Saturday, July 2, 2016

Investor's Code: Buying and Selling

Having a code is important in life. A personal code can help you determine what you yourself view as an easy moral choice and what you will help you sleep better at night. Whether this be a moral code that acts when you have to stand up to a bully who is taking advantage of you or someone you know or maybe it’s just returning a lost wallet that has a huge amount of cash inside, a moral code is a requirement in life.

Now, investing may not require as much of a moral code. I myself have a few investments in “sin stocks” that may be a little more against a moral code than others but my moral code isn’t what we’re talking about here. The reason I bring up having a code is that I believe that investors must have their own code that corresponds just with investing. It’s a code that defines what stocks are worthy of a buy and which are worthy of a sell. Without a code an investor can find himself in an awkward spot and without a direction.

In fact, this can be a major downfall for a lot of new investors. A code denotes that you as an investor have a plan of attack and defense. Without it, an investor is flying blind. Without a code, an investor can easily be swayed by something as simple as one article that has been written about how one of their stocks is no longer worth the investment when in reality it is still the best bet in town. The key point of this post is to remind investors that read this blog that they need to make sure that they have a code set in stone as to what they will buy and what they will sell. They should have a clear designation or code as to what qualifies in both situations so that they are insulated from the barrage of good and bad press that comes out about companies.

If an investor can be protected from the filth and lies that the media can spew out about various companies, they can better position themselves to make money in the market. It protects an investor from impulses that psychologically can drive us to make mistakes. The fewer mistakes we make, the more money we are likely to bring in with good choices in investing. If you don’t have a code just yet and you’ve been flying by the information provided to you by other investors or advisers, it may be a good time to start creating your own code so that you know you’re on the right or wrong track. Then after you’ve implemented it, review it constantly. Speed test it if you can keep up with it. Are the profits rolling in? Are they sluggish? Is your money tanking? Once you’ve implemented, you can evaluate, adjust, and learn. Once learning happens, you will find yourself becoming a much better investor. Or at least you should if you learning the lessons and not simply pushing them aside.

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