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The Right Way to Invest

How to not lose money in stock market?


Does buying in a company stock directly means that you are investing? Is every stock buyer really investing? Think again. Are they investing or speculating?

As we have discussed earlier, buying in a company stock is equal to becoming a partner, a small boss of a company. Do you become a boss just for a month and then decide to take profit and leave? Hell NO! That's not investment, my friend.

Personally, the easiest way to define investing is to believe in a company's future profitability and so, stick with it to reap the profit.It takes time for an investment to be rewarded. Imagine you open a restaurant today, you will not get a rewarding profit immediately, but maybe in 1 year time. If you buy a house today, you will not be able to sell it immediately with a higher price, but it take few years time for it to rise in value. The same goes to stock investment. Here are few characteristics about investing:

1. It takes time to see the reward of your investment. It is a long term effect.

2. It takes effort to find and pick the right stock, just like finding the best business to partner with. This is what being known as value investing, as practiced by Warren Buffet.

3. Don't easily believe in rumours or insider news. Have faith in your stock.

4. Don't let your emotion controls you. Be patient, calm. Don't be too greedy and too emotional with the up and downs of share price.

5. The continuity and profitability of company is more important that the stock market index. If a company is doing well, one day, the company value will definitely be reflected by the share price.

6. Reflect and learn from mistake.

7. Do plenty of homework and fully understand a company background and operations before joining the team.

Setting your mindset right at the very first place is utmost important. Remember. Invest, don't speculate. Look at all those successful investors such as Warren Buffet, Benjamin Graham. They are into long term investment. In fact, a renowned Taiwan investing guru, 胡立阳 mentioned that if you are doing more than 10 transactions per year, you are literally fooling around.

Next, to prove that investing is superior that speculating, let's have a look at the statistic here.

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