What makes a successful stock investor? Learning how to pick winning companies. This is one of the hardest things to do for most people and you’ll miss more trains that you’ll catch.
That’s why you’re reading this article. You want to find out how you can find these unicorn companies. In this article, we cover some of the best stock market investing strategies known to man.
But, before we dive into the tried and true investing tips, let’s just say one thing; never invest more than 10% of your total portfolio in individual stocks.
The majority of your portfolio should go to a variety of low-cost index mutual funds. Moreover, never invest money that you’re going to need in the next five years.
With that out of the way, let’s get to the tips!
- Invest in Actual Companies
Picking companies shouldn’t be a popularity contest based on the most colorful sticker symbol you see at the bottom of the screen from Jeff Brown reviews.
Keep in mind that buying shares in a company makes you part owner in that company so you have a vested interest in its success.
This makes you their business partner so you should put on your business buyer hat when looking for potential companies to invest in.
Do your research to find out what the company’s operating strategies are, who its competitors are, what position it occupies on the market, and what its long-term prospects are.
- Set and Forget
Don’t be one of those people who is constantly checking their stocks every day. It’s enough to check on them once per quarter, or four times a year.
Constantly checking stocks can lead to rash decisions made without considering the long-term effects of a company’s value.
If you notice a sharp decline in value in one of your stocks, look at the totality of the situation, including any external environmental issues that may have affected the company, as well as its internal condition.
- Control Yourself
Emotional intelligence and the ability to control oneself is the discipline you need to be successful in investing.
That’s what has made successful investors like Warren Buffet such legends in the game. The man is known for holding stocks longer than most investors on the market and this is the strategy that has made him one of the richest men in the world.
You don’t have to be a rocket scientist to be a successful investor but you do need to have your wits about you. Let your instincts and intuition guide you, not your emotions.
If you allow panic or excitement to drive your trading decisions then none of the following stock market tips will do you any good.
- Be Prepared for Hard Times
We cannot stress enough the importance of leaving your emotions at the door once you enter into investor mode.
Don’t make any impulsive decisions as you could end up making a colossal mistake where you end up selling low or buying high.
One trick to prevent this is to use a journal and write down the merits of the different stocks in your portfolio and why they deserve to be there. Then, make the decision to keep or dump the stock based on a sober state of mind.