Some Stocks Investing Basics
About beating the market…
Most books will claim that they can teach you how to beat the stock market, i.e how to invest in such a way that you will earn better returns than the general market.
No one can teach you how to beat your market, and beating the market shouldn’t be your goal. Focus on maximizing the chances of achieving sustainable gains.
About the risk that you will lose your money…
You cannot totally eliminate risk, your investments will go down from time to time. Your goal is to manage the risk and always act according to the fundamentals, and not your fears and emotions.
About character…
You want to be an Intelligent Investor: This simply means being patient, disciplined, and eager to learn; you must also be able to harness your emotions and think for yourself. An intelligent investor is able to drown out the roar of the crowds and stick to his/her strategy irregardless of what the crowds are doing / saying.
“While enthusiasm may lead to accomplishments elsewhere, on Wall Street (stock market) it almost invariably leads to disaster.” – Benjamin Graham
About making predictions…
It is easy to predict “growth” industries, but an intelligent investor realizes that by the time an industry is recognized as a growth industry, the stocks have been bid up so high that it’s future returns have nowhere to go but down.
About when to buy stocks…
Stocks become more risky as they rise, and less risky as they fall. Irrational exuberance states that when stocks start falling, we should sell off, while intelligent investing says this is the time to buy.
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