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As seen from the simple definition, it is easy to be a good investor: Simply choose companies in the years to do relatively well and are not at exorbitant prices to reap the benefits after a few years.

On the contrary, speculation is an uphill battle … A kind of Intifada, in which hordes of small speculators are fighting against large speculators with stones that resemble armies with tanks. Or even more powerful weapons … see the last: with huge databases, and graphs tick to tick, Reuters software reacts in milliseconds after the publication of a notice, automatically generating purchase orders or sales. The price? Several hundred thousand dollars … in its basic version, of course! It is very difficult to be a good speculator, because he plays with a tremendous disadvantage compared to professionals. And some do not even try: speculate as “instinct”! Remember that some lose for others to win: Really someone has such good instincts to beat these subprofessionals? WHO has set up this software, Simons, has since 1988 taking a 34% per year on your … after deducting its extremely high commissions! Who wants to fight him?

Today is crazy to speculate, when fighting against Simons & CIA … That is much better to be investor: An investor “normalize” to buy stocks at random (or preferably, discarding the worst) and maintain a good chance of obtaining a high yield.

What happens is that we all believe we are very good, and 5% are speculating that wins, not 95% to palm … Why?

For pride and ego.
Because we read very good forums / blogs / websites, and our favorite gurus tell us what to do to win.
Because we trust.

And how do you get to these extremes?

The principle is greed (covetousness bursts the bag). Then, greed leads to recklessness. The recklessness leads to gambling, to operate and operate non-stop. And the gambling leads to the dark side of the bag: the need, despair and ruin
Some enter the stock market either directly with the idea of ??getting rich, but this is not normal (except in times of bubbles). Typically, a bag into the idea of becoming an investor, but as you do not understand, gets into the forums to find out. And here starts the problem: in the forums are not talking about good companies with low P and good prospects, but companies that have risen sharply, with high volatility, and profits (if any) that nothing justifies the prices paid for them.

Once the poor sheep (novice investor) has gotten into the fashion business, is likely to register strong short term benefits, 15% in a month, for example … clear that the end did not take it out, because he could not sell in time. But see how easy it can be lost, think they now know, and know that the next time out. And at that time, and are no longer investors and speculators have become (and also newbies): cannon fodder. Of course, caught good bag four years in a row, and do well (or well). But then come the lean years, and instead of using stop-loss, as speculators who are averaging down as if they were investors. The disaster is served: You have entered the dark side of the bag!

So how about it?

  1. Do not choose values ??that are in fashion.
  2. Find stocks with solid business with good prospects in the coming years, and are not too expensive. Have good PER ratios, dividend, etc, without that being because the company has problems that are cyclic or worsen in the future.
  3. Do not engage in buying and selling. Trying to get out more below gives bad result, and also bad sell for cash after a relatively modest rise. You must buy and forget, avoiding the “market timing”.
  4. Ignore the gurus and bloggers 😉
  5. Never ignore your instincts to buy or sell. Must be the reason, not instinct, who lead the operations, and reason takes to operate and not in a hurry, unlike instinct, that comes to mind and want to buy or sell now.

And finally, a little message to those of Google searches for “leveraged investment tools” or “investment warrants” I hope that by now, I have been clear that “investment” can not go in the same sentence that ” leverage “or” warrants “. Leverage and warrants are not investment, but speculation are the weapons with which to speculate against software Simons and Reuters … yourselves.

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