Connect with us

Success Advice

10 Cold Hard Facts About Buying And Selling Shares

Joel Brown (Founder of Addicted2Success.com)

Published

on

Buying-Selling-Stocks-Shares

Are you ready to buy and sell stocks & shares?

It is common knowledge that share market investments yield the best returns over a long period of time, if one knows how to go about it correctly. Success in the stock market depends a lot on the capability and mindset of the investor rather than the market. The same market rewards some people and causes losses to others mainly due to this difference.

Here are ten facts that you should not overlook if you are buying and selling shares.

 

10 Must Know Facts Before You Try To Make Money Selling Shares

 

1. Set your expectations right:

Many people start investing in stock markets hoping to double their money in a year or less. While this is sometimes possible by pure luck or taking insane risks, it is a rare phenomenon and not sustainable over any reasonable length of time. Stock markets give good returns over long periods of time that will be in the range of 10 to 12% annually. If you are looking for something more, you are speculating, not investing and that is a very risky thing to do. Stock market returns are also not fixed, but come with a lot of volatility and even with some short-term losses. So get the expectations right or your emotions will get the better of you and you are very likely to make irrational decisions.

 

2. Stock market investment is a long-term activity:

Short-term movements of the market are just noise or knee-jerk reactions to company or economic news. They are what they are – short-term. There is nothing more to read from it. Benjamin Graham (known as the father of value investing) put this across nicely when he said that in the short-term the market is more like a popularity voting machine and in the long run it is a value weighing machine. Don’t bet on the popularity which goes up and down every other day, bet on the substance. In the long run the markets and stock prices move towards their fundamental valuations. It is unfortunate that many investors bark up the wrong tree and lose money in popularity contests rather than looking for value.

Warren Buffett once said that he would only buy something that he would be happy to hold even if the market stops trading for ten years. This is the kind of long-term view that is required to focus on quality stocks.

 

3. Turn a deaf ear to free investment advice:

Business channels on TV are 24 hour animals, they need to be fed. You will find a lot of analysis going on about why this stock went up or that went down or about which direction it may take based on some future events or predictions. As discussed above, these are most likely short-term movements which may not represent any real change in valuation. Any event that doesn’t affect the valuation of a stock or does not have a long term economic impact does not matter to the long-term stock investor. Keeping out all this noise about short-term market volatility will give you more time to focus on real changes that affect company performance which are the real issues that a smart investor should be focusing on.

 

4. Think and act like the owner of the company:

When you buy a stock, you are buying a share in the company however small it may be. Think about buying a stock like you are buying a company. This means you have to do quite a bit of research about the company, its business, its past performance, checking out its competitive advantages and forecasting future trends in the light of the company’s strengths and the likely economic scenarios. Deciding to buy or sell a stock should not be an impulsive decision, it should be a well thought out decision.

Peter Lynch one of the best in the mutual fund business said that to buy a stock, the company has to be profitable, the business should have a strong competitive advantage and the stock price has to make sense.

 

5. Buy when a stock is cheap and sell when it is high:

This seems to be the obvious thing to do, but knowing when a stock is cheap and when it is time to sell needs an understanding about valuations. Novice stock investors assume that what goes up must keep going up and use the price direction to make their investment decisions. They usually end up buying when the stock is expensive and close to its highs and selling when it is cheap. They thus do the opposite of what they are supposed to be doing. Making investment decisions solely on the basis of price movements is like allowing the tail to wag the dog. Only a person who thinks like an owner and understands valuation will be able to time the market properly.

Benjamin Graham, known as the father of value investing advises that one should never sell in panic just because the prices have fallen and the market is undervaluing a stock, as the prices will bounce back.

Link: (Video) A Fun And Easy To Understand Cartoon Of How The Stock Market Works

 

6. Don’t give undue weightage to a company’s management:

Even the best management team cannot run a company profitably if it has a bad business model and financial position. Management teams can change many times during a company’s life and so it should be given only due weightage and the company’s strengths and weaknesses should take precedence over it. Even an ace driver cannot win a race if the car he is driving is a slow dilapidated vehicle with partially inflated tires.

 

7. Patience is essential, but it is very different from being stubborn:

Never forget the original analysis on the basis of which you purchased a stock. When the outlook of the economy or the company changes check how it impacts the original analysis, valuation and forecasts. If you would not buy a stock based on what you know today, there is no great reason to hold on to it even if you already own it. Patience is when you hold on to a stock in spite of price fluctuations and this will usually be rewarding. You are stubborn when you keep on holding to a stock just because you don’t want to take a loss or want to be proven wrong. This can lead to big losses.

