Spot a coward investor around you

The word investment has lots of meaning depends on people. A day trader and a long term investor can say that he is an investor. Warren Buffet is one of the best examples for a successful investor.  What is investment? Setting a goal and upon the risk profile, selecting a proper investment that provides enough returns in a period of time. The two must have qualities of an investor is, patience and long term focus. By selecting the proper investment through rigorous research, he will hold the same and using his patience to wait till the instrument reaches to full value to get him/her proper returns.  

Coward investors are not at all aware about the basic qualities a good investor required. In other word, they are giving little importance or not know what the word investment mean is.   

If you spot anybody around you with any of the following action, you can identify, he is in the group of coward investors.

1. Following public blindly – A coward investor always tend to follow the public by chasing there activities and doing the same himself. These kind of investors always interested to know the activities of legend investors from there country. They will be curious to know the stocks that the legend investors buying to follow them and buy the same. They are little aware about the truth, lose from some stocks will never affect the legend investors. But as a retail investor, his lose will be huge.

2. Rely on tips and research reports – This is another bad habit coward investors have. They will immediately invest on any investment instrument by believing the tips and market news’s or research reports from self acting investment gurus or broking firms. They are little aware about the selfish intention behind such traps. Also, they don’t have commonsense to understand that, no one inform others about a possible candidate once identify the huge profit possibility in it.

3. Selling stocks when need to buy – A very bad quality of a coward investor is, always panic on stock market fluctuations. This is happening because he/she is little aware about the above mentioned qualities required by a good investor. Such panic force he/she to sell the stocks in the wrong time and ultimately give him/her huge loses instead of possible profit that can receive from long term holding.

4. Always monitoring stock prices: This is another problem spotted among coward investors group. They will immediately grab the newspaper everyday or use the websites to monitor the price or value continuously. I know someone looking for these details in an hourly basis. If the holding value is coming down, they will be very upset and panic. This will lead them to wrong decisions.

5. Making investment in the wrong time – Coward investor never care about the investment timing. He will immediately act to buy any equities once seeing that the price of equity shooting up continuously. This is happening because of little knowledge to know the buy and sell timing and spot the real value of the stock by research. Such blind action lead him/her to buy shares when the price is high and when it comes down by next fluctuation, they will sell the same by panic and will suffer lose.

6. No goal and no investment perspective: If you ask to a coward investor about his goal, he can say anything to justify him and his actions. This is happening because he doesn’t have well defined goal to justify his investment actions. Such investors using the investment instruments as a time pass and that will ultimately give him lose.

7. No study and research – This is the major error happening from coward investors. The basic success in investment is lying on the knowledge on the investment products. Its quality, advantages, disadvantages and the suitability to meet the requirements should come under consideration prior to invest on that. Study on an investment instrument is a time taken process considering all supported factors and comparison with multiple peers. Coward investors never spend time to understand the products. This will lead them to select a wrong product for a goal.

8. Approaching wrong person or company – There are certain criteria to select an advisor or a proper company to deal with. Consideration on the background, qualification, experience in the industry and the authority and approval to deal with customers, are some major factors should come under consideration when selecting an advisor or firm. Coward investor could accept advises from wrong persons or places and that will lead him to trouble in the future.

9. No disciplined approach – Investment success entirely lying on the disciplined act of an investor. There are lots of methods available for an investor to undertake investment in a disciplinary manner using dollar cost averaging when investing in equity or Systematic Investment Plan when investing in mutual funds.  It is entirely not recommended to put all the money to a single investment instrument. Instead, should span across multiple investment instruments to balance portfolio in a disciplined manner to cover the possible treat from capital erosion. Not doing the same is a practice of a coward investor.

10.  Withdrawing investment money to meet temporary requirements – This is the most known foolish act from most investors. The major reason for such action is, to not having any specific investment goal in life. An investor who has such goals will never touch the money that kept for the goal and will find other possible solutions to meet the temporary requirements.  Such actions from a coward investor will put him in trouble by not achieving his goals in proper time and spoiling the possibility of good future returns.

There are lots of idiotic acts you can find among these kinds of people. Identify yourself by comparing the above points to your present investment character. If you spot one, work out to avoid that bad habit to be a successful investor.

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Question: Do you think the market timing is a required factor to invest? Comment here