Encouragement to Start Your 2010 Off Right

by Andrew Horowitz

This is the Winning Investor’s Quick and Dirty tips to making money in any market and I am Andrew Horowitz, your guide to profits.

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Let's start 2010 off right with the three very important tips and tactics that will help contribute to your investment success.
 
With 2008 being so difficult, it's good to start fresh, dust yourself off, pick yourself off the ground, and get back in the game.  That brings us to our first tip which is not just valuable advice for investors, but good advice for most things we do in our life.
 
Don't beat yourself up.
 
It's so easy to feel guilty, terrible, fearful, or doubtful if our past experiences in the market have been negative, or if we are coming off a particularly bad year.  Realize that nobody is perfect.  Allow yourself to learn and grow, and don't try to strive for perfection.  Cut yourself some slack!  Go easy on yourself. 

If you took a big loss on a particular stock in your portfolio, let it go.  Learn from your experience so that you can find any mistakes and then seek to correct them in the future.  It is so easy to get caught up in a stock as we think the growth prospects are limitless, and we wrap our ego up in the stocks we buy.
 
Don't let your emotions - positive or negative - cloud your judgment and assessment of the worth of a company.  Try to remove both the negativity and anxiety along with the positive feelings you might have for a stock and make sound decisions based on the rules and guidelines you establish for yourself as an investor.
 
If a stock declines 10% to 15% where you bought it and your rules say you sell stocks that decline that much,  or if the stock begins to break support levels you thought would hold, sell the stock.  Do not try to second-guess yourself or look for reasons to stay in your position.  This is how you can wind up with large losses in your account and wonder what happened!
 
But if this happens, don't dwell endlessly on your loss and kick yourself for not selling earlier. 
 
It will help relieve stress to know that no one - not even Warren Buffett - is perfect.  Yes, Warren Buffett lost money in 2008 too!  That may or may not be comforting, but it's helpful to know that people do not have magic wands when they pick stocks. 

Keep a journal of your experiences.
 
Whether good or bad, write as much down as you can as possible.  Keep an investment journal of your successes and bad moments as an investor or trader.  Did you do your work and find a fundamentally strong company that was in an uptrend and you bought it and made money last year?  Write that down and what you did to find that stock.
 
Did you jump into buy a stock because someone on television recommended it?  Did you hold it longer than expected and wind up selling it later for a large loss?  Write about that too. 
 
Write down helpful new information you read in a magazine or website or hear on a podcast or TV.  Don't take stock tips from people, but write down tips like we discuss here on the Winning Investor.  Always do your homework yourself! That way you will have confidence to hold on to those stocks that turn into big winners, but also levels to sell your stock if it falls a certain percent or its fundamentals deteriorate or breaks key support levels.
 
Let's sum up the top tips to help you in 2010 become a winning investor over the long term.
 
Allow yourself to make mistakes. 
 
Bounce back with new knowledge from all of your experiences.
 
Keep a journal of all your investments that worked out and the ones that didn't.  Look for patterns.
 
Rely on your rules and ratios and analysis instead of emotion in trading.

 
Don't get caught in hype and don't take a random stock tip you hear on TV.  Do your own research and keep good notes of all your experiences.
 
This will help you develop and grow in knowledge as your experience grows, and keep you on the right track to becoming a winning lifelong investor!

Keep with us as we discuss even more ways to become a winning investor in our next podcast! If there’s a question you’d really like to ask, just email me at winninginvestor@quickanddirtytips.com or call 206-338-0836. That’s 206-338-0836 and maybe your question will appear on the show.

Thanks for joining me, I hope you look forward to our next episode as much as I do… This is Andrew Horowitz wishing you all the best on your quest to investment success.