Some New Lessons about Buy-and-Hold Investing

Nearly five years ago, and only a couple of years into the re-structuring of my investing mindset that was so desperately needed (I had been a stock investing failure before 2013), I wrote my first post devoted exclusively to the “buy-and-hold” method of investing.  Without much of a track record to that point other than a few emerging winners, it was more of a looking forward with excitement to what might be after a few more years of making this my main investing mindset and practice.

Continue reading “Some New Lessons about Buy-and-Hold Investing”

Why Do Only a Few Investors Succeed?

Investing – in stocks, mutual funds, ETF’s, etc. – is much like anything else.  Out of the many who try it, only a few end up really doing well with it.  But why?  Shouldn’t anybody who bought Apple or Amazon or Starbucks or MasterCard or PayPal or [insert name of ginormous, highly successful company] stock back in the day (or even the past five years) have done well with it?

The funny thing with stock investing in particular is that those who experience the greatest success are defined not by what they do, but more by one certain thing that they DO NOT do.  Let me attempt to frame this in a riddle:

Continue reading “Why Do Only a Few Investors Succeed?”

Is Diversification Good or Bad?

A popular mantra in the world of investment advising is the idea of diversification, of dividing your money into several different types of investments instead of just one or a few and, in the case of stocks, into several different companies.

This is in stark contrast with Warren Buffett, considered one of the most successful investors of all time and arguably the most famous, who once said:

Continue reading “Is Diversification Good or Bad?”

How the Exact Same Stock Will Produce Winners and Losers

Let me reveal right up front what most inexperienced stock investors fall for:  the buy recommendation.  Whether it’s from a time-tested, reputable service like The Motley Fool, a financial advisor, or from a friend – or a friend of a friend – people who know little to nothing about stocks and the market and investing can get excited as a school kid whenever they catch wind of the next “big” thing to invest in.  Why?  Because they easily get caught up in thinking that it’s a sure-fire guarantee of not only money, but BIG money.  (Believe me, I write this from experience.)

It’s as though they believe the person or entity recommending that particular stock used a special investing-only crystal ball or some other sort of mystical power to be able to predict the future.

Continue reading “How the Exact Same Stock Will Produce Winners and Losers”

Choosing What to Invest in Does not Need to be Complicated

When it comes to deciding what to invest in, particularly stocks, people can get easily overwhelmed – especially those just starting out.  Not only are there thousands of stocks to choose from but too many people focus on charts and numbers and the never-ending analysis and advice.  Some of the most successful investors in history, like Warren Buffett and Peter Lynch, have developed the ability to break things down into simple ideas and have been wildly successful at putting them into practice.

Here are some simple ways to see through the clutter and find great companies to invest in, as inspired by the world’s greatest investors.

Continue reading “Choosing What to Invest in Does not Need to be Complicated”

A Successful Investor Needs the Right Personality, not Just the Right Resources

Perhaps the greatest benefit to a person who wants to invest their money in this day and age is being able to access a nearly endless amount of information, analysis, and advice about a multitude of investment types, including stocks.  From T.V. resources like CNBC and Bloomberg and BNN and Cramer to web sites like The Motley Fool and Seeking Alpha, the amount of information at first can seem overwhelming.  Not only are the days of having limited resources gone but also having to wait for some resources, like investing newspapers and newsletters, to arrive in the mail.  You can now make investing decisions within minutes of learning about something and no longer days.

But once the dust settles and you have found a handful of favorite resources – or even only one or two – that align with your goals and levels of risk tolerance, the hardest part of investing begins:  finding out whether you have the personality to become a successful investor.

Continue reading “A Successful Investor Needs the Right Personality, not Just the Right Resources”