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Becoming Better Investor

The biggest financial markets winners are medium to long term market players who find the best seed (financial instruments), and sow them in the right seasons before giving themselves enough room (time) to manoeuvre.  Markets go up and down in an uptrend or downtrend and best seeds ( financial instruments) that are bought or sold at the wrong time will not generate profit (produce losses). 

Becoming a better investor should be the goal of all investors including small market players like ordinary technical traders. 

What does it take to becoming a better investor?

1/ Make The Decision To Become A Better Investor.

Believe it or not without that decision, one will be wandering in the wilderness of the financial markets.  It all starts with a firm decision.  Once one makes that decision, everything begins to align if one stays focused.  Remember those two words: decision and focus.

2/ Do Not Continue To Do Things Like You Were Doing Them Before.  

Please note that it an aberration to expect a change while doing the same things like before.  It will not work.  Stop and start with new strategies that work.  

This is true for someone that was day or swing trading aimlessly or an investor who is investing without learning first how to invest.  Just stop and take time to build a better investing strategy.

3/ Love The Initial Public Offering (IPO)

What one needs to look for is new companies that were listed for the first time, but for different reasons the stock price went down for six months or so.
It has to be a good business in a bullish sector that is coping with the competition.

One example at the start of 2020 is Pinterest stock. Please note that not all stocks that decline after the IPO are good value because some of them will never recover or take ages to produce gains.

In the interest of the full disclosure; at the time of the writing of this article I do hold Pinterest stock.  One should never take this article as an investment advice.
It is an investment educational material that aims to open the eyes of many blind
investors.  Also, it is not because I hold Pinterest stock then it will definitely rise.
Stocks can rise or decline (Yin and Yan)

Nevertheless those who know how to spot value stocks will get in before the stock begins to rise.

That was also the case for Facebook stock after the initial decline of its IPO. 
Last point, Elliott wave traders who master how to combine the irregular first Elliott wave with the fundamentals will be ahead of the crowd.

4/ Buy And Hold Using Free Commission Investing Account

Becoming a better investor is about buying best value companies stocks at the right price.  At the same time, one does not want to accumulate large amount of money in commissions fees.

Buy and hold investing strategy is deployed in a timely fashion when the SP 500 stock index (the market) is coming to the end of a correction, and new monetary or economic policies are supporting a bullish reversal.

The most recent example in 2012 is the change of the U.S monetary policy from dovish to hawkish (interest rate hiking) when the SP 500 has completed the 2nd Elliott wave (higher degree) correction that was due to the 2008 financial crisis.

In a nutshell, it means valuable stocks become cheap (good value) in an oversold market that is supported by new monetary and economic policies in the USA.

Please Google search commissions free investment brokers or account to find them.  One example of those in 2020 is Trading 212.  I like them because for UK clients, there is an ISA account that also helps to cut tax charges.  Really nice stuff indeed.

5/ Use Elliott Wave Forecast And Fundamentals

One wants to use a valid fundamental analysis that incorporates the Google finance acid test to uncover oversold or bullish financial instruments.  After that, one will use a valid Elliott wave forecast to time the entry more precisely when the financial market is still bullish.

Warning

This investing strategy should be avoided when the SP 500 is in the fifth Elliott wave.

One does not want to buy stocks all over the place without care in that instance.  A cautionary approach will be more suitable when one puts in place defensive measures (hedging or limited investing portfolio). 

Most traditional investors are fundamentals market players, but most do miss out just because they lack the knowledge and skills of an Elliott wave investor who knows exactly how to time the markets.

6/ 5% Money Management Plan

It does not matter how often one has winning investing positions, if one is not managing the investing portfolio like a smart market investor, one can easily pile up stupid losses.  

Therefore, one ought to adhere to the five percent money management plan, and be ready to cut losses especially if the initial signal has been invalidated.  Be agile like a deer, and keep eyes wide open like an eagle.  That can only help.  

The time of wild wild west investing style has now ended.  There is now a fierce competition between investors.  There is no room for day dreaming or keeping fingers, hair, nails and tooth crossed.  One can pray, but one will still take decisive actions when necessary.

7/ Give Yourself Enough Time And Room

Generally, in the long run the markets rise more often than it falls.  So if one invests in good value financial instruments at the right price, one can still come out clean.  

Indeed, after the 2008 bearish season, investors who were in possession of good value stocks were saved just because they hold on to those golden nugget value stocks for three or five years at least.  Most were rewarded for their patience.  

The length of time one gives oneself is really a beneficial factor.

Though they were in red for few years, their good value stocks pick did not let them down as the SP 500 resumed the bullish trend at the start of the third Elliott wave of higher degree.

Contrary to other market players such as day and swing traders who were taken out of their positions, medium to long term investors were far better off.

8/ Always Invest In Dividend Paying Companies 

Stocks do not rise in a straight line.  Therefore, when there is no capital gain, juicy dividends will surely compensate.
One will be smiling all the way the bank when there is nice capital gain plus fat dividend cheques that are popping through the letter box.

9/ Dividend Reinvestment Plan (DRIP)  

Smarter investors do not always cash out their dividends, but use them to buy new shares for many years as long as the company is generating more shareholders value.  

The accumulation of those dividends reinvestment can generate really eye popping gains in many cases if one holds on for ten or more years.

10/ Learn To Become A Better Investor

No one is born a smart investor unless one is born in a smart investor's family, and has the privilege to be part of it at the early age.  Therefore, nothing should stop one to start learning to gradually mature as a better investor.  

There are so much free online written and audio visual investing material today.  One can also take online investing courses or take a job in an investing firm that can train one to prune those rough edge investing knowledge and skills.

Remember that one must first make the decision to become a better investor.  From that point, one must stay focused, and be ready to go one step at a time.

It is odd that many are investing large sum of money in the financial markets without learning a bit to become a better investor.  Children's money and saving accounts have been depleted year after year due to the lack of knowledge and skills.  

Not only that people refuse to take responsibility for their actions, but instead blame the financial markets.

Remember that it is insane to expect a different result when one keeps doing the same things or repeating the same old investing mistakes.


Conclusion

It is possible to learn to become a better investor, but the first step is to make that firm decision.  


Obviously investing is not for all folks.  If that is your case, stop and find better things to do in life.  One can excel in other things in life.  If investing is for you then make the decision to become a better investor.  I wrote this article while thinking of many day and swing traders that have lost over the years their hard earned money.  


One question remains, is investing what one needs instead of day and swing trading or both?
Now there is thought, but also a away out.  The decision is yours.

I think I have said enough, so I will stop now.  However, I will be back soon if another food for thought investors' article.  Stay tuned and thank you for visiting stochastic-macd.com website today.

If this article has woken up the investing genie in you, please feel free to share it on your favourite social media.  I will really appreciate that.  If you do that then you are a special being, and you can be proud of yourself.  


Please do not forget to say good words about us on your number one trading or investing forum.
Happy Investing To All.


This article is written by G Beaulieu 

Founder Of Stochastic-MACD.com