To help you become a better stock investor we’ve boiled down some of the most salient observations. Here’s part 1 to get you started and read more at Cashay.com
- We've boiled down some of the most salient observations into 20 suggestions we think will make you a better stock investor.
First, keep it simple. Those who trade too often focus on irrelevant data points or try to predict the unpredictable are likely to encounter some unpleasant surprises when investing. By focusing on companies with economic moats, requiring a margin of safety when buying, and investing with a long term horizon, you can greatly enhance your odds of success.
Two. Have proper expectations. Are you getting into stocks with the expectation that quick riches soon await? Unless you are extremely lucky, you will not double your money in the next year investing in stocks. If you don't have the proper expectations for the returns and volatility you will experience when investing in stocks, irrational behavior, such as taking on exorbitant risk in get rich quick strategies, trading too much, and swearing off stocks forever because of a short term loss may ensue.
Third, be prepared to hold for a long time. Trying to predict the market short term movements is not only impossible, it's maddening. Be patient and keep your focus on a company's fundamental performance. In time, the market will recognize and properly value of the cash flows that your businesses produce.
Four, tune out the noise. There are many media outlets competing for investors' attention. And most of them center on presenting and justifying daily price movements of various markets. Tuning out this noise will not only give you more time, it will also help you focus on what's important to your investing success, the performance of the companies you own.
And five, behave like an owner. Stocks represent ownership interests in companies. If you are buying businesses, it makes sense to act like a business owner. This means reading and analyzing financial statements on a regular basis, weighing the competitive strengths of businesses, making predictions about future trends, as well as having conviction and not acting impulsively. Stay financially fit, friends.