What to do Before, During and after a Trade
(Best and shortest article , I have read in terms of money management and psychology)
(Best and shortest article , I have read in terms of money management and psychology)
Learning to catch High Probability Breakouts
- Thread starter amitrandive
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Warren Buffet's Wisdom
http://time.com/money/3649878/invest-like-warren-buffett-bill-gates/
According to Alice Schroeder, in 1991 when Bill Gates’ dad asked Buffett and Gates what the most important factor for their success was, they both gave the same answer, “focus.”
In order to do a good job of those things we decide to do we must eliminate all of the unimportant opportunities.
Like success in life and business, to be successful in investing, you need focus and time if you want to do better than average. As Warren Buffett has explained,
“Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.”
Just getting to average performance is hard enough. While by definition, the average investor cannot do better than average, the average investor would do nearly 80% better if he or she simply earned the average market return. Most investors would be better off in index funds.
The first key part to be successful is to learn the mistakes that hold people back and avoid them. For investors these include being too active, overconfident, loss-averse, taking on debt to invest, and making rash decisions based on daily market movements, among others.
The second part is to know what your goals are and have a process where you constantly learn, think independently, and quickly try and figure out when you are wrong. You need to go put in the effort so that you can evaluate a selection of businesses and build a circle of competence, that is a set of businesses and industries that you can understand and can independently evaluate. Only then will you be able to select businesses whose values are misjudged by the market, providing an opportunity for you to profit.
Most people don’t do this. The key is to realize the limits of your knowledge, you can’t know and be good at everything. For this reason, most people shouldn’t try and invest in stocks to beat the market since they can’t put in the time and focus.
Investing is a lifelong journey, not a sprint. If you are willing to put in the time and focus, a commitment to learning how to invest will pay dividends for the rest of your life.
http://time.com/money/3649878/invest-like-warren-buffett-bill-gates/
According to Alice Schroeder, in 1991 when Bill Gates’ dad asked Buffett and Gates what the most important factor for their success was, they both gave the same answer, “focus.”
In order to do a good job of those things we decide to do we must eliminate all of the unimportant opportunities.
Like success in life and business, to be successful in investing, you need focus and time if you want to do better than average. As Warren Buffett has explained,
“Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.”
Just getting to average performance is hard enough. While by definition, the average investor cannot do better than average, the average investor would do nearly 80% better if he or she simply earned the average market return. Most investors would be better off in index funds.
The first key part to be successful is to learn the mistakes that hold people back and avoid them. For investors these include being too active, overconfident, loss-averse, taking on debt to invest, and making rash decisions based on daily market movements, among others.
The second part is to know what your goals are and have a process where you constantly learn, think independently, and quickly try and figure out when you are wrong. You need to go put in the effort so that you can evaluate a selection of businesses and build a circle of competence, that is a set of businesses and industries that you can understand and can independently evaluate. Only then will you be able to select businesses whose values are misjudged by the market, providing an opportunity for you to profit.
Most people don’t do this. The key is to realize the limits of your knowledge, you can’t know and be good at everything. For this reason, most people shouldn’t try and invest in stocks to beat the market since they can’t put in the time and focus.
Investing is a lifelong journey, not a sprint. If you are willing to put in the time and focus, a commitment to learning how to invest will pay dividends for the rest of your life.
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