Investing in stock market is not like betting. The investors should try to avoid speculating on the news about companies that they are trading in. It is not a good practice to move in and move out every time there is some news or rumors about the company. I know many people who keep trading and call them investors. I call traders, those people who continually indulge in short selling and deal in options and futures. These traders are not investors; they are purely gamblers as you see in many betting houses and casinos around the world. These traders like most gamblers lose eventually or frequently.
The truth is when we trade rather than invest, the commissions eat up the profit and we don’t realize it. This is the truth; I have had a taste of it. I tried to time the market and expected the market to go up and up but it was other way around. I meticulously calculated the movement of certain shares and I was proved wrong again. This was something I could not take it. I believed I did a good job in doing things the right way but again I was proved wrong. Realization: Don’t time market or speculate.
When I think about how to pick stocks, I have realized that I should not be in a hurry and try to go by the news and hot tips instead I should concentrate more on how the company is and their long term vision and mission and where they plan to head in the future. It is not a good sign as to keep shifting your portfolios in a long term as you will end up paying heavy commissions than a little capital gains tax.
Being a patient investor always pays. It always does. Don’t be in a hurry. Be informed about the company and make a sensible judgment as to how things should move, where to park the funds and also try to understand the essential values of investing and not trading if you want to be an investor.
Every investor has a trader inside him who cries to do things as per his wimps and fancies, but it is the duty of the investor to silence him and not to indulge in trading with emotions. If emotions start ruling the investor’s brain then I am sure that investor will lose eventually.
Finally, “Don’t think too much!”
Engineer's Finance 