Although, very few, either realize it, or will admit it, many people seem to approach, investing in stocks, in a rather, short – term, rather than longer – run manner, and mind – set! When you invest, will you do so, as if you are renting, or owning the stocks, you purchase? In most instances, those, who seek quality companies, rather than seeking, some, get – rich – quick, approach, minimize their personal risk (in the long – term), as well as, if done, wisely, get a better overall rate of return, over – time! With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, what this means and represents, and the potential risks and ramifications, etc.
1. Constant trading/ turnover, versus, buy – and – hold: Some people turn – over their portfolios, far more often, than others. While, in the short – run, this may deliver profits, etc, it often, fares less well, over a longer – period, with expenses, market – shifts, changing economic times, etc, taken into consideration! However, the buy – and – hold, approach, generally requires far more homework, study, and consideration, in order to thoroughly, consider, whether the right type of company, is being chosen!
2. Doing due diligence: A wise, educated, prepared investor, generally, does best! When one does his due diligence, he maximizes the possibilities. Choosing a quality, wiser course of action, requires excellent dedication to due diligence, and a commitment to avoid, proceeding, in a hasty way! Consider management, industry, corporate dedications, etc, and proceed, wisely!
3. Long – term, proactive, versus, impulsive and/ or reactive: Consider fully, up – front, what you seek, and identify, those companies, which might best serve your needs, goals, and priorities. Be thorough, demanding, but, also, patient! Avoiding choosing, based on rumors, feelings, tips, or short – term fads, or other impulses, etc, and, rather, proactively, carefully, choose, wisely, for the longer – term!
4. Evaluating the company, versus the overall market: Beware of market – timing, but, rather, pay far more attention to the specific company, instead of the overall market! When you avoid, over – considering, the short – term, and the inevitable market swings, you minimize speculative risks, etc! Fully research, all aspects of the subject corporation, know about its management, history, plans for the future, relevance, and the strategic, as well as action plans, and choose, wisely!
In most cases, most people, over – time, do much better, when they opt for the longer – term approach, instead of the shorter – one. Are you ready, willing, and able, to become a wiser investor?