| Investment Education In 3 Minutes |
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| Written by Sandeep Nath |
| Monday, 03 May 2010 21:45 |
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Lack of investment education is the number one reason people don't make money, whether in the stock market or real estate. They don't think long term. They might buy something today and regret it tomorrow; the buyer's remorse syndrome. And most people find it impossible to move in the opposite direction of the herd mentality. Of being optimistic when the prices go up and pessimistic when they go down, Fear and greed get the better of them. Unless you have that in check you won't separate emotion from money.
Lack of investment education is the number one reason people don't make money, whether in the stock market or real estate. They don't think long term. They might buy something today and regret it tomorrow; the buyer's remorse syndrome. And most people find it impossible to move in the opposite direction of the herd mentality. Of being optimistic when the prices go up and pessimistic when they go down, Fear and greed get the better of them. Unless you have that in check you won't separate emotion from money. Any person would generally, unknowingly, buy when it climbs and sell when it drops. That's not right. Here's what Peter Lynch reveals from his 20 year record of serving 28% annual returns at his mutual fund. He says most people who invested into his fund did not make much money. Why? They were putting their money in looking at strong performance and selling out when it was weak. By chasing performance rather than results they did not capitalize on the potential of the fund therefore. Two things that investment education essentially covers are knowledge and conviction, which help go against the herd. Knowledge without conviction is pretty useless while conviction without knowledge can be dangerous. This is where Warren Buffet's model is good to fall back upon. What you would not know about Warren Buffet is that at age 6 was out making money from soda bottles. His secret is 'pick your investments with a margin of safety'. Buy anything at a discount. Make money based on purchase price rather than sale price. Secondly he advocates using Mr Market effectively. Since the prices fluctuate everyday Mr Buffet advises to look but not act. It's a little like Ted Williams the great baseballer who would swing only at the balls that came within full striking angle. Ted explains that he set out 77 baseball sized cells around the bat and would swing only if the ball fitted into one of those cells. Likewise Warren Buffet says wait for the fat pitch and right time on the perfect investment before you strike. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. The mPower and m1 programs from WMI were created to do exactly this provide a proper investment education to adopt the internal success system used by successful people. Watch a video at http://DoOnlineBusiness.com |