A couple of minutes before the interview occurred, I wanted to share on radio on specific points on improving an Investors / Trader’s psychology and key traits in approaching the market.
Unfortunately, I was informed to do “Stock/Sector Pick of the Day”, which I suppose the masses love to hear. This is a stark difference from following a Investing / Trading methodology and being consistent.
This is what I wanted to share:
The most important trait to me is Discipline.
In the market, there are only 2 methods to profit. 1. Capital Gains. 2. Dividends.
Before you invest, you have to be clear on which method you are pursuing.
For example, I
You buy Company A at $1 for Capital Gain.
If it falls below $1, the market goes against your system. Instead of stopping your losses, Investors tend to justify “Company A also gives dividends, I can keep this.” – which is the psychology of the majority.
More often than not, Company A continues to bleed, and most investors add on to a list of Junk A-Z in their CDP statement.
What can we learn from this?
Stick to your objective: Capital Gain or Dividends?
Stop-Loss, if the market goes against your objective.
If the above scenario occurs, you no longer have the power of choice. You are not an investor by choice, but because you’re forced into that particular situation. You became an involuntary investor.
I will be covering STI Outlook shortly. Stay Tuned.