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“Do I ‘buy and hold’ or do I cut my losses when stock markets plunge?”
“How do I know if a stock has the potential to rise over time?”
“Why does a stock fall in price even when the company does well?”
Nobody can blame investors for being thoroughly confused nowadays at what to do with their investments. Many people I talk to find that no matter what approach they adopt, they never seem to be able to make consistent profits from their investments.
They may score a nice profit once in a while, only to find themselves losing it all back to the market eventually. Even when they invest their money with professionally-managed funds, they find their investments going nowhere or worse, struggling to break even. In their frustration, many of these people resign themselves to earning a measly 1% – 3% interest from bank deposits.
The fact is that there are people who make huge amounts of money from the markets, year after year. These are the professional and semi-professional investors/traders who are able to grow their investments anywhere from 15% to 150% annually.
While these successful investors do have losing investments (everybody does), the fact is that over time, they consistently make much more than what they lose from the inevitable mistakes they make.
So, how do they do what they do? What really works in the market and what doesn’t? How much of it is luck? Can these skills be learnt by anyone?
This topic is something I have passionately studied and practised for over 21 years, ever since I started investing with my mother’s stock brokerage account at the age of 18 years old. I am not only proud to say that I have made a nice fortune as a semiprofessional investor (and now, a professional one) but I am even more proud to say that I have made every conceivable mistake that can be made in world of investing.
It is the mistakes I have made in the past as well as my ability to continually fine-tune my strategy that has allowed me to discover the profitable investing techniques that I employ today.
There are three key principles of successful investing:
The first ‘M’ of profitable investing begins with having a winning ‘Method’ that will give you an edge over the market.
While no method can guarantee a profit 100% of the time, over my next few posts I will show you winning methods that ensure that your investments succeed majority of the time. You are going to learn a set of rules that will tell you exactly WHAT stocks to buy, WHEN to buy and WHEN to sell. Sometimes knowing WHEN to buy and sell a stock is even more important that knowing just WHAT to buy.
Many people end up buying the right stock, but at the wrong time. As a result, they see the stock decline further downwards in disbelief. Learning how to read the emotions of the market and enter only at the time when the stock is ready to make explosive gains upwards is the key to boosting your investment returns.
The second ‘M’ of successful investing — ‘Money Management’.
Many investors with a good investing strategy may still end up losing money because of poor risk and money management principles. They may make money on nine great investments only to lose all their profits in one bad one.
Knowing how to minimize your risks and maximize your returns through portfolio management and position sizing techniques is crucial. Successful investors know how many shares you can afford to buy of each stock and when to cut your losses when an investment goes bad.
Finally, you must master your ‘Mindset’.
Learn how to adopt the winning psychology of successful investors and know how to manage negative emotions like fear and greed that get in the way of your success.
Money is a very emotional issue for many people and more often than not, the emotions of investing your money tend to make you counter-productive. This is why I focus so much on training my students to develop the winning mindset of top investors. Without this winning mindset, you will still not be able to achieve consistent profits even if you know the most effective strategies.
This post has just been a brief overview in helping you become a successful investor, but over the next few weeks I look forward to sharing with you my ideas in posts to follow. So stay tuned!