The Role of Your Investment Attitude by Jason Swanson

Many people often wonder why some make it in the stock market and some don't. They sometimes sigh and say, "They have all the luck, that's why." True enough, luck can be a factor in one's success or failure in the stock market. As most experts will allow, trading at the stock market is very similar to gambling. They both involve a great deal of risk. But unlike gambling, success or failure in the stock market is not solely dependent on luck. It has much to do with two things information and attitude.

Information has much to do with success or failure at the stock market. First of all, information makes stock trading more than just guesswork. Analyzing trends can help investors make educated guesses regarding their investments. 

One important aspect that often goes unnoticed is the proper attitude investors must have towards investing. Too often, investors fall prey to the wrong type of attitude in investing. This leads to wrong decisions, and impulsive buying or selling. What are these attitudes, and how should they be avoided? 

1. Many Investors Exhibit an Impatient Manner
Unfortunately, many investors get into the mix just because they are under the impression that they could get rich overnight as result of a few investments. This is so far from the truth. In fact, successful portfolios are built over time.  Stocks take time to mature and appreciate. If the investor never realizes this, he or she might be looking to make a quick buck. And when he or she is unable to, he or she may become discouraged or may sell his or her shares for a lower price. 

2. Many Investors Look to Take the Risk to Be Overnight Millionaires
Warren Buffet, the Wall Street Tycoon has this advice for investors: don't bet all your marbles on stocks that seem to be skyrocketing today. They could crash tomorrow. Buffet confides that he has always built his empire over stocks that were stable and exhibited continued growth over the years. He says that these stocks are preferable to volatile stocks that could crash anytime.

Other investors fail to diversify their portfolios. Depending on how much risk one is willing to take, an investor should divide his or her portfolio into low-risk, medium-risk, and high-risk categories, and invest in such stocks. Some people are too risky and put their heads on the guillotine with high risk investments. Others will not risk their necks on any investments. One should choose an attitude that is just right for his or her risk tolerance.



Article Source: http://www.articlesphere.com/Article/The-Role-of-Your-Investment-Attitude/207247

Top Tip for Novice Investor by Goh Eng Yeow

"I agree fully with US financial portal Motley Fool for placing this tip right at the top of its advice to novice investors: Dollar-cost average for your entire life and you'll beat almost everyone who doesn't. What this means is to invest the same sum in the stock every month or even consider buying more of it when the market is down and less when it is up. Over the long term, this will ensure that you buy low and sell high. Of course, this advice applies only if you are buying into stocks whose earning capabilities have been proven beyond the benefit of a doubt over the years."

[Source: The Sunday Times, 4 May 2014, page 37]

Goh Eng Yeow is a Senior Correspondent with The Straits Times and the author of "Small Change: Investment Made Simple".

Click here for a review of Small Change: Investment Made Simple

Look Well into the Matter of Investment by Sean Hyman

Sean Hyman, Editor of The Ultimate Wealth Report, urges investor to look well into the matter of investment by examining companies on three dimensions:

1. Fundamental analysis -- look at how strong the company is financially;

2. Technical analysis  -- look at the current pricing of the share; is it under-valued, fairly-valued or over-valued? For example, RSI < 30 = cheap; RSI > 80 = pricey; P/E <8 = under-priced; P/E>24 =over-priced; P/E=16 = fairly-priced.

3. Sentiment analysis -- be greedy when others are fearful, and fearful when others are greedy. Avoid the love money. Move in and out of stocks at the right timing according to rational thinking rather than greed. 


Be greedy only when the time is right. Indeed it takes great discipline to resist following the crowd and act rationally. According to Sir John Templeton, "To buy when others are despondently selling and to sell them when others are avidly buying requires the greatest fortitude but pays the greatest rewards."

The Most Important Factor When Investing In a Company by Peter Lim

"The most important factor to consider when investing in a company is the person running it; you look at whether the person is honest, and whether he or she is master of their trade. It works, it's a tested method of assessing companies." -- Peter Lim

(Source: Page 3, The Business Times, 16 July 2007, "Former 'remisier king': equities still have legs" by Teh Hooi Ling. Mr Peter Lim, formerly known as the 'remisier king', is a billionaire.)

Three Golden Rules by Teh Hooi Ling

The secret to winning at the winning game of shares investment is staying the course with the following three golden rules:

1.  Consistently invest in a diversified baskets of stocks that represent the real economy -- especially when prices are cheap.

2.  Don't bail out at the worst of times. Then, you will not get a fair value for the businesses that you own.

3.  Try to minimize your cost as much as possible. All the more you should buy when you see businesses going on sale at a cheap price during depressed market conditions.

(Source: Page 33, The Sunday Times, 20 April 2014, "How to win at a winning game" by Teh Hooi Ling. The author, a CFA charterholder, is head of research in no-management fee value fund mananger Aggregate Asset Management.)