“Making good decisions is a crucial skill at every level.” ~Peter Drucker
In this article, I am sharing an idea to be a successful investor by some investment in knowledge. For any late comers, it is the time to take your test by visiting my previous post titled “Test to Measure your Investment Skills and Performance”, with twelve practical questions to measure your knowledge.
To know the requirements of having investing knowledge prior to start investing, read below example:Whenever asking preferred time to buy stocks, I generally receiving the reply “When Stock Market coming down to most”. Is that true? Yes, it is true, but only if you able to find the hidden danger associated to this scenario. It is because; less price of a stock doesn’t mean it is undervalued. It can be of course overvalued.Other way, buying any stock at the time stock market is peak doesn’t necessarily mean it would be a bad buy. It may be a good buy than when market is bottom down! Analyzing capacity to understand the real value of a stock plays major role to identify such opportunities by just avoiding market up and downs. This is an example of knowledge I meant an investor required to acquire. To start with most common required knowledge, below are some useful tips for anyone who willing to be a right investor. These are some but not limited to. Most of these tips focused to the personality of investor than any others.1. Never invest on any company based on advices, freely available research reports, words from blockers or any news. A good investor should do his own research on all factors, even shouldn’t miss any, which supports to identify the suitability of investing on any stocks.2. Traders always creating wealth for brokers than self. A perfect investor should identify the right stock with sufficient analysis, wait for the right time to purchase and keep the stocks for ever.3. Taking any investment decisions based on any pre-determined yearly returns is the door to lose. It is reasonable if an investor expecting returns little more than compare with the same from instruments like fixed deposits.4. Never ever invest any money in stock if you have borrowed from someone, stopping any other investments to invest on an attractive stock, selling or pledging of any valuables. Instead, invest your surplus amount or a capital that you have formed by saving money little as little in each month.5. Unless if you are confident with most required skills to analysis a stock to identify the investing possibility, it is always better taking a mutual fund or exchange traded fund path to get equity investing approach.6. Tipsters are like barking dog. They are just sending tips but never bother who hears. Anyone who pays attention to those barks pushes himself to lose. A right investor never hears tipsters but he can do his own research to identify any truth from his tips. It may sometime, but very rarely, help an investor to analysis further to find an investing opportunity.7. An investor should not commit any action without proper study and research. Any movement in stock market or price of any stock should have some solid reason. An intelligent investor should able to identify such reasons to avoid big mistakes. Investing on any stock which having a blue chip status, is not a guarantee for wealth to an investor than others.8. Portfolio monitoring is an integral part of investments but it should be moderate. Monitoring portfolio time to time is a symbol of panic nature. Never monitoring portfolio mean the person have little seriousness on the subject.9. If you are capable to understand the real value of a business, you will be able to set a target price to sell your stock. If such, a good investor never holds, whether it is full or partial, the stock once it touches the target. A good investor should able to identify any happening changes in the value of business and adjust the target as per the result, if required.10. A good investor never plays with a business that not has any certainty in the future. If the business found worsening, he will leave the shares at the earliest. He will never leave any room for speculation.11. A right investor never bothers or panic upon any happening crashes in the stock market. His selection of investment would be able to survive any such time to time events easily. Instead, he will take such macro driven factors as an opportunity to buy more fantastic stocks that available as cheap.12. It is a myth, only blue chip companies are best investments. Any stocks whether it is a blue chip, mid cap, small cap or penny stock found as valuable and incomparable with value investing rules, can be a best investment than any blue chip or large cap stocks.
I still remembering you to visit the skill test to know more about your present status.