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| source: http://www.blogworld.com |
Have you lost already in your stock investments like Steve Jobs? Probably not or probably you might have. And as the great man of marketing and innovation said “It’s character-building.”
I have two online stock brokerage accounts. Ask me now how is my portfolio on both accounts? Answer is: Both are at negative after the sudden stung the stock market took from recent economic woes. How much? About 1/5 of my total investment.
It is sad to hear when people ask me about my stock investment and how much I already earned expecting me to say that I already earned one million in just 6 months but in reality I only earned about 1/4 from my original investment(which is not yet a million by the way). And when they learned about it they would say “oh I thought I can be a millionaire in the stock market.”
Here is the truth: The stock market is a risky place to invest but along with risk comes returns.
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| source:http://wilderdom.com |
That is why we have what we call calculated risk. We place our investments in stocks that will generate an acceptable future earnings at the same time buying such stocks when they are at their bottom prices. We only put free cash in stocks. We are investors not gamblers.
From time to time we might do short trades on our stocks to seize the moment and pocket gains to further buy stocks of great value that will give us at least two bagger returns within the next 3-5 years.
So should we stop investing in stocks because we made a bad stock investment decision and lost money?
We should rather be good students who learn from such mistake and use that learning experience to avoid the same mistake and develop a better way of doing stock investing.
Yes as Jobs said it is humbling; accept your mistakes and learn how to turn your mistake into your point of achieving your goals.
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| source: http://www.triathlontrainingisfun.com |
I lost a lot of money before in the early days of my investing in the UK market in 2007. I took those as expensive lessons. The most important things I learned:
The market is volatile no matter what you think as an investor. Your investments are subject to fluctuations.
P/E, FCF, DCF, P/B etc. are useless in a bull market! Everything goes up even the crap stocks.
You make most of your money in bear market (NOT IN A BULL MARKET). This philosophy shaped our investment strategy. We’ve never lost a single dime on our long term holdings ever since applying this strategy since 2008. We buy a lot of stocks in a BEAR Market, we sell during a BULL MARKET. People do the opposite they buy in good times and sell in bad times.
It’s known fact that every 4-6 years years we will experience a crash. 1987, 1991, 1997 (Asia), 2001 (Tech), 2007-2008 (Financial), 2011 (Europe and USA). This is when we get interested.
You don’t have to be in the market everytime, just wait for the opportunity when company trades 10centavos to 1 Peso. Then LOAD BIG TIME. That to us is value investing.
thank you Aris for this info. Many do buy when the market is bullish but the right way is to buy when prices are at bottom so that when the market goes up you profit big time. Probably the fear of not recovering from a stock that seems to go down further is the reason why most people avoid bearish times in the stock market but they forget that when the stock is down its a bargain hunting days for investors