Eight Investing Lessons I’ve Learned in 2019
Year 2019 is ending soon and I’d like to share with you the eight investing lessons I have learned in 2019:
Since 2018 until now, we have experienced huge market volatility. While many have chosen to cash in and stay on the sideline, some have opted to stay invested with more caution. What I have learned is this is tough situations do not last, tough people do. The best time to strengthen our muscle is in challenging times and I deeply believe that if you can survive in tough years, you will thrive in good years.
Split your Capital
Season investors say that if you want to make quick money, do trading; if you want to make serious money, invest. I would say, if you want both, do both. Therefore, split your capital into two portions, one for investing and one for trading. In this case, you can make side income via trading while letting your business grow via investments. Along the way, you may adjust the fund proportion accordingly as it would make execution flexible.
Read Market News as Entertainment
This is especially so when the market is flooded with negative news. The more you are engrossed with it, the more you feel afraid and it leads to unfounded decisions. Don’t get me wrong, we still need to know the economics’ data such as the GDP, unemployment rate and interpret them rationally. However, stay away from provocative news that stimulates fear. Your life can be much easier once you have learned how to filter market noise.
My definition of uptrend is that the latest price candle that stays above the MA50 line and this line is trending upward. This is especially useful for trading. The momentum would lead to further uptrend and it will allow you to sell at a higher price.
Having said that, since the uptrend is not a straight line, a better entry point is during price correction while the uptrend pattern remains intact.
Invest in Growth Stocks
If the company’s earnings are improving, it would lead to higher share price and uptrend. When the market turns volatile, its share prices would plunge too. However, once the market cools down and the so-called bad news does not affect the company’s fundamentals, the uptrend would continue.
Furthermore, the company can be more resilient if it pays regular dividend while growing at the same time.
Regular Portfolio Review with Action
Whether you trade or invest, do review your portfolio regularly maybe once per fortnight or once a month. There is a need to do this because things could change. For example, the uptrend has turned downtrend, the company prospect is no longer as good, or you have found a better company to invest in.
If you review your portfolio regularly, you will be able to grab the opportunity and switch accordingly.
Be Risk Averse
Risk comes from not knowing what you are doing. Being risk averse means avoiding businesses that you are not familiar with. In addition, buying a good business that you know well does not necessarily mean it has low risks. You need to buy at the right price.
Therefore, get to know the company’s valuation and its growth prospect to reduce risks.
Keep on Discovering
In uncertain times, many investors tend not to invest because of some company’s values that have surfaced. You can detect this from reading their quarter and annual reports, or by observing the chart.
Be open-minded too. For instance, you can hunt for companies where their share prices have plunged tremendously. There could be a turnaround opportunity there.
Hope the above investing lessons would help you in a certain way. Before we end this article, let us have a look at our portfolio on 14th November 2019:
The portfolio above has showed a gain of 263% since November 2015, which is encouraging. Last month, we sold Homeriz at 0.69 after it reached our profit target. Our new cash level is now at RM93521.
Investing is a lifelong journey, so let me end this article with a quote by Steve Jobs. Regardless of the market condition, let us always “Stay hungry. Stay foolish.”