Everyone would like to become a better investor. People
get into a twist trying this method and that only to abandon them for the next
new thing. There's an easier way, and it involves following a few simple
suggestions.
Stop watching the market and start your watching stocks
Just because the market is frothy doesn't mean your
stock's price is. Just because the market is sinking doesn't mean your stock is
now a bargain. Unless you look at your company and how it's priced, you really
can't make an intelligent decision about whether to sell. Rising prices often
cause investors to panic and sell everything, and falling prices may make them
think that almost every investment is a sure thing. Both attitudes are equally
foolish.
Spend less time reading and listening to information
about your investments
It may sound counter-intuitive, but spending too much
time attending to your investments can send your portfolio straight downhill.
There are 'experts' everywhere and most of them sound very persuasive. They all
claim to know what the market will do next week and whether your stock is
headed up or down. If you listen to them you'll be panicked into selling too
soon or buying stocks you shouldn't buy. If you must read about your stocks,
read the company's annual report and quarterly earnings reports and skip most
of the opinions.
Get the buy right and don't worry about the sell
Buy solid dividend-paying companies when they're on sale
and hold them until there is a major change in their story. In some cases, this
may mean you can hold them for a lifetime. Don't underestimate this method.
Every time some pundit insists that buy-and-hold investing is dead, it proves
itself all over again.
Ignore market noise
Every talking head can tell you why the market went up or
down today. If the reasons sound flimsy, it's because they often are. In the
short term, the market makes very little sense and fluctuations can happen for
a million silly reasons. In the longer term, good companies reward their
shareholders and their prices reflect it.
Diversify intelligently
Buy stocks when they're on sale and not just to diversify
your portfolio. Don't buy a housing stock when you know the housing market is
declining, even if it would diversify your portfolio. As time goes on and you
take advantage of the economic cycles, you'll still end up with a diversified
portfolio, but it will be composed of stocks you purchased at bargain prices.
Balance profits and losses.
Sooner or later, you'll need to raise cash and will want
to sell some stock. Be careful how you do it. Some investors only want to sell
losers, while others can only stand to take profits. The former will have you
selling stocks that are just about to turn around, while the latter will leave
you with a stack of losers and a big capital gains bill. It's almost always
better to balance winners against losers, which minimises your tax exposure,
cleans the junk out of your portfolio and allows you to take some profits.
Don't confuse a great company with a great stock
Just because a company is making tons of money and has
low debt and great management does not mean its stock is a good buy. Some great
companies have share prices that have been bid up to unsustainable levels. If
you like the company, wait for a temporary drop in the share price. Sooner or
later, you'll usually get one.
Take a beginning accounting class
It may be a little more work than the other suggestions
but learning to understand a profit-loss statement and other fundamentals of
business accounting will give you a huge advantage in understanding whether the
company you're buying is financially healthy.
By taking the time to understand how the markets work and
how companies are valued, you can relax when everyone else is panicking and
know that your long-term results will almost certainly beat any fixed-income
investment you can find.
Contact us 
Need help you with business equipment finance or property loans? Talk to the Zenith team experts on 1300 288 874 or enquire below.
Company Details
Phone:
1300 288 874
Fax:
(02) 8088 7300
Email:
sales@zenithfinance.com.au Australian Credit Licence Registration Number 389877
