Here’s some food for thought for those who invest in the stock market. Apologies in advance if some of the advice is a bit scattered. I have a few important deadlines to meet for next week but wanted to drop some advice here for new investors (and for more experienced ones who could do with a refresher!).
In this market, both bulls and bears can profit. Plenty of opportunities to make $ on both sides, whether you’re investing on a stock long term, shorting a stock, or swing trading. Half the battle is knowledge – researching and keeping an eye on good stocks for which patterns can be discerned more easily, and knowing those stocks well.The other half is time – just timing your entries/exits right and being patient. There’s also the “luck” factor (i.e. random presidential tweets overnight; geopolitical events; scandals, etc), but this matters a lot less if you invest in a stock in the long term. It all depends on how much risk you want to take.
And always keep in mind some old mantras that go beyond the cliched “buy low sell high,” or “diversify your portfolio!”:
i) Do your research! This will allow you to be confident in your stock picks, to navigate through price manipulation, and to have the patience that is necessary to lock in good profits.
ii) Stay humble and on your feet. Don’t ever feel that you’re too good and always question yourself and your trading strategy. Set profit targets and exit your positions once you’ve reached that goal. Remember that even the most inexperienced trader can win some in the stock market – the hard thing is to have a consistent pattern of wins.
iii) Don’t just learn about stocks but learn about entire sectors – e.g., f you expect cybersecurity to be a sector that will absolutely moon in the next years/decades (AS YOU SHOULD!), you would have invested in stocks like $ZS, $OKTA and $CRWD a long time ago (and you’d be significantly wealthier today than you were a few years ago!). I personally specialize in a few sectors, primarily cybersecurity, software, and defense, but also health care, pharmaceutical and engineering. I do trade outside of my “comfort zone” some times, as this forces me to learn about new companies and entire sectors. But I generally stick to my guns, and that’s what’s made me the most profit in the last few years.
iv) if playing options, avoid playing things that expire too soon (unless you’re just looking to gamble), and avoid overtrading;
v) Don’t be afraid to ask questions, to get advice from more experienced traders. And of course, always be skeptical of paying for advice (unless you’re getting it from Señor Buffett himself or from some very experienced trader that you trust). With the internet today there are simply too many tools and ways to get better at trading in the short- and long-terms for free.
vi) “Buying low and selling high” is a lot trickier than it sounds, and most traders I know have lost a lot trying to do this. I would personally rarely buy a stock that is in a strong downtrend, even if I like it’s fundamentals. Wait for the stock to show signs of recovery before entering a position. Similarly, many stocks hitting ATH will keep breaking ATH because they are fundamentally good and in sectors that will continue growing. For example, “buying high” for stocks like $MDB, $ZS, $CRWD, $COUP, $MSFT, $LMT, $NVTA, $COST and such is not a bad idea if we know the company will continue to do well, is showing good fundamentals, and it’s well positioned (vis-a-vis competitors) in a growing sector.
vii) And above all, remember that the best trades are the ones that are a product of TA, FA, and good timing. So it is absolutely essential to know the fundamentals, technicals and the market sentiment in order to succeed in the stock market. This brings me back to point i).
Good luck with your investments!
Disclaimer: Consult your financial professional before making any investment decision.