Buying stocks doesn’t have to difficult. However, what can be challenging is choosing the companies that will consistently beat the stock market. This is something that most people can’t do, which is why you need stock tips. These strategies will give you results when you invest in the stock market.
Leave Your Emotions At The Door
Investment success isn’t about intelligence. What you need is the right temperament to control the urges that can get you into hot water when you invest. Some investors let their heads, rather than their gut instinct, lead their decisions. Trading driven by emotions is one of the most common ways investors damage their portfolio returns. Smart investors like Jeff Bishop check their emotions at the door.
Pick Companies, Not Ticker Symbols
It’s easy to forget that behind all the stock quotes that crawl along the bottom of the CNBC broadcasts is an actual business. Don’t let stock picking become turn into an abstract concept. Remember that when you buy a company’s stock, you become a part-owner of that business.
When you screen potential partners, you will have an overwhelming amount of information. It’s easier to focus on the right details when you’re thinking like a business buyer. You need to know how the company you’re considering operates, what its place is in the industry, who its competitors are, its long-term prospects, and whether it will bring anything new to the portfolio of businesses that you already own or have stock in.
Plan Ahead For Panicky Times
All investors will sometimes be tempted to change their relationship with their stocks. However, if you make rash, heat-of-the-moment decisions, this can lead to one of the most common mistakes in investing; buying high and selling low.
This is where journaling can help you to make informed decisions about your investment portfolio. Write down what makes every stock in your portfolio worthy of the commitment. Choose a time when you feel clear-headed about your portfolio, write down the circumstances which would make you want to shed a stock.
Write down why you’re buying. List what you find appealing about the company and the opportunity that you picture for the future. What are your expectations of this stock? What metrics are the most important to you and what milestones will you use to judge the progress of the company? Write down any potential problems and make a note of which ones would be game-changers and which would be signs of a setback that is only temporary.
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Sometimes there are good reasons to sell. For this section of your investment journal, write up something that lays out what would make you sell the stock. Don’t worry about stock price movement at this point, especially not in the short-term, but think about changes to the business that would affect its ability to grow over the long term. This might be things like the company losing a major customer, the CEO starts taking the business in a different direction, a major competitor becomes apparent, or your investing thesis doesn’t work out after a reasonable amount of time.