I am a novice investor. My exposure to capital markets, albeit short, has definitely taught me some lessons. I erred, learned from those mistakes and have tried to construct a system, a strategy that works for me.
Being nimble, agile has helped me restrict my losses on a lot of positions I had initiated. When realisation dawns that some improper investment decisions have been taken, it pays to not prolong correcting the mistake. Often, it may mean booking a loss. Book the loss. Move on.
Booking losses is never easy. It hurts. But, it’s a bitter potion. It vastly improves future actions if lessons are learned.
b) Interaction with fellow investors
I began my investing journey by reading some of the popular investment books. I was foolish to think that I had acquired the requisite skills to participate in the stock market. Also, I had developed a superiority complex. I was ignorant. I was arrogant. I was an empty vessel that made too much noise. Then, by the stroke of luck, I got the opportunity to meet some investors, not much older than me. My arrogance melted. I understood that I was nothing but a speck of dust. I stayed in touch with the group of investors. I learned a lot from them and often cloned their investment decisions. It worked well for me. It serves well to be open to the idea that the beliefs we hold may be wrong. That allows us to grow and become accepting of others’ perspective.
c) Involvement in other activities
When I began, I was addicted to the stock market. I’d check stock prices every 10 minutes. I was passionate. But, anything in excess is detrimental. Eventually, I was tired.
Hence, its important to participate in activities very different from investing. It’ll ensure our health - Physically and mentally.
It could be reading, running, music,intellectually stimulating discussions. Absolutely anything.
After all, it’s a healthy mind and a healthy body that’ll ensure healthy returns from the market.
d) Shed the urge to compare
It’s difficult to resist the temptation to compare our stock returns, performance with that of your acquaintances. And, our underperformance often causes aggravation. I compared and I still compare. I’m trying to get rid of this vice.
Comparison makes us unhappy,envious. These aren’t very healthy emotions to harbour. It directly or indirectly will have a bearing on our investing performance. If you do well, excellent. If you don’t, its alright. Someday, you’ll do well. Don’t fall in the vicious circle of loving suffering and self pity. Stay positive and give it your best.
e) Seek help
For most people, direct equities may not be the right strategy to adopt. Not everyone can do everything. But, if there’s the desire to be the manager of our funds there’s no harm, shame in seeking support from financial services firms. They exist for precisely this purpose. Seek help. Sharpen your returns.