This May Be the Hardest Thing of All To Do
Considering what's the hardest thing of all to do as an investor can yield a number of items. For example:
Establish a sell strategy for each of your positions.
Even many experienced investors who spend oodles of time concocting ways to find stocks or assets in which to invest, including when to invest, don't put serious thought into this. I must say it's not something I took to right away; but it is something I learned (sometimes the hard way). I did that through reading, research, thinking and, finally, writing down my sell strategies. Without a sell strategy, you're open to riding a position down, sometimes over an agonizingly long periof of time.
Fundamental investors would be the most likely candidates for this agonizing ride to oblivion. The typical reason would be that their analysis seems to hold up, despite the falling price of the position. And, indeed, for all intents and purposes, it may very well hold up. So the mentality is: Everything looks as good as it did when we first put on the position. There's no reason to sell. The price will bounce back.
You can tear apart the logic here, of course. How to you know the price will bounce back? The fact is, you don't. In addition, at times, while the fundamental analysis continues to look good, something may be going on in the sector or company that, for whatever reason, you just don't know. Yeah, even in this digital age where all available information always and everywhere appears to be at our fingertips, there are some things we don't, maybe can't know.
So do dedicate time to establishing sell strategies for your positions. And if you're not sure what a sell strategy is, well, start Googling. You'll assuredly find enough out there to get you started on determing what's the sort of strategy you're most comfortable with, and most capable of executing.
Other hard things for investors are wild swings in markets, resisting the siren call of the financial media (both bullish and bearish), following the advice of experts in areas with which you are totally unfamiliar.
But here's the really hardest thing of all to do: Nothing.
Right now, for example, we have positions to buy both for existing accounts which need additional positions, and for new accounts in cash that need to be invested. But some of these positions have run up so far, so fast recently, it's hard to justify buying right now. A good example: Gold. It's had quite a run since July. So we used some of our resources and applied our thinking caps to come up with a some price parameters that would cause us to pull the trigger and buy. And while it started correcting last week, today it jumped up again. With that jump comes some emotion: Oh no, what if that all-but-brief correction was it? What if we're off on another bull run?
Now, we may be wrong in our assessment, but it's doubtful that ever-so-slight correction is "it." And with that conviction there's nothing to do. Nothing.
It's not easy to do nothing as the price rises and we subconsiously calculate what we could have "made" had we bought when the correction started. And, of course, we could be wrong. This could be the start of another bull run. Oh well. If it is, we'll just have to go back to the drawing board and concoct new parameters that we believe make buying sensible.
Then again, if the position is a really long-term position, one which you're almost absolutely certain you'll be keeping for at months, really more like years; and if your position is in a long-lasting bull market that's still got strong legs, it really doesn't matter when you buy. You'll make money.
Of course, you can't know any of this with certainty - which is what can make investing difficult and frustrating at times.
Establish a sell strategy for each of your positions.
Even many experienced investors who spend oodles of time concocting ways to find stocks or assets in which to invest, including when to invest, don't put serious thought into this. I must say it's not something I took to right away; but it is something I learned (sometimes the hard way). I did that through reading, research, thinking and, finally, writing down my sell strategies. Without a sell strategy, you're open to riding a position down, sometimes over an agonizingly long periof of time.
Fundamental investors would be the most likely candidates for this agonizing ride to oblivion. The typical reason would be that their analysis seems to hold up, despite the falling price of the position. And, indeed, for all intents and purposes, it may very well hold up. So the mentality is: Everything looks as good as it did when we first put on the position. There's no reason to sell. The price will bounce back.
You can tear apart the logic here, of course. How to you know the price will bounce back? The fact is, you don't. In addition, at times, while the fundamental analysis continues to look good, something may be going on in the sector or company that, for whatever reason, you just don't know. Yeah, even in this digital age where all available information always and everywhere appears to be at our fingertips, there are some things we don't, maybe can't know.
So do dedicate time to establishing sell strategies for your positions. And if you're not sure what a sell strategy is, well, start Googling. You'll assuredly find enough out there to get you started on determing what's the sort of strategy you're most comfortable with, and most capable of executing.
Other hard things for investors are wild swings in markets, resisting the siren call of the financial media (both bullish and bearish), following the advice of experts in areas with which you are totally unfamiliar.
But here's the really hardest thing of all to do: Nothing.
Right now, for example, we have positions to buy both for existing accounts which need additional positions, and for new accounts in cash that need to be invested. But some of these positions have run up so far, so fast recently, it's hard to justify buying right now. A good example: Gold. It's had quite a run since July. So we used some of our resources and applied our thinking caps to come up with a some price parameters that would cause us to pull the trigger and buy. And while it started correcting last week, today it jumped up again. With that jump comes some emotion: Oh no, what if that all-but-brief correction was it? What if we're off on another bull run?
Now, we may be wrong in our assessment, but it's doubtful that ever-so-slight correction is "it." And with that conviction there's nothing to do. Nothing.
It's not easy to do nothing as the price rises and we subconsiously calculate what we could have "made" had we bought when the correction started. And, of course, we could be wrong. This could be the start of another bull run. Oh well. If it is, we'll just have to go back to the drawing board and concoct new parameters that we believe make buying sensible.
Then again, if the position is a really long-term position, one which you're almost absolutely certain you'll be keeping for at months, really more like years; and if your position is in a long-lasting bull market that's still got strong legs, it really doesn't matter when you buy. You'll make money.
Of course, you can't know any of this with certainty - which is what can make investing difficult and frustrating at times.
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