Tuesday, July 23

Ten secrets about investing that only a successful investor will divulge.

It’s only natural to approach successful investors, whether they’re in India or elsewhere, and seek for wise counsel. While sharing selfies with famous investors on social media platforms like Facebook or Instagram can seem appealing, there’s a more important reality you should be aware of. Ask fund managers who enjoy getting autographs how many practical and helpful advice they have ever received. The usual response would be “nothing.” Now let’s examine how to succeed in the stock market game. Let’s first examine the stock market investing secrets that the majority of wealthy investors would not divulge.

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1. The role of luck is far more significant than you may think.

You can eventually start to think that expertise is the only factor in successful stock market investment. That is untrue. The finest investors have also been very fortunate. It is all mostly a matter of chance. Although most investors may be reluctant to acknowledge it, they have frequently been fortunate to be present when trends are about to change. Naturally, 90% of investment success still comes from ability and just 10% from luck, but without that 10%, it is nearly impossible to succeed as an investor.

2. Pull weeds and give the flowers some water.

That is a very elegant way to express it. It simply implies that you need to exit your losing positions quickly and hang onto your winning ones for a sufficient amount of time. That’s the secret to profitable investment. Successful investors don’t always make the proper decisions in their investments. Their success rate might be comparable to yours, or worse. However, they take care to water their flowers and pull weeds.

3. A more passive strategy might increase your chances of making money.

Whether you like it or not, investing in index funds will yield higher returns over an extended period of time. There will be anomalous years where your abilities will be valuable and you’ll attract multi-baggers. However, you’ll do better in an index fund most of the time.

4. Consulting others did not make anyone a rich.

You will never hear a successful investor encourage you to stop asking for recommendations. Nobody went around begging for trade ideas and investing training in order to become a George Soros or a Warren Buffet. Learn your own lessons, acquire your own knowledge. That is the sole method available.

5. A single poor choice might completely ruin your performance.

When you are still a little investor, this is crucial. However, the largest investors have been known to lose the majority of their winnings in a small number of deals. Never undervalue the market’s power to steal your profits, no matter how significant they may be.

6. The market is more astute, hence the majority of popular stocks are overvalued.

Nothing is free, and excellent, high-quality stocks are notably not available. A tale is almost certainly expensive if everyone on the street is aware of it. Taking that significant risk on the future leaders of the world is the secret to successful investment. You won’t get very far if you choose the conventional route of going with the flow.

7. Choosing to do nothing is a crucial investment choice as well.

Many of us learn early in life that taking action is the key to successful investment. That seldom ever happens. Patience is a virtue for investors who can wait years for results. They also possess the self-control to hold off on buying or selling equities when the market as a whole is rushing to do so. The majority of wealthy investors will avoid discussing this since it seems too commonplace. However, this is just as significant. This is purposeful passivity, not inactivity.

8. Thrift prevails: Treat equities as a deep discount and be frugal with your money.

Approach stocks in the same way as you would a deep discount item. Even if the stock is performing well, get the best deal available. Save as much money as possible on brokerage fees and minimize your opportunity cost. Developing the habit of being frugal to the extreme greatly benefits your performance in investments.

9. The most astute investors seek for reputable companies and spread their risk.

Astute investors purchase the underlying companies rather than stocks. There are just too many elements at play there, making it far more complicated than it looks. Above all, keep in mind that risk is diversified by everyone—from Soros to Lynch to Buffett. In practice, a focused strategy is not particularly wise.

10. Before choosing one stock, you must reject a hundred

You would be surprised to learn how tedious and time-consuming stock selecting actually is. An average investor is said to need to reject a minimum of 100 stocks before deciding whether one has the potential to be a multibagger.