 

8. When an investment is obvious to everybody it is usually time to exit:

Recognizing the signs of the top of a market move allows you to exit when the prices are high. It is a familiar pattern when stock prices go up. When the prices are low, only the smart investors notice it and accumulate it. Then the prices go up, more people start to take notice and buy, pushing the price up further. Next the TV channels start talking about the stock and more people on the sidelines start rushing in. As prices go up further, everyone, their drivers and gardeners are also aware of the stock and there is a mad rush to jump into the bandwagon. This is when the stock is trading at many times its fair price and smart investors quietly sell the stock. When the stock is obvious to the whole world, it is a bad sign and a time to exit. Recognize these signs of a top, because after this point a huge correction is around the corner.

Hedge Fund Manager Jim Cramer emphasized this by saying that bulls and bears make money while pigs get slaughtered. Stocks which are overvalued and still rising are just climbing up a tower to take a suicidal jump.

 

9. A safety margin is always necessary:

The future is always unpredictable and however skilled an investor is in analyzing valuations and forecasting the future, there will be surprises. This could be due to unforeseen events or changes in a company’s internal or external environment. All great investors keep a margin of safety to prevent major losses in the event things don’t go as expected.

 

10. Never put all your eggs in the one basket:

Diversification across many different industries and sectors is the key to a healthy portfolio. Economic events usually impact different sectors differently. Having all stock investments in one or two industries could result in a disaster if an event that impacts them adversely occurs.

It is possible to make money selling shares and obtain handsome returns in the long run, but you must go about it like a businessman and not as a speculator. The ten things mentioned above are cold hard facts that you should always keep in mind while investing in stocks.

 

wall street investor quotesBe sure to checkout our 22 Must Know Investment Quotes By Some Of The Worlds Greatest Investors for some unforgettable investment advice.

 

 

 

Article By: Neil Cloud | Addicted2Success.com

I am the the Founder of Addicted2Success.com and I am so grateful you're here to be part of this awesome community. I love connecting with people who have a passion for Entrepreneurship, Self Development & Achieving Success. I started this website with the intention of educating and inspiring likeminded people to always strive for success no matter what their circumstances.I'm proud to say through my podcast and through this website we have impacted over 100 million lives in the last 6 and a half years.

Advertisement
4 Comments

4 Comments

  1. Julee

    Apr 9, 2014 at 1:40 pm

    Hi my name is Julee and I have learn so much already. I wrote down your contact information. I would like to hear from you thank you

  2. Joel

    Joel

    Jan 25, 2013 at 10:58 am

    Thanks for sharing that with us Peter, yes you are right, this advice is for long term investing. Thanks for dropping by, and Kanwal, that Warren Buffett quote is a classic! nice work.

  3. Kanwal Sarai @ Simply Investing

    Jan 25, 2013 at 1:51 am

    Great advice! This reminds me of Warren Buffett’s words of wisdom “Be greedy when others are fearful, and be fearful when others are greedy.”

  4. Peter Valus

    Jan 24, 2013 at 11:07 am

    Nice post though. I am Trader myself for a while already and, let me just give a little suggestion. In the beginning, just not to frighten newbies, trading and Investing are 2 different things. You (I guess) have been explaining facts about (long term) buyin and selling stocks what is called investing. While trading is intraday activity. So young traders, have belief, this does not apply to you (mostly) at all. But while investing, this is really nice article to follow.

    great job

Leave a Reply

Your email address will not be published. Required fields are marked *

Success Advice

3 Areas You Should Focus on to Become a Great Leader

Published

on

how to be a great leader
Image Credit: Unsplash

Having listened to all of our stakeholders and being fully aware of the situation, spring is a good time to conduct a quarterly review to see exactly where we are in order. This helps us have a clear starting point to re-adjust our goals for the coming year.

One of the main problems tends to be that we look back at the things we haven’t done and where we didn’t get the results we intended. Because of this, we get ourselves in a state of anxiety which is hardly a resourceful state for setting positive goals.

A better approach is to be nice to ourselves. Have a look back over the last three months and check all the things you have achieved. Give yourself a treat for all of the things you planned to achieve and did. They may be something as simple as maintaining a to-do list or smiling more.

