— “Calling the Trend” Column, by George Leong, B.Comm.
I will talk a bit of investing today. Success in the market requires patience and capital preservation. The last thing you want to do is to chase stocks higher and leave yourself vulnerable to a major downside move. The risk is there and you need to be aware of it.
If you don’t have a lot of money to invest, and you can’t afford to lose in the stock market, your options are most certainly limited. Of course, nobody wants to lose money speculating in the stock market, but the reality is that it is part of the business.
At the end of the day, you do have to sock away some money before you can go out and create a portfolio of stocks. Once you accumulate some “play” money, there are a lot of options and strategies available to you that will help mitigate your investment risk in the stock market.
It is true that it is a lot easier to make money once you already have some. This is how the rich always seems to be getting richer. They can afford to lose, so they have all the time and resources in the world to help them invest their money in the best possible way.
Of course, once you have some money to invest, it is also a lot easier to lose it. This is why it is important to take steps to help mitigate investment risk, and to keep yourself in the game as long as possible so your money can work for you, and not the other way around.
The longer you are in the stock market, the more probable it is that you’ll find a big winner. When it comes to money, many people do things they wouldn’t ordinarily do. Because it is the main currency by which we all live, you have to be diligent when you spend it.
Make no mistake about it, it is a lot easier to spend or lose money than it is to create it. If you have already accumulated some wealth, you know this to be true. If you’re trying to save a bit of cash, you also know this to be true.
There are plenty of other worthy things to do in this world above speculating in stocks. Buying and selling stocks is not for the faint of heart, so if you can’t sleep at night because you are worried about your portfolio, you may want to consider another kind of business venture. Think about what you are trying to achieve by investing in stocks.
You have to be diligent in your research and you have to be patient for the right opportunities to come along. One of the most important requirements for being successful in the investment business is to develop your own approach to the market. You must approach the stock market in a manner that only you are comfortable with. Some people are good at short-term trading, while others excel at long-term investing. You can’t use anyone else’s “system” as your own.
You will only be successful if you take in as much information as possible, try different approaches, and settle on a routine that works for you.