Unfortunately, many investors who have been seduced by the lure of easy money trying to "active" investors before they have the skills, resources or the right frame of mind to do that.
This is not to say that investing in stocks is extremely difficult ... It is not!
However, beating the market on a regular basis is far from simple and requires to bring an investor in the investing process a particular discipline, knowledge, and passion that enabled him to rise above the herd.
Like in any other competition, can not win! Everyone In fact, for any amount of money that the market exceeds people's money is not doing quite as well!
How can you tell if you are ready for an "active" investor to be? Not an investor who buys and sells stocks on a regular basis, but operates in the way the academics say it - someone selects its own shares. It's not like there is a licensing process or whatever. In fact, there is not even a formal course of instruction. Just like parenting, you tend to find out if you really cut out to be after you have made for a fairly substantial bet an investor
In my opinion, you should not invest in stocks:
... If you need the money within two to three years at least.
... If you do not like math.
... If you "play" the word, "gamble," or to use when you describe your investments similar speculation oriented word
... If you think indexes are more important than what companies you own.
... If you are not prepared for the volatility. Many people look at the returns for the stock market just seemed to run at the first loss! If you can not stand to lose money, you do not have the resources ... Period!
... If you think that you only buy stocks that go up. You are not perfect! No system is perfect. No provider of advice is perfect. You can - and will - lose money at some point during your investment career! You can minimize if you do your homework and be careful about the valuation, but money lost is money lost this loss.
... If you believe that the share price movements alone or you only tell something about the underlying quality of the company or the business. Too often people buy low-priced stocks with the idea that they are cheap, only to discover that they are low priced because the underlying business sucks.
... If you are not a list of why you bought and what would you write could sell. If you do not know why you bought a stock in the first place, how can you know when to sell? Bad scene. Avoid.
... If you can not tell the difference between a balance sheet and a profit and loss account. Especially if you do not even know where to find. A copy of either
... If you can make. A rudimentary assessment of the underlying quality of a company
... If you can not define any of the following words: gross margin, operating margin, profit margin, earnings per share, the cost of goods sold, buybacks, sales, receivables, inventories, cash flow estimates, depreciation, investment, market equity capitalization or valuation, shareholder, assets, liabilities, return on equity.
... If you only have one source of information about the company. I do not care if it's your best friend, a message board, or a content provider. If you can not independently check the facts, you are bound to unintentionally get cheated. No one likes to admit that he is wrong. If you are dependent on a source of information, chances are if it finally cough up the conclusion that it will be too late for a bad call
... If you can not remember the name of the main products of a company makes or major competitors of the company.
... If you do not use the Internet. Seriously people, come on! Almost all of the disadvantage that it is an individual investor from the side data was erased by the Internet. If you do not, you are at a great disadvantage to all of the other players.
It's like trying to wrestle without limbs!
Ioannis - Evangelos C. Haramis was born in Greece in 1951 and studied in Greece, the U.S. and Belgium. He has been active in the equity markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the publisher of
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