Afterwards, think of all the things you achieved which weren’t planned and congratulate yourself on your flexibility and creativity; for the person with the greatest flexibility of behaviour controls the outcomes.

For those results that weren’t as you intended, remind yourself that we all make the correct choice at the time we make it. We don’t deliberately make the wrong choices and whatever the outcome, there’s always a positive intention. There’s no failure, only feedback, and we learn more from our failures than we do our successes.

“Be good to yourself. Listen to your body, to your heart. We’re very hard on ourselves, and we’re always feeling like we’re not doing enough. It’s a terribly hard job.” – Marcia Wallace

Look to yourself

It is vital, especially for sole proprietors or owner/managers, to manage themselves in order to be fit, healthy, and relatively happy. Evidence points to a clear relationship between our moods and assorted aspects of job performance such as decision-making, creativity, teamwork, negotiation and leadership.

While success may put us in a good mood, an organisation that sees the glass as half full rather than half empty, stands a better chance in these difficult times.

Depressed individuals will always see the glass as half-empty and even rapidly emptying. This attitude saps energy and leaves those affected feeling worthless, helpless, and hopeless. In its worst case, depression can impair the ability to communicate and it’s not hard to see the organisational parallels.

Below are three elements within all of us that need to be taken care of:

1. Your mind

The key to a healthy mind is variety, so take an interest in other people, things, events and current affairs. Adopting an open and curious mindset allows us to see future possibilities and hence be more empowered.

2. Your body

A healthy body requires a solid routine. Ensure you eat and drink healthy products (especially water) and get plenty of rest and exercise. Knowing our own limitations and taking action to stay within them ensures we operate at our best.

3. Your spirit

Much has been written about feeding or maintaining the spirit but I believe there is one simple rule. Believe in something that is true to you and spend time each day with your true beliefs. Solitude is the nurse of enthusiasm and is as needful to the imagination as friends are to our character.

“Never get so busy making a living that you forget to make a life.” – Dolly Parton

Beyond individual performance, there are broader issues at stake. None of us are islands, happy in our own little depressed world. Moods, good or bad, are infectious and some people or positions can have a greater ripple effect than others. If a shy apprentice has a gloomy outlook, few may notice. But if people like the owner/manager are wandering around looking like the end of the world is coming, that can directly affect team spirit.

Water bearer or well poisoner

So what can the organisation do? Firstly, as individuals, we must show a positive and upbeat demeanor. That’s not easy and faking it will easily be spotted as the deception will be transparent. This isn’t unauthentic, but merely an attempt to empower ourselves.

Congruent leadership offers the means to put into words what it is you are experiencing with the person in order so your behaviour is consistent with your own values and beliefs such that you always appear to be what you desire to be.

Your mood as a leader then is highly contagious. Even though leaders or opinion formers aren’t always in leadership positions, they’re at the centre of informal networks. They have charisma and magnetism, possess strong opinions, and express them forcefully. Therefore, they have considerable social power and can have a direct effect on morale by being a water bearer or well poisoner. Which are you today?

What resonated most with you about this article and leadership? Share your thoughts below!

Continue Reading

Success Advice

The 6 Step Process for Delivering Critical Feedback in a Constructive Way

Published

on

how to deliver constructive feedback
Image Credit: Unsplash

We have all been in the position where we knew we needed to have a difficult conversation at work that involved delivering constructive feedback. Maybe a major deadline was missed, there was a clear decline in performance, or someone blatantly dropped the ball. Most of us avoid delivering the feedback, and the conversation can get pushed back again and again, wasting valuable time and money.

Delivering constructive feedback is challenging, and uncomfortable for most people, even highly trained leaders. Yet, delivering and accepting feedback is one of the most important keys for success. So why do we avoid these conversations? Because we never learned how to have them.

Open, honest, direct communication is not a skill we are taught in school. There is no “How to Have Tough Conversations” 101. As a clinical psychologist that specializes in couples work, I see just how important communication is in maintaining thriving relationships. I understand that good communication is the foundation of every successful relationship; both intimate relationships and your work relationships.

Below is a 6-step guide to providing constructive feedback:

Step 1: Clarity on the Goal of the Conversation  

The first step is to get clear on the goal of the feedback conversation. Are you planning to see a change in performance, simply communicate how you felt, or receive an apology? Get clear on what you are hoping to get out of the conversation. Be honest with yourself about what you need, what is most helpful to the relationship, and what is most helpful to the organization. Getting clear on the goal also ensures you are speaking with the right person.

