What it takes to be a successful stock investor
Successful investing is a journey not a one-time occurrence. And it takes planning.
In fact, you might say that successful investing is a journey. A journey that lasts decades, or even longer.
But how do you begin?
You start with a destination. Where do you want to go? What does success look like to you?
Then you map out your path.
How much money will you need? When will you reach your goal?
After you know what you're trying to achieve, it's time to think about where you want to go.
LET THE BULL RUN
Dennis Gartman, one of Wall Street's most respected market commentators, says it is important to remember that "winning trades are profitable." He advises traders to let winning trades run, rather than cutting losses short. Gartman explains that he follows his own rules regarding trading, including the following:
• Don't cut your losses too soon.
• Don't panic.
• Keep your emotions under control.
• Stick to your plan.
• Be patient.
• Stay disciplined.
Gartman notes that many people lose money because they try to exit winning positions too early. This leads to emotional outbursts and poor decision making. In addition, some traders fail to stick to their plans.
They change their minds about how much risk they want to take or what type of position they want to enter. Finally, people often become impatient and start panicking when things go wrong. But patience and discipline are key factors in successful trading.
START SMALL
If you want to start investing, there are a few things you'll need to know before diving into the world of stocks. One thing you'll need is a good broker. You don't necessarily have to use one though; many people prefer to do everything themselves. But if you decide to go with a broker, make sure you find one that offers low fees and commission rates. They won't cost you anything unless you earn profits.
Another important factor is how much money you want to invest. If you're just starting out, you might want to limit yourself to $1,000-$5,000. Your goal here isn't to beat the stock market, but rather to build up some experience in trading. Once you've gained enough knowledge, you can increase your investment amounts.
The third important aspect is your risk tolerance. Some people love to take risks, while others aren't willing to put their entire portfolio on the line based on a single trade. This is where diversification comes in handy. Diversify your portfolio across different types of securities such as bonds, stocks, real estate, and commodities.
Finally, you'll need to set aside some time each week to monitor your portfolio. Make sure you check your account once per month and keep track of your performance. You'll soon realize that learning about the market takes time, but stick with it and you'll see great returns in no time.
DON'T FOLLOW THE HERD
The herd mentality is a very common phenomenon among investors. People tend to follow what others are doing rather than make their own decisions. This happens because people believe that everyone else knows better than they do.
But there is no reason why you should follow everyone else blindly. You must learn how to think independently and make up your mind based on facts and figures. If you're following the crowd, you'll never achieve true success.
You might even end up losing everything you've worked for over the years. So, it's important to know how to tell whether the market is really bullish or bearish. And the answer lies in knowing how to read the signals correctly.
NEVER TIME THE MARKET
Warren Buffett is one of the most successful investors in history, the other person is Ray Dalio. His track record speaks for itself. But the Oracle of Omaha isn't known for his investment acumen. He's famous for saying "The best way to invest is to buy a great company at a fair price." This quote is often used to justify investing in stocks rather than bonds. And it makes sense. If you're buying a house, why go for a cheap mortgage? You want to pay less interest and save some cash.
But what about investments like stocks? Shouldn't you take out a loan to acquire them? Wouldn't you want to pay less interest? Well, yes, but there are better ways to achieve this goal than trying to predict where the stock market is headed.
He recently got into tech stocks too.
Investors who attempt to time the market tend to make poor decisions because they don't understand how markets work. They think that they can predict short-term movements in the stock market based on macroeconomic factors such as unemployment rates, inflation expectations, etc. So, they look at the big picture and decide whether to invest now or later.
They believe that they'll know the direction of the economy and the stock market better than anyone else. However, they fail to realize that the economy is driven by many different forces, including consumer confidence and spending habits, corporate earnings growth, monetary policy, and government fiscal policies.
In addition, the stock market is composed of thousands of companies, each with its own unique characteristics. Some companies are growing rapidly while others are struggling. Some industries are booming while others are declining. These differences mean that no single factor drives the overall direction of the economy and stock market.
And finally, the stock market is a dynamic environment that constantly changes. Companies change CEOs, merge with competitors, launch new products, and undergo major restructuring. All of these events influence the value of a company and ultimately determine whether it goes up or down.
As a result, timing the market is extremely difficult. Even Warren Buffett admits that he tries to time the market, but fails miserably every time.
MEASURE & IMPROVE YOUR RESULTS
The second piece of advice I'd offer is this: Start measuring everything.
I'm a big believer in metrics. As soon as you start tracking something, you gain insight into how much better you are than you thought. If you don't track anything, however, you won't know how you're performing compared to others.
And if you don't compare your performance to someone else, you can't tell whether you're improving.
So I'd recommend getting a benchmark. Find out what the average person invests in. Then set up a spreadsheet to track your returns. And do it every month.
Then keep comparing your returns to those benchmarks. You'll see whether you're moving toward or away from the average, including check this michael burry books, and this new post about kaspa wallet.
