Posted at 6:46 PM , on November 20, 2015
A successful self trader – Rule # 28
Back in 2002, i asked a savvy investor the secret of his success. His answer was enlightening. Keep a crash shopping list ready and be liquid enough to capitalize on the crash. In retrospect, this is so true. We typically find investors who are fully invested at the top and hence are not able to make the best of a crash in the market. That is where you lose out. Keep a shopping list ready and be liquid in a crash. Continue reading
Posted at 11:01 AM , on September 14, 2015
A successful self trader – Rule # 24
We have learnt in the theory of evolution that it is not the strongest species that survives. It is the species that adapts best to changes. The same applies to trading and investing. A rigid approach can finish you. If you adapt your strategy to changing market dynamics, you are most likely cut out for the long haul. The choice is yours; whether you want to be the giraffe or the dinosaurs! Adapt or get trampled.
Posted at 7:22 PM , on August 28, 2015
A successful self trader – Rule # 22
Averaging is the cardinal sin of investing
Let me begin with the caveat that, averaging your position is not theoretically wrong. Just that it does not work in practice. You bought a great stock, the stock corrected; you averaged and lost money. You averaged your short position and again ended up with losses. Why does averaging not work in reality? Are there situations where averaging makes sense?
Posted at 7:37 PM , on August 14, 2015
Have we not heard these arguments? This stock has been with me for last 12 years. I bought it at Rs.10, I can afford to wait. I am a long term investor, so I’m not bothered by blips. Absolute fallacy! You just can’t fall in love with your stock. Don’t ever look at your portfolio emotionally. Some stories are not working. Some will give you a better entry level. Some have opportunity costs.
WHY NOT TO FALL IN LOVE WITH STOCKS
You will find a lot of investors advising you not to fall in love with stocks. Believe me, as much as it is easy to say, it is extremely difficult to practice. We all build an emotional attachment to the stocks that we hold; and that is why this rule becomes so important. More often than not, falling in love with a stock forces you to live under a fallacy. Let me explain. Continue reading
Posted at 1:41 PM , on August 7, 2015
Forget about hot tips and peer pressure. Buy the stock of a company, whose products you or your family members understand. This familiarity could stem from your jobs, purchases or usage. These ideas are available all around if you care to observe. Don’t ever hold on to a stock which does not pass the litmus test of your conviction! It is actually quite simple. Continue reading