stock investing tips
16-03-2018 04:49
Here at Morningstar, our stock analyst staff has nearly a thousand years of collective investment experience. In this final lesson of the stock Investing tipsClassroom, we’ve boiled down some of our most salient observations into 20 suggestions we think will make you a better stock investor. is not stupid. Seventeenth-century philosopher Blaise Pascal once said, ’All man’s miseries derive from not being able to sit quietly in a room alone.’ This aptly describes the investing process. Those who trade too often, focus on irrelevant data points. Buying stocks is easy. The challenging part is choosing companies that consistently beat the market. That’s something most people can’t do, which is why investing in a diversified mix of low-cost index funds and exchange-traded funds is a smart strategy for the investor. So smart that even diehard stock jocks swear by indexing for the money they’re not using to buy individual equities. But you’re reading this to get better at investing in stocks. We’ll assume you’ve got a yen for research, time to let your investments ride through many market cycles and have set parameters for the amount of money you’ll put on the line. (We recommend no more than 10% of your holdings be invested in individual stocks.) And let’s not forget this vitally important investing PSA: “Money you need in the next five years should not be invested in stocks.” Here are five investing habits essential for success in the stock market: Check your emotions at the door. Pick companies, not ticker symbols. Plan ahead for panicky times. Build up your positions with a minimum of risk. Avoid trading , 1. Check your emotions at the door “Success in investing doesn’t correlate with IQ … what you need is to control the urges that get other people into trouble in investing.” That’s wisdom from Warren Buffett, chairman of Berkshire Hathaway, oft-quoted investing sage and role model for investors seeking long-term, market-beating, wealth-building returns. Buffett is referring to investors who let their heads, not their guts, drive their investing decisions. In fact, trading triggered by emotions is one of the most common ways investors hurt their own portfolio returns. All the investing tips that follow can help investors cultivate the required for success. 2. Pick companies, not ticker symbols It’s easy to forget that behind the alphabet soup of stock quotes crawling along the bottom of every CNBC broadcast is an actual business. But don’t let stock picking become an abstract concept. Remember: Buying a share of a company’s stock makes you a part owner of that business. You’ll come across an overwhelming amount of information as you screen potential business partners. But it’s easier to home in on the right stuff when wearing a “business buyer” hat. You want to know how this company , its place in the industry, its competitors, its long-term prospects and whether it brings something new to the portfolio of businesses you already own badin, Pakistan