There are not many opinions from investors, but they do agree that making money in the market requires a firm strategy built around a set of rules. Think about your early days as an investor. If you are like many people, you joined with little knowledge of the market. When you buy, you don’t know what the bid-ask spread is. If the stock goes up, you either sell it too early or if the stock price goes down, you sell it too late.
If you don’t have a carefully crafted set of investment rules yourself, now is the time to start. The best starting point is to ask people who have succeeded in your investment career. We have not only found people who can claim success, but also some of the most successful investors in history.
- Successful investors have one thing in common-they have rules.
- Well-known investors like Warren Buffett say that before looking at stock prices, focus on fundamentals and management quality.
- Other major investors suggest to place big bets when you have an advantage, and always be forward-looking.
1. Dennis Gartman: Let the winner run
Dennis Gartman begins publishing Gartman letters In 1987, it was a daily commentary on the global capital market, sent every morning to hedge funds, brokerage companies, mutual funds, food and trading companies around the world. Gartman is also a successful trader and frequent visitor to financial networks.
“Be patient with successful transactions; be extremely impatient with failed transactions. Remember, if we are “correct” only 30% of the time, as long as our losses are small and our profits are large.” — –Dennis Gartman
His above-mentioned rules solved some of the mistakes made by young investors. First, don’t sell at the first sign of profit; let the winning trade run. Second, don’t let losing trades escape. Investors who make money in the market can lose a little money in the transaction, but they cannot accept to lose a lot of money.
As Gartman pointed out, you don’t have to be right in most cases. More importantly, let the profitable trades run up and quickly get rid of the losing trades. If you follow this rule, the money you make in profitable trades will far exceed that of losing trades.
2. Warren Buffett: Do research
Warren Buffett is widely regarded as the most successful investor in history. Not only is he one of the richest people in the world, but he also has the financial ears of many presidents and world leaders. When Buffett speaks, the world market will change according to his words.
“It is much better to buy a good company at a reasonable price than to buy a fair company at a reasonable price.” -Warren Buffett
Buffett is also known as a prolific teacher. His annual letter to Berkshire Hathaway investors is used in university finance courses at the largest and most prestigious universities.
Buffett gave two key suggestions when evaluating a company: First, look at the quality of the company, and then look at the price. Viewing the quality of a company requires you to read financial statements, listen to conference calls, and review management. Then, only after having confidence in the quality of the company, can the price be evaluated.
If a company is not a premium company, please don’t buy it just because the price is low. Bargaining companies usually produce bargaining results.
3. Bill Gross: Have faith
Bill Gross is the co-founder of PIMCO. He manages PIMCO Total Return Fund, one of the largest bond funds in the world, and served as the company’s chief investment officer before leaving in 2014.
Gross’ rules focus on portfolio management.
“Do you really like a certain stock? Put about 10% of your portfolio on it. Make this idea important. Very good [investment] Ideas should not be scattered into meaningless oblivions. “——Bill Gross
A general rule that most young investors know is diversification, that is, don’t concentrate all investment funds in one name. Diversification is a good rule of thumb, but when you choose a big move and other names don’t, it will also reduce your profits.
Making money in the market is also based on detailed research to seize opportunities. For those opportunities that require more funding, always keep some cash in your account, and don’t be afraid to take action when you think your research points to a real winner.
4. Prince Alwaleed bin Talal: Patience is the key
You may never have heard of Prince Alwaleed bin Talal, but he is well known in the investment world. As an investor from Saudi Arabia, he founded Kingdom Holdings, and later bet on Citigroup (C), the predecessor of Citigroup (C), as the bank’s largest shareholder in the early 1990s.
In addition, he also invested in Twitter (TWTR) and Snap (SNAP). His patience was tested during the Great Recession, when many of his investments took a hit.
“I am a long-term buyer. I am not a seller.” —Prince Alwaleed bin Talal
When others dumped stocks, especially when Citi was under heavy pressure in the late 1990s, Prince Alwaleed bin Talal did what many of the best investors did to accumulate wealth: holding investments. Investors who have firm beliefs and conducted research can hold for a long time and survive turbulent market events.
5. Carl Icahn: Stay vigilant
Carl Icahn (Carl Icahn) is an activist investor and modern corporate predator who buys a large number of shares in the company and tries to obtain voting rights to increase shareholder value. Some of his assets include Time Warner, Yahoo, Clorox and Blockbuster Video.
One of Icahn’s biggest rules is that when investing, you shouldn’t put everything in your eyes. Over the years, Icahn has become his enemy, but investors should not strictly accept his advice in terms of interpersonal relationships. In your investment history, how many times have you read articles, watched news reports, or got tips on the next hot stock from trusted friends and lost money?
There is only one recommendation for action: use your own detailed research based on facts (not opinions) obtained from trusted sources. Other suggestions can be considered and verified, but this should not be the only reason for investing money.
6. Carlos Slim: Looking to the future
Carlos Slim, another richest man in the world, owns hundreds of companies with more than 250,000 employees. Slim pointed out that one of the biggest investment opportunities is to solve the poverty problem in Mexico and Latin America.
Successful investors will not pay attention to what is happening now. Instead, by studying the momentum of a company or the entire economy and how it interacts with competitors, they invest now in what will happen in the future. They are always forward-looking.
If you are now considering or trying to catch up with the trend of investments that have yielded short-term gains, then you may have missed a major move. Try to find the next big winner, but always associate your portfolio with great companies with long-term stable growth records.
A lot can be learned from successful investors and their experience. Each of these investors is known as a student and leader of the market. When you start to apply these rules and promise to abide by them, even if you don’t think so, you should be doing well in the market.