“I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better.” – Elon Musk

Step 2: Invitation

Set up a time to talk. Feedback conversations are not meant to be had in the hallway. It is important that both parties can set aside adequate time and have the space needed for dialogue. Additionally, there must be respect for both parties’ need for time to process information. For example, if you are delivering feedback, and the receiver needs time to process the feedback before responding, setting up a subsequent meeting will be most helpful.

Step 3: Ownership

Own the role you played in creating the situation. When you model ownership of blind spots, failures, or missteps, you set the stage for the receiver to do the same. For example, you may acknowledge that you were not aware of how to support your employee and not aware of the problem until x situation occurred. Equally important as owning your role, is owning your emotions. Own your emotions using “I” statements. For example, “I felt disappointed when I realized your sales performance had substantially declined”.

Step 4: Open, Honest, Direct Feedback

Feedback that dances around the problem does not do anyone any good. It only increases anxiety on behalf of the receiver, and potentially causes the feedback to get totally lost. The conversation needs to be open, honest, and direct. For example: “I felt concerned when you did not attend the last two strategy calls this month…It brought up questions for me about your commitment to the company.”

Step 5: Listen, Validate and Accept

When providing feedback, it is important both parties maintain an open mind, and respond in a way that communicates validation and acceptance. As soon as an individual gets defensive, feedback cannot be taken in, and the value of the conversation dramatically decreases. When providing feedback it is important to listen, validate, and accept your receiver’s viewpoint. Notice, I did not say agree. This looks something like saying: “I can see why X led you to commit Y , I understand you were under a great deal of stress/dealing with a personal situation/frustrated.”

“We all need people who will give us feedback. That’s how we improve.” – Bill Gates

Step 6: A Clear Plan for Moving Forward

In providing feedback, the magic is that now things can change! If feedback is never given, relationships end, things will stay the same, businesses will die, and money will be lost. If you have gotten to this step, that means you did the hard work, and now you get to put change into action. A clear plan includes an acknowledgement from both parties regarding what they will do differently to prevent the situation from occurring again, and how they will stay accountable in making the change happen.

The good news about delivering feedback is that the more you do it, the easier it gets. Remember, giving and receiving feedback is one of the most surefire ways to open yourself up to massive growth.

As a giver of feedback, it is your job to model openness and a desire for growth, so that the receiver may take in the feedback and make the necessary changes. Exceling at feedback delivery will help you set you apart from others and enable you to achieve extraordinary relationships, in both your personal and work lives.

Continue Reading

Success Advice

Here Are 4 Reasons Why You Should Have a Podcast, Youtube Channel or Online Show

Published

on

why you should have a podcast
Image Credit: Unsplash

Confidence comes from a place of strong understanding of self. After close to three years on radio, I’ve grown from a shy introvert to a shy introvert with an extrovert persona. When the mic is turned on, I can channel a version of myself that some say is attractive, strong, and of course, confident but it wasn’t always this way.

What I want to share with you is what I discovered on this journey into broadcast that you can apply to your life, your ventures, and your personal development. This doesn’t require any fancy gear. It does require a leap of faith on your part because once you go down the road of media; it can change your life.

1. Perceived Expertise

When you go to a doctor, you expect their knowledge will guide them to a solution to your problems. When you have a show, you become your listeners’ doctor. For all the multiple thousands, maybe millions, of YouTube channels, podcasts, and user-created content in the world, each person that gets behind a mic takes a position on their passion, their opinions, and their themes.

They challenge the status quo for the benefit of their listeners in hopes to entertain and educate. With consistency on your side, those fans place you on a platform and give you permission to influence them.

2. Global Acknowledgement

One of the benefits to increasing confidence is when you receive thank you notes from people you may never meet. The feeling of enriching someone’s life from halfway around the globe, provides validation you’re enhancing someone else’s life with your wisdom and your wit.

The very first time I was told I was making a difference in someone’s life in a country other than my own, I felt like I caused massive impact that transcends my circle of influence. When you experience just how much you can cause impact and it comes back to you, it’ll change your worldview.

“Be grateful for what you have and stop complaining – it bores everybody else, does you no good, and doesn’t solve any problems.” – Zig Ziglar

3. Backed By Numbers

One of the most exciting ways to measure success is to quantify your growth. It’s not enough to just broadcast. Having subscribers and downloads helps to know, numerically, how well you’re doing. Word of caution. This can be a way to set yourself up for distress because of number envy but if you understand what the numbers mean; you can control the narrative of the numbers.

