Top 10 Investing Tips: Part Two | Daily Rosetta - Personal Finance ...

This is the second part of my top ten investing tips that I?ve learned over the last decade of professional money management.

1) Most of the time markets are boring. In other words, you must be prepared to do nothing. In that sense, investing is like fishing because most of the time you will do nothing at all. You must wait for events to play out and only swing at fat pitches.

2) Don?t let market action make you impatient. Most traders and investors are in hyperactive mode where they try to trade every gyration in the stock market. Why? First of all, it is vastly more stressful. Second of all, no one is smarter than the market and you are bound to be shredded on ill-timed positions.

3) Markets need to trade at prices where they will ?clear.? It means you have a stock you own a bunch of and you can?t sell it (but want out) because it isn?t trading. You need to drop offers down to where the buyers (i.e., volume) are, then you can take your loss and move on.

4) All paper currencies can decline against goods and services (or gold, Rembrandt?s, etc.) if they print enough of them. On a relative basis some will win vs. others. So, you can look for the winners of the paper race, to the bottom, or look for ideas like gold, silver, etc. that win in absolute terms.

5) Always keep a close eye on Central bankers. They have a massive influence on the market. There is an old adage that you should not fight the Fed and it has been true over the last twenty years.

6) The best thing to do when you know you have been wrong is to start some action This is especially true for short covering. Depending on how you?ve been wrong changes how you look at the situation. Even if you just take a tiny bit of action you will feel differently. Doing nothing just reinforces what you have already done or not done.

7) The patience required in investing is not so much the patience sitting with a position after you establish it, but the willingness to be patient before you establish it.

Being prepared for volatility does strengthen one?s resolve. Especially in the last decade, it has been important for investors to accept volatility. It has been a big part of the investing landscape as huge macro issues have surfaced.

9) When we face life?s difficulties, quite often they are not as bad as we think they are. After a bad trading day I usually take inventory of all the great things in my life, most importantly love and health.

10) Exercise and get away from your computer screen. One of the tough things about the investment business is actually learning to relax. When you live and die in the most brutal Wall Street jungle on earth, it can almost impossible for some professional money managers to leave behind the problems of the market at the office.

Source: http://www.dailyrosetta.com/top-10-investing-tips-part-two/34052.html

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