high, not a seed.
  • A company which announced a breakthrough is a good seed, eg. Battery day by Tesla, Apple opening stores, Eldorado resorts opening casinos, Airlines starting to pick up again etc.
  • Stocks like Pepsico (PEP), Nike (NKE) are zero touch seed stocks, plant them and see your money grow.
  • Telehealth — OneM and TDOC is the future could be a seed.

Once you have identified your seed, you can grow it with care based on the funds you have. And patience… if you did your due diligence and research hold tight it’s gonna be a fun ride.

Bottom line — If you don’t like to farm, the ride or risks with it, don’t get into trading stocks it is not for you.

A little bit about myself, I live in Kirkland, WA located in pacific north west aka PNW part of the world. This is interesting because every weekday my day starts at 7AM. Because NY stock markets open up around that time. I like to read about companies, trending business news and market movers. I try to watch my portfolios during first and last hour of the market, that’s when the action is. When I get a free time, I read about companies I follow and keep searching my new seeds. :) Happy trading!

See you until next part 2/3— The Ride

Leave a comment if you want me to cover anything specific.