The major number that makes most people smile is 10,000. I’d advise it to be 1. Here’s why. As you grow in your industry, so does your reach. If you learned that the one person that subscribed totally changed for the better because of you, wouldn’t that be worth the effort?

4. Effective Communication

While it’s not talked about much, having a show is documentation. You create a dynamic account of your life, your industry, and the pulse on what’s important simply by having a show. When you find a channel to improve your communication skills, you demand attention and people will listen to you. You become more trusted as a leader and people will follow you once they believe you can lead them to their wants and needs.

“To effectively communicate, we must realize that we are all different in the way we perceive the world and use this understanding as a guide to our communication with others.” – Tony Robbins

These insights have helped many people become leaders and, ultimately, move others to their best selves. It’s worked for me and I hope it works for you. At the end of the day, it’s all about showing up and showing out.

Have you ever thought about having a radio show? If so, what would you talk about? Let us below!

Continue Reading

Success Advice

5 Essential Skills to Drive Success in Every Niche

Published

on

skill building
Image Credit: Unsplash

There are many people who don’t have the courage to launch a business in a niche as they think they don’t have the right skills and experience to obtain success. While there are specific skills which determine the success in every niche, there are also some general skills which ensure success in any business you would try.

Below are 5 essential skills you need to drive success in every aspect of your life:

1. Ambition

When you launch a new business, you need to be prepared for difficult moments such as fighting the competition and winning your target audience. Moreover, if you follow some successful entrepreneurs, you should keep in mind that they also faced difficulties and continue to experience them. So, how does a successful entrepreneur get over all the difficulties?

The essential skill you need to possess is called ambition. Set small and clear milestones in your development plan and use your ambition to go over each difficulty and finalize what you had in your mind. It doesn’t matter how hard the path is going to be. Visualize your target and put in all the efforts to achieve it. Staying organized and scheduling each step to get things done are some of the techniques you can use to achieve success.

2. Listen to those around you

While listening to your instincts is necessary if you want to be a successful entrepreneur, this is not enough. As your business develops, you will have an entire team to manage and lead to success. Therefore, you cannot be a successful leader and have success in every niche unless you learn how to listen to the people around you.

You should listen to your employees and discover what they are expecting from you. This is the way to follow if you want to keep your team motivated and help them give the best of themselves.

On the other hand, you will need to listen to your customers to improve your products and services and provide excellent customer support. By listening carefully to the voice of your customers, you will be able to stand out of the competition and ensure their loyalty towards your brand.

“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” – Jeff Bezos

3. Courage

When you decided to become an entrepreneur and build your own business, it means you are a courageous person. Courage will help you harness the power of creativity. Don’t be afraid to take risks if you feel a specific action will bring more success to your business.

Apart from doing intensive research on your ideas and developing the exact steps you are going to follow, you will need the courage to implement them. Not all the ideas will turn out to be successful.

Regardless, you will have something to learn from each success or mistake and this will help you move your business even further. When you have the courage to follow a path which is not very familiar to you, this is going to be the moment when you will widen your horizons and exceed your limits to achieve success.

4. Creativity and imagination

If you already implemented your idea and you see that it works, you most probably think that you don’t need to change anything to achieve more success. You need to keep in mind that customers’ preferences change and your competition is waiting for your mistakes to “steal” your clients.

Therefore, you need to use your creativity and imagination to improve your products and services to meet your customers’ expectations. What is more, creativity can also mean that you are open to talk to new people and use their experience to improve something in your business.

“Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” – Steve Jobs

5. Continuous learning

If you want to drive success in every niche you will need to show a willingness to learn. You need to stay updated with what happens in your niche and what your customers expect from you.

Education is not only something for school. It is a lifelong process, and you should be open to seek knowledge and improve your skills with every opportunity. An efficient trick is to stay close to people who are already successful in your industry, ask their opinions on various subjects and learn from their experience.

The above five essential skills will help you build a successful business in every niche. A true leader is ambitious, knows to listen to the people around him, and is always open to learning from others.

No matter the size of your business, you will need to be creative and use your imagination to improve your products and services. These skills will help any leader develop new skills, stand out of the crowd, and strengthen his position on the market.

What skill do you think is most important to be successful in life? Let us know below!

Continue Reading

Trending