How to Grow an Investing Account (without getting

How to Grow an Investing Account (without getting lucky)

I have 4 core principles:

1. Themes

2. Conviction

3. Concentration

4. DCA

-> 1. Themes

Follow the hot sectors at any given point in time.

- Which sectors are spending the most money?

- Which areas are governments supporting most?

- Which direction is the world going in?

Stock prices are forward looking and reflect future earnings.

So, which companies will grow earnings fastest?

Over the last ~decade, it was software adjacent tech like $Alphabet(GOOGL.US), $Microsoft(MSFT.US), $Meta Platforms(META.US), $Palantir Tech(PLTR.US).

Before that it was sectors like energy and banking.

Currently it's the AI supercycle, tracing Mag7 capex spend down the supply chain into sectors like photonics and memory.

In 2035, it could well be a space related supercycle e.g. a sector made up of companies building data centers on the moon.

-> 2. Conviction

Step 1 is easy.

This step is the hardest, but most important.

You need to do your own research to build conviction in the theme, sector and company.

Without conviction, this whole investing process I'm outlining becomes pointless.

The absolute simplest way to "research" is to read what analysts/researchers write. This is the bare minimum you should be doing.

The ramp up in your knowledge will be exponential.

Don't copy trade - AI is there if something in a tweet or article doesn't make sense to you.

Ultimately, you want to understand a company (and the investing thesis) where you're able to explain:

1. What they do

2. Why they matter

In 2 or 3 sentences, without using jargon.

First-principles thinking to get down to the true roots of the company.

If you believe in the company's story after doing all this - that's conviction.

And prevents you from selling out of positions too soon.

-> 3. Concentration

You're not getting rich and compound capital fast enough by investing in $SPY and having a small tilt towards $QQQ.

But you also don't want to full-port a high beta name like $Sandisk(SNDK.US) or $Applied Optoelectronics(AAOI.US) where your portfolio gets trashed if the stock goes down 20% in a day.

If under ~£250k, the approach I recommend is picking 5-6 "high growth" names of varying beta.

For example:

40%: $Micron Tech(MU.US) + $SIVE: for high beta AI

40%: $Marvell Tech(MRVL.US) + $Corning(GLW.US): for mid tier AI beta

20%: $Alphabet(GOOGL.US) + $NVIDIA(NVDA.US): for AI compounders

It's enough concentration so you see genuine % gains in your portfolio if any stock makes a big move up.

With some stability so you don't get ruined if a name drops hard for any reason.

Again, if you have conviction, you wouldn't sell on any dips since you'd have high confidence in the business.

-> 4. DCA

This part is entirely dependent on personal risk tolerance.

But generally, lump-summing into positions is not my preferred approach.

It can work though if you've done steps 1-3 properly and don't panic sell.

You're never going to perfectly call bottoms, so having some allocated capital spare to avg. down is a good idea.

Then DCA up when conviction in a company's story grows.

E.g. product qualifications, earnings beats, expanding deals/pipeline.

Assuming I have $1k for a position, I like to do something like:

1. $300 to initiate a position after a quick burst of research.

2. More detailed research over a few days/weeks i.e. Step 2 above: Conviction.

3. $300 if I build more conviction via deeper research.

4. $400 DCA over a few more weeks/months to build the position out on any dips.

The one caveat with this method is that you're never going to have the "best" avg. price.

But it helps build even more confidence in the trade.

Which is the ultimate goal with long-term investing.

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The post's title was inspired by @naval's viral thread on How To Get Rich (Without Getting Lucky) - potentially greatest thread ever made. I read it a couple of times per year at least.