Andrew Kinsey reminds us that investing in equities can prove challenging for most investors, due to human nature in general which often craves instant gratification. Patience and discipline go a long way in this arena! That said, Andrew’s isolated three key points that he’s had to “learn and relearn” during his investment career.
Here they are:
1. Short term trading on a long-term portfolio.
This will reduce your returns! When you do this, you incur additional costs, and trading in this context implies that you can anticipate short-term movements.
2. Don't over-invest.
Planning an investment opportunity is ideally influenced by clear reasoning, with a time-horizon in mind. If you find yourself wavering and wanting to play around with your trade, take a step back and remind yourself of your initial clear-headed decision. The only time you should close out an investment is if the facts on which you initially based your trade have changed.
3. Don't act on impulse!
Always think carefully about what you’re doing. The worst thing to do is chase the market! For example, if you’ve noticed a share that you haven’t invested in has gone up 30% already, you shouldn’t decide to buy shares on the sole basis that you feel like you’re missing out.