Today has been a terrible day at the market where I lost a lot of money.
It was one of those days when the bears came down the stairs and nobody had a chance. I stood up – showed my by-now-famous toothy grin, flashed the Victory sign and headed back home to lick my wounds.
My head was whirling – what is the strategy to emerge as a winner in the market, how to get access to that know-all elixir by which I rake in the moolah, daily and forever.. There is a deluge of information, everybody assures 100% success and daily returns – only if I follow them and of course, pay a price for that. I could not see any light at the far end of the dark tunnel…
Here are a few points I would like to share, which may be useful to the discerning public:
1) Be fearful when others are fearful and greedy when others are greedy
All too often, people condemn herd mentality. If you look at what happened when the twin towers came down, it was precisely that which saved most of them. Imagine charting your own course in such a situation, not being bothered about what others were doing…
2) Think emotionally, act logically
Sounds weird, but I assure you it is not. We all think emotionally, no matter what our upbringing or experiences are. I am yet to come across a person who does not experience fear in a dangerous situation. However, we act bravely – which is logical and correct. Same is the case with stocks also – we can think emotionally and act logically. If a stock is moving up, we need to buy it and when it is tanking, let’s sell it.
3) Read all analysis and statistics regularly; do your own thing at your own peril
I urge you to pay for good advice; it will save you a whole lot of bother at a later date. Charting your independent path in investing is all good talk, but we need to understand analysis, data, etc. and be able to make meaningful and worthwhile interpretations. Pay and take sound advise from those people who study this day in and day out.
4) Understand the limitations of value investment
There is no golden pot at the end of the rainbow. Long term investments are all methods to lock in your liquid funds and use up your money today through concept-selling. If a stock is priced low today and you are no Warren Buffet who has deep pockets to wait for a long time for the stock to move up, then better not get into this trap. If money cannot come to you aid today and make life comfortable, who is bothered about how much money you will make after ten years, especially when there is no guarantee of life or security?
5) All for one, one for one
Selfishness is the only selfless thing. Be selfish when it comes to the stocks market. Use intelligent advise, do analytics, stay focussed, stay hungry for booking profits day by day and have clear exit strategies for every stock.
This article seeks to understand the underlying fundamentals, as an investor, while dealing with speculative trading in shares.