The private investment boom started not so long ago, and novice investors have not yet fully learned to distinguish useful investment advice from myths and misconceptions, with which the information space is filled.
A huge number of video bloggers and info-businessmen vied with each other to give a variety of advice on their social networks. Unfortunately, not all of them are correct and can lead to serious losses. Introducing 5 bad advice, which can be found on the Internet.
Buy on growth, sell on the fall
If you buy on a rise and sell on a fall, then losses are inevitable. And not only because of, that in such a situation you will often buy at the highs and sell at the lows. Reverse rule: “Buy that, what fell and sell that, what has grown ”in itself is also ineffective.
It makes sense to buy a share not because, that she rose or fell, but because there are good reasons to expect its growth in the future. Business growth potential, industry cyclical recovery, improving corporate governance, lucrative deals M&A - these and other drivers are a more compelling reason to buy, than the movement of market quotes.
Gain experience, trading shares
Investments and Trading is one of those areas, where you can practice for a long time, but not gain any useful knowledge or experience. The fact, that the process of buying and selling shares in itself is just a press of two buttons in the application. In this case, the logic of decision-making from deal to deal can remain the same, despite the variety in results and circumstances, which will create the illusion of growing competence.
Therefore, it is not the number of transactions that matters., a thoughtful study of causation. In the first couples, it is very important to study the materiel, on which your own experience will be layered. Due to what the shares grow in price? What's better: growth stocks or value stocks? What determines the profit of different companies? What is P / E? Read the answers to these and other questions in our collection I'm new to the stock market. Where to begin
Buying shares is not risky, because the market is always growing
Opinion, that the market is always growing, became an axiom, which is passed by word of mouth and is often taken as a thesis, that investing in stocks is a risk-free idea. Let's figure it out, what is really behind these words.
The statement about the permanent growth of the market is rooted in the following schedule.
This is the oldest index of the American Dow Jones market on the horizon of the last 120 years. All this time the index grew, which means, and the stock market grew with it. Based on this, we can assume, that growth will continue in the future. But it is worth emphasizing a number of nuances.:
The index includes everything 30 companies, and not all issuers, which are on the market. Even S&P 500, which includes 500 Shares, covers no more 15% of the total number of US market issuers.
Companies in the index change regularly. Today it includes completely different companies., than 30, 50 or 100 years ago. Many of those issuers no longer exist. They were liquidated or absorbed by other businesses.
There have been periods in history, when the index was declining or was in a sideways position for 20 consecutive years. They can be seen on the graph.. If you look at the indices of other countries, then there such periods can reach up to 45 years.
In this way, the growth of the index does not mean, that the individual shares you bought will grow. Furthermore, even investing in an index fund does not guarantee, that in the coming 20 years you will get high profitability. Quite possible, that the result will be only a few percent ahead of inflation. It is important to understand this and compare it with your investment goals.. Learn more about, how to do it, read in special material.
Quit your job, start investing
Recognized Master Investor Warren Buffett has never exceeded 25%. In some years, he managed to increase his portfolio at times, but there were also disastrous periods, which smoothed the growth curve.
Will you manage to live less, than on 25% of your capital per year? If the answer is no, it's too early to leave work. But don't be upset, because investments can be combined with work, at least this is what most private investors do. But in the future, when the capital grows to the required size, there will be every chance to lead the lifestyle of a British gentleman, living on income from capital and not burdened with routine worries.
Copy trades of successful investors and make a lot of money
Firstly, successful investors and traders rarely expose their trades to the public and, usually, do not sell paid signals in telegram channels.
Secondly, the essence of successful investments is not, to know, what and when to buy, and in that, to manage risks. To do this, you need to understand, what and why do you buy, what risks do you undertake and in which case it will be necessary to get rid of the asset promptly.
There are really good auto-follow strategies, but they are not based on the decisions of an individual specialist, and on a certain algorithmic system, implementing a specific idea. This idea is being tested on historical data and may show good results in the future.. Choosing a profitable strategy isn't much easier, than choosing a separate stock, therefore, diversification is just as important here.
Important news awaits you here, forecasts and investment ideas, teaching materials, serious analytics and easy reading, as well as a lot of convenient services, including calendars of dividends and buybacks.
