Every seasoned investor in the market has had their fair share of ups and downs, and while this is a natural process everyone should go through, it may be for the best to minimize the amount of “downs“ you’ll be experiencing.
Thankfully, word-of-mouth advice can be incredibly helpful, at least as far as investing goes, and it’s why so many successful investors have been interviewed through the years, as everyone’s eager to find out what it is that they know that we don’t.
Everyone’s secret to success is different, and while some may have copied what others had done to lead themselves to victory, they eventually had to put their own, original spin on it, and it’s what separates the good ones from the great ones.
We’ll go over some of these experts’ recommendations and what you can do to incorporate them in your investing endeavors, hopefully to some degree of success.
Set your greed aside
As counterintuitive as it may sound, sometimes it’s best to cash in your winnings before they’ve reached their full potential.
Market profits can become incredibly volatile, and you can begin losing money from the moment your investment peaks, as things tend to become worse much faster than they’d begin to improve.
According to Bernard Baruch, this is known as “conquering“ your greed, and it’s what he’d used to succeed in the stock market, and he assured that both bulls and bears make money in the market, it’s only the pigs that never do.
Making risky investments can prove to be profitable, and the same thing goes for making a safe one, but as long as you’re quitting while you’re still ahead, you’re probably in the clear.
Accept your losses
If you do end up hesitating on cashing in your investment, there’s no point in praying that it’ll bounce back, unless there’s irrefutable evidence that it’ll do so.
Instead, you should abandon ship as soon as possible and cut your losses so you’ve at least got enough to move on to another investment that’ll make you money in the future.
If you look at the data, you may find that around 50% of all investments tend to go south, and knowing this can be incredibly helpful when it comes to how you’ll deal with a sudden loss.
Awareness is key, and if you’re able to recover from a loss without too great of an effort, you’ll know you’re on the right path.
Don’t ignore luck
As important as investing skills can be, luck is also a big factor in making money off the stock market, although some bad luck may not be all too bad, even more so if you’re just starting out.
A bad run or two will help you learn a lot about what a good investment is, and even though there aren’t any “real” patterns in the market, knowing what to expect is an invaluable skill.
Essentially, you’re always banking on a high roll, but you can always tilt the odds in your favor by knowing how much and when to invest in a certain asset.
This means that you’ll make a smaller investment in a much more risky asset, whereas you’ll be dedicating larger portions of your portfolio to those that are much more likely to succeed.
If you look at it this way, it’s almost as if you’re playing with a stacked deck, except the house can’t possibly win if you’re attentive enough.
If an investment falls through the first time you’ve committed to it, there’s no point in giving it second chance, even if it’s one you’re emotional about.
If you’ve invested in a stock that didn’t end up working out, it may be for the best to just sell it and move on to different assets.
No matter what you do, your ego must stay out of the equation if you’re planning on making as much money as you possibly can and being stubborn can be your greatest enemy.
No matter how good of an opportunity you think you’ve passed up, it’s important to remember that the market offers thousands more for you to choose from, and a much more promising one will eventually come by.
Losing hope can be devastating to your career as an investor, and it’s what usually drives people away from the market, as they quickly become scarred by the losses they experience.
However, that’s just how it works sometimes, and investing is a rollercoaster ride that has many ups and downs, meaning that it’s up to you to decide when it’s time to get off.
Giving up the first time you get burned only means you’re missing out on a highly profitable opportunity that may come up in the near future, and this optimism is what drives successful investors to greatness.