Saturday 29 September 2012

Different Tastes for Different Folks

We sometimes look towards people who are successful in investing and hope to emulate their success. By following their investment strategies, we should be more successful in our own investments, won't it? And by following more such successful investors, we should have a greater chance of success in investing, isn't it? However, even after following their investment strategies, we sometimes wonder why we are not as successful as they are.

There are many investment strategies that make money, like value investing, growth investing or technical analysis. However, the stock market sometimes has a fad. Occasionally, it would favour under-valued stocks while at other times, it would favour growth stocks. When the investment strategy that we adopt does not yield us the desired effects, we would generally lose faith with it. Conversely, we see other investors making loads of money and try to adopt their investment strategy and abandon our own strategy. Even so, we do not consistently make money.

It's important to be patient. Every sound investment strategy would make money if you are patient enough. Even the greatest investors do not constantly make money at all times. Take for example, Warren Buffet, the greatest investor, did not make money during the dot-com boom when everyone else was making money off internet stocks. However, just because the investment strategy is currently out of favour with the stock market does not mean that it is a poor strategy. And when you switch to a strategy that is currently in favour, you risk riding on the tail-end of that strategy and the winds might just be about to turn. Moreover, by switching strategy, you lose focus in your investment strategy.

Investment strategies are like cuisines. All cuisine are tasty, but sometimes, for example, French cuisine are more popular while at other times, Italian cuisine are in favour. While we learn to be a better French or Italian chef, we should not mix the 2 cuisines. Doing so would be rojak, and we never get to be a fine French or Italian chef.

See related blog posts:

No comments:

Post a Comment