If you invest in shares, by investing either directly into the market or via your Super Fund, you probably don’t need reminding that the current values are down, down, down.
Many investors sold up in response to the decline, and those who have held on are probably wondering how much longer they can last. It’s easy to get caught up in the panic (myself included), which is why I say let’s get back to investing fundamentals. It helped me, so I want to share with you the “50 Rules for Investing Success” compiled by Dr Steve Sjuggerud, PhD.
I couldn’t have written it better myself so I want to send you right there, but I’ve also selected the ten “pearlers” that are my favourite picks for D.I.Y investors. Plus, if you’re relatively new to stock market investing, I’ve added some footnotes to help explain:
1. “An attempt to make a quick buck usually leads to losing much of that buck.”
This is a great reminder that serious investing is long-term, i.e. seven to ten years.
2. “Cut your losers and let your winners ride.”
Like me, if on occasion you’ve bought “a dog stock” it might be time to consider getting rid of it.
3. “Don’t fall in love with your stock; it won’t fall in love with you.”
Don’t mix emotions and investing. Yes, I know stock markets are influenced by emotions (fear being the dominant one currently) but those who can remain objective have a distinct advantage.
4. “Never throw good money after bad (don’t buy more of a loser).”
This is where we get back to fundamentals: is the company you’ve bought into a proven performer in good times and bad?
5. “If the investment sounds too good to be true then it probably is.”
Again, look for proven performers – not just over recent years but decades!
6. “Bear-market rallies are often violent; giving the illusion that a bull market is back.”
A bear market is when the stock market is falling (bull market means it is rising). People want to believe the market has finished falling and buyers usually jump in big-time, which is what causes this volatility.
7. “Have patience and stick with your discipline.”
8. “Bear markets begin in good times and bull markets begin in bad times.”
Markets will eventually fall after long periods of sustained growth. It’s easy to forget we’ve had five or so years of strong returns on our investments.
9. “Be patient; don’t be rattled by fluctuations.”
10. “If you don’t understand the investment, don’t invest.”
When stock market experts are asked, “If you were to buy just one stock for your mother, which would it be?” They often say, “Woolworths”. Why? Well everyone understands what Woolworths’ do. Don’t invest in companies when you don’t fully understand what they do.
The other fourty rules are just as priceless and definitely worth a look. Remember; don’t lose heart, stay calm and learn from your mistakes.
Disclaimer: Individuals should consult a licensed financial planner for specific financial or investment advice.
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Thanks for sharing such great post, according to me make a proper analysis of sectors where you want to invest and also see the compatibility and the profitability of that sectors is the perfect way to invest. The professional attitude of investment is like you should invest for long term and don’t follow the crowd.
My attention is currently on the stock market. I am fascinated with Mentor Capital (MNTR); I think it will pay off in the near future due to their 20% interest in a bio-tech company with a new breast cancer treatment in the works.