To begin with, investors are those who take a long-term view on equity markets and they gain from the buying and selling of the shares. They become aware of good stock and more importantly keep an eye on it till the complete story unfolds and manifests itself. There is nothing like Successful Investment Strategies or is there a Bible that tells us How to become a successful investor in the share market? What you have are rules and some pearls of wisdom that can assist you to become a successful investor.
As we said, profitable investing involves three key steps viz. identifying a good stock, holding it for a long time, and exiting losses quickly. It is solely when you can master these three steps that you can truly become a successful investor. Here are some of the habits of highly successful investors that you should know if you want to be an investor.
Make a Commitment To Your Long Term Investment Strategy
One of the fundamental things you want to do to be a successful investor is to have a long-term strategy. Successful investment strategies are all about subject matters that hold you in the long run. As an investor, your aim is to primarily combine the best of growth and value. Growth companies are the ones that will supply you the virtuous cycle of positive price movement, P/E re-rating, and earnings growth to match up with these valuation re-ratings.
A stable investment strategy is primarily based on two key approaches. Firstly, you undertake a value approach and strive to buy into future leaders at low valuations. Eicher in 2009 or Escorts in 2012 had been all examples of shares that have been quoting at deep value. Once the company starts performing, the valuations begin going up and that is when you want to treat it as a growth stock. The most vital thing is not to waver in this investment approach.
Always Diversify Your Risk
There is a mild dichotomy here. Successful investors may also tell you that most of their money used to be made in just a few stocks. That is surely true. But to survive long enough in the stock markets to make money, you need to be certain that your risk is diligently managed. That is where diversification comes in. Too a great deal of concentration can wreck your equity portfolio and as a result, your risk needs to be continuously monitored. Irrespective of whether or not you are a dealer or an investor, one of your aim should be to keep capital and that can only be done by diversifying your risk.
"There's Always A Scope Of Improvement"
Never Try To Overtrade In The Market & Look At The Costs
These are two different issues however have important implications. Your journey of how to emerge as a successful investor starts with managing your costs. Costs have a range of implications. There are transaction costs, regulatory costs, there is the price of missed opportunities and there is also the taxation cost. Successful investment techniques are all about keeping your prices to the bare minimum. In the long term, it makes a huge difference to your portfolio.
Do In-Depth Research Before Investing In A Stock
One of the most integral out of the few habits of highly successful investors is the capability to identify good stocks. It is no longer simply about entering into stock but additionally about timing your entry. Over the last 10 years, if you had bought into any of the downturns, your returns would have been significantly superior. Before you invest, recognize the company, its business model, its core competition, and threats of disruption, take a look at if the business enterprise has a moat and a margin of safety, focus on intangible assets, etc. Successful investment strategies are all about figuring out the right stock and entering at the proper time. Focus on how best you can do it and don’t worry about getting the bottom and top of any stock.
Cut Your Losses
How to turn out to be a successful investor in inventory markets is all about cutting out your losing positions. An accurate investor never averages positions in the hope that the inventory will bounce back. The best of traders can only get 70% of their calls right. For the remaining 30% in your portfolio, you want to ensure that it does no longer unnecessarily eat up your resources and your time creating opportunity losses in the process.
Run Your Profits As Long As You Can
Focus on your conviction and don’t be driven through the percentage returns that you have earned. An investment in Wipro well worth Rs.10, 000 in 1980 grew to be almost Rs.300 crore by 1999. Therefore, how to end up a successful investor in share markets is all about that indefatigable conviction and the persistence to let profits run as long as possible.
