Financial literacy-II
The most important feature for an investor is nothing but is his own temperament, not the actual intellect.
Yes, you need a real temperament that neither give you over confidence or less confidence during all the seasons of market investing, which is being with the crowd or against it. An independent thinking person with confidence in what you believe is much more important than being the smartest person in the block.
Just like anything else, your best returns come from those who wait for the better opportunities to show itself before making a commitment. Those who chase the current hot stock market usually end up losing more than they gain. Always stay current with the things going around both domestically and internationally, both in the form of current market trend and forthcoming government rules and regulation changes. Remain active in your analysis of sectors and then look for quality companies at discounted prices. Always vigilant and be patiently waiting for them to reach their discounted price before you make a move.
In general, most of us are disciplined, some are more disciplined and some are less than others. We all learn this from childhood. Same kind of discipline is required in financial management. Some learn through observation, some learn through reading, some learn from both. Interestingly the best learn through your own failure, the lesson through the hard way. But as an investor when it comes to your money, earning through your own mistake is often avoided and is not preferred.
When doing the research on stock investing, don’t make a trade until the technical and the fundamentals are right. Research on fundamentals help to find a quality stock (company) and the real technical analysis help you to determine when to make a trade (buy) and same timely technical analysis will help you with your exit point to come out of the investment. With the experience you will be able to understand, the fundamental reason that is driving the stock and technical analysis will confirm the fundamentals, then you make the move to trade either way.
Don’t behave like The Gambler. As an investor, we should always aim to put the odds in our favor with every trade. All of these can be identified through individual stock selection technical or fundamental analysis, sector-based, value based pricing, growth oriented, whatever approach which works best for a particular investor. The real point is that investors must be constantly vigilant and working toward finding and recognizing opportunities as they present themselves. After all, you have been dealt the right cards, it’s time to take the next move
Money management cannot be put on auto-cruise control or autopilot but it is an ongoing process. The first precept is to minimize the losses on each and every opportunity. Unfortunately, investors do not have any easy way but, investors must work hard to find good opportunities. Once you have a good hand and sound judgment, it is time to decide how much money to commit to the opportunity.
Most important factor is actually knowing you. It means doing everything you can to stick to your own discipline. Everyone is tempted to get on with it to make the next trade, but if that opportunity does not fit within your measure or criteria of a good opportunity, then you must force yourself to let it pass. It is possible that while you will miss some good gains, this will also save you from some hefty losses as well. There is nothing wrong in following your discipline is essential for success as a small gambler as well as an investor. You must be extraordinarily patient in your pursuit of the right opportunities and then aggressively go after the better ones.