It is better to do a strong, basic research similar to a big company before diving into the world of stock markets. I would suggest allotting some time for a few months in R&D. Call it your own R&D department and clock yourself in to learn about various stocks and funds. Now, generally speaking, investing in funds is known as defensive. With investing in index funds being at the core of your portfolio, it is also prudent to put in some money in actively managed stock funds or bonds funds with low expense ratio. My initial understanding of the mutual funds world was that the mutual manager would be the who books profits on your behalf based on his research. Also, 2008 proved this notion so wrong. And it seems you are the one responsible for the rebalancing which pretty much makes it obvious that you are better off holding an index funds with low expense ratios and self re-balancing features. However, buying into mutual funds is still overall a defensive strategy and we shall focus more on creating your own index or creating your own mutual fund or creating your own hedge fund. We will not dwelve too much into the risk management aspect. Honestly, the best risk management tool out there is diversification and if you are risk- averse to x%, better take and put that x% right away into a bank CD or treasury so that you will never be held up with the losing bags. In fact, it is never good to be all in on stocks. No matter what. Unless you have a very safe net and you are holding an external account on money which you can totally afford to lose and it is most likely stocks of your own firm that you founded or acquired. So as you go about writing this notes down into a checklist, you can also put them into a document and run this criteria or checklist everytime you make a buy/sell decision.
As you enter into the actual trade stage, let this checklist and your research output be the main guiding light and not fad, on the spur moments and decisions, not a new technical indicator or what buffet says or whatever media or any other hedge fund manager says. Essentially your conviction and temparement is the one that is being tested by the market. As long as you ace in this department, there is a good chance that you will pass the patience test and other things the market will throw at you.
A well defined checklist should ideally have entry points and exit points and buffer points built just in case you feel at the moment that maybe it is better to hold off for a few more days to book more profits. Such intuition comes as you become a more seasoned trader.
Some buffet speaks that I have collected over the years:
"Buffet speaks:
Buy the business and not the stock
Value investors, he said, "search for discrepancies between the value of a business and the price of small pieces of that business in the market." Hence, the only thing they are bothered about is "how much is the business worth? He's not looking at quarterly earnings projections, he's not looking at next year's earnings, he's not thinking about what day of the week it is, he doesn't care what investment research from any place says, he's not interested in price momentum, volume or anything. He's simply asking: What is the business worth? While they differ greatly in style, these investors are, mentally, always buying the business, not buying the stock.
and finally theories are there - just do it .. and learn on the way - hard or easy!
There is a thin line separating investment and speculation: The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money.
After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands.
You might be surprised to hear that he thinks you can succeed at stock investing without giving your whole life over to financial statement analysis. He's outlined a method whereby the total research time to find a stock "equals a couple hours." And he doesn't think you need to check back on your stocks but once a quarter. Doing more than that might lead to needless hyperactive trading that wears down your portfolio with transaction costs and taxes.
Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.
also, i would say less diversification and concentrating on a few stocks are better
after all for diversification purpose mf is always there
a lot of good securities wont do much good..but they are good as a holding option.
maybe i can track and when they are undervalued then i can go and buy them.
i would also be clubbing etfs-ishares with stocks."
Buy the business and not the stock
Value investors, he said, "search for discrepancies between the value of a business and the price of small pieces of that business in the market." Hence, the only thing they are bothered about is "how much is the business worth? He's not looking at quarterly earnings projections, he's not looking at next year's earnings, he's not thinking about what day of the week it is, he doesn't care what investment research from any place says, he's not interested in price momentum, volume or anything. He's simply asking: What is the business worth? While they differ greatly in style, these investors are, mentally, always buying the business, not buying the stock.
and finally theories are there - just do it .. and learn on the way - hard or easy!
There is a thin line separating investment and speculation: The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money.
After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands.
You might be surprised to hear that he thinks you can succeed at stock investing without giving your whole life over to financial statement analysis. He's outlined a method whereby the total research time to find a stock "equals a couple hours." And he doesn't think you need to check back on your stocks but once a quarter. Doing more than that might lead to needless hyperactive trading that wears down your portfolio with transaction costs and taxes.
Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.
also, i would say less diversification and concentrating on a few stocks are better
after all for diversification purpose mf is always there
a lot of good securities wont do much good..but they are good as a holding option.
maybe i can track and when they are undervalued then i can go and buy them.
i would also be clubbing etfs-ishares with stocks."
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