Who Wins and Who Loses in The Stock Market

 

Who Wins and Who Loses

Investment brokers’ lore: They can tell whether a new client will be a winner or a loser within the first few minutes. Investors’ mistake: Forgetting that the broker is essentially a salesperson working for a commission. (Often a loser makes more money for the broker.) Don’t rely on a broker for financial and money-management advice.

Classic losing syndrome

An investor loses money in the stock market and swears never to get involved again. Then, after resisting the early publicity about the latest investment fad, the investor moves back into the market just before prices collapse. Worse: Investors who buy a glamour issue on margin after a substantial and fast advance. They get hit the hardest during the inevitable correction.
Investment advisory services and systems and inside information don’t help much either. Please check Low-Interest Loans For Homeowners.
 

Facts:

Advisory services establish a reputation after making a few good investment predictions or good calls on a specific kind of stock. But they have to keep making predictions, and soon end up with losses. Technical analysis is as subject to change as is dart throwing.
Only 65% to 70% of insider trades work out for insiders. Investors usually tend to overestimate the impact of the “insider news” on the stock’s price. Or they miscalculate the effect.

Wall Street analysts are too slow

By the time their buy/sell recommendations make the rounds, all the action has been taken. The sound way to become a winner:

Keep your neuroses under control

While you will never escape fears and doubts, don’t allow your emotions to override your judgment.
Initiate your own investment decisions. Don’t let someone talk you into buying or selling.
The average investor doesn’t need to talk to his broker more than once a month.
Do your homework before entering the stock market. Most winners educate themselves and manage their own money. Read books and financial papers. Take basic investment courses. Learn investment jargon so that you can’t be intimidated.
Break away from the fear-greed-guilt cycle that produces losers with the belief that gains are made by magic and fantasy. Learn to deal with reality.

Think about taxes as well as investment

Tax consequences are an important part of success. Picking stocks: If the fundamentals of the company sound good and are high quality, and if the price/earnings ratio is under 10, buy at the low end of the stock’s trading range for the past two years.

Divide savings into four investment categories

(1) Ready cash to meet emergencies.
(2) Income to help maintain your standard of living.
(3) Growth to make capital grow and, at the least, keep pace with inflation.
(4) Mad money to speculate on the long shot.
 
Distribute investments appropriately, if there’s enough capital. Don’t forget you can find excellent conversation this from Quora.

 

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