GOLDEN
RULES FOR INVESTORS
HAVE REALISTIC EXPECTATIONS
There's nothing wrong with hoping for the 'best' from your investments, but you could be heading for trouble if your financial goals are based on unrealistic assumptions. For instance, lots of stocks have generated more than 50-75 per cent returns during the recent bull run. However, it doesn't mean that you should always expect the same kind of return from your investments.
What matters is the portfolio return, return from individual stocks is irrelevant
"Anonymous"
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PATIENCE AND LONG TERM HOLDING
The markets can move up and down in any short period of time. Markets moving up and down is just how they work. The goal of any investor should be to focus on their long-term plan and avoid knee-jerk reactions. Ignore daily market fluctuations. Overreactions lead to bad money moves. Take pause. If you stay invested for the long term, you’ll reach your goals sooner.
Value stocks are about as exciting as watching grass grow, but have you ever noticed just how much your grass grows in a week?
"Christopher Browne"
INVEST IN LINE WITH RISK APPETITE
Does market volatility bother you? If you see a drop in prices of your invested stock, does your stomach churn, or do you barely notice these things? It is really important for investors/traders to invest as per their risk appetite, so that market volatility doesn’t affect them much. This will enable them to make informed decisions. One can earn more in the long term, compared to the short term churning of their portfolio. Investing should help one meet their financial goals, instead of taking them further away. It is always advisable to invest only that sum of money which wouldn’t affect one's day-to-day financial needs.
We must all suffer one of two things: the pain of discipline or the pain of regret
"Jim Rohn"
STOP STANDARDISE INVESTING BASED ON TIPS
Be it investments, work, business, etc., being aware of what you are doing is very important. Stock market is no different. One must learn fundamental and technical analysis and learn to implement them in their investment strategies, so that they can make educated decisions, instead of investing into a certain stock because they have a “hot tip”. Such hot tips burn fingers faster and leave one with nothing.
This isn't to say that you should balk at every stock tip. If one really grabs your attention, the first thing to do is consider the source. The next thing is to do your own homework so that you know what you are buying and why. For example, buying a tech stock with some proprietary technology should be based on whether it's the right investment for you, not solely on what a mutual fund manager said in a media interview.
I have probably purchased fifty 'hot tips' in my career, maybe even more. When I put them all together, I know iam a net loser
"Charles Schwab"
GOLDEN
RULES FOR INVESTORS
AVOID SHORT TERM TRADING
Barring professionals, it is strongly advisable not to indulge in short term trading on regular basis. Eventually short term trading is close to zero-sum game when gains and losses are measured relative to the market average. In a zero-sum game, someone can win only if somebody else loses. Mathematically it is against you and one needs to be at par with the professional trading giants like Banks, Hedge funds, Institutional investors including DIIs and FIIs, veteran traders etc. to consistently generate returns in the longer run from short term trading. My sincere advice to non-professional traders is to narrow down on short term trading and let the experts deal with it.
However, equity investment in the long run is not a zero-sum game and there is real and actual wealth creation in the market in the long term. It is more like a fruit growing tree in your garden. The tree keeps growing and the fruits available from the tree also keeps increasing. This is because, when you are investing in stocks, you are essentially buying companies which keep growing in line with the economy. As companies grow over time, their profits also increase and the profits they pay to their shareholders also keeps increasing – at an aggregate. This translates to an increase in the valuation of the companies and businesses. Some of the leading companies in India (like TCS, Infosys, HDFC Bank, Hindustan Unilever, ITC, Reliance, etc.) have consistently grown over time and shareholders have reaped enormous benefits.
The majority of short term trading results are just random. In the long term the money ends up with those that can trade and manage risk
"Steve Burns"
AVOID HERD MENTALITY
The typical buyer's decision is usually heavily influenced by the actions of his acquaintances, neighbours or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. But this strategy is bound to backfire in the long run.
In investing, the crowd is wrong much more often than right
"Kenneth Fisher"
PAY NO HEED TO MARKET NOISE
Ignore the noise, avoid short-term emotional decisions, and focus on what you can control over the long term. Look for a professional who works with people like you, who can help you ignore the noise and stay focused, and so gain confidence and peace of mind with better outcomes.
The market does not know you exist. You can do nothing to influence it. You can only control your behaviour
"Alexander Elder"
