filed in Simplified Sunday Series on May.23, 2009
So the last few weeks I have talked a little in depth about short selling stocks. While this might be a strategy some find useful. Others prefer to hold stocks for long term gain. As we have seen in the past months, a strong buy back came into the stock market and many bargain priced stocks are up significantly. Yes, at times the prices of these stocks will fall, but for a long term investment, many will continue to grow slowly, yet steadily each year.
To be a successful long-term investor, here are some tips you might find useful if not already in place!
1. Dont Follow “Hot Tips”
We all want to find that winning stock that will make us rich over night. The reality is, there is no magic ball that your friend, his secret friend, or best-friends dog can point to that will make you wealthy. Learn to do research on your own instead of accepting this tips as the final word. This is why I hardly push a stock on this site. I will talk about what I bought or narrow down to a sector to look at. At the end, its your money and you should be in full control of how its invested.
2. Don’t Panic!
If you are a long term investor, you should not be checking your stock prices 5 times a day. Watching at the daily fluctuations will only cause unnecessary panic which you do not need. Your objective is long-term, so don’t worry. You are supposed to be confident in your long term choices and the reason you invested.
3. You are investing, not trading
Remember, you are investing long-term. Some people are trading short time for large profits, this is a good strategy, but you cannot be investing with the same mentality. The risks of long-term investing are different, and in some ways less than that of short-term volatile trading.
4. Expand your knowledge
Sometimes we see a big company like (IBM) and feel its a great long term hold due to its size and strength in the industry. However, many smaller companies in the same sector could provide a better return in the long term. With the potential of being the “next big thing” or being acquired by the large cap companies, this could add further incentive to invest in them.
5. Don’t Let Pride Get in the Way
This is a big one. If a stock is going down and continuing to sink, don’t go down with it. Remember, not everyone is right 100% and not every investment will bring you a profit. This is the reality and you should not allow emotions to wipe out any money that is left. Cut your losses and find another stock to invest in. Remember, you can claim your losses and offset that towards any gains you will make. Its a large market, don’t get caught up in one stock!
Hope these short tips help simplify your objectives for long-term investing!
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