Investing in the stock market can be intimidating, but taking action is crucial. Most likely you have either read or heard about the many inspiring success stories that motivate people to take charge.
However, the market can be extremely challenging to navigate due to the multitude of businesses listed on the different stock exchanges.
However, there are some proven secrets that can propel you to success!
Don’t time the Market
Don’t time the Market – Avoid attempting to time the market as it can lead to disastrous outcomes. Many who attempt to accomplish this feat fall flat on their faces.
When the market dips, investors often hastily sell their shares, hoping to keep their money in play and weather the storm. This can result in not getting the returns you would have gotten if you just had been patient and stayed in the game. Keeping some money in your bank account for emergency expenses can be a good idea, but selling shares and taking money out of the market can really cost you.
The article “Why timing the market is a fool’s game” by Marek Krzeczkowski and Henry Morrison-Jones strongly concurs that making changes during market turmoil is counterproductive to success.
In the article, it is written that making changes when the market is acting up is counterproductive to success. The sentence that sums up timing the market the best is “The plausibility of timing the market is a frequently broached topic in financial literature and almost always the conclusion is that it is nearly impossible to get right.”
What makes this ordeal so difficult to overcome is the fact that you need to time the market twice. Once on the way down and another on the way up. Instead many investors who attempt to time the market sell off their shares too late or buy them back too early.
Stay Patient
Patience is key in the stock market as investment returns compound over time. In the article that Jacob Wade wrote for Yahoo Finance called 9 Stock Market Secrets You Need to Knowhe stated that investment returns compound over time. Returns in the stock market compound on a year-to-year basis. For example, if you invest 1000 dollars and get a return of 10% in the first year you have made 100 dollars. In the second year, you get the same return and your account grows by 110 dollars instead of 100.
When this continues to occur year after year, your money can grow fast. Investing in the stock market works similarly to a business. In the first year, you might not generate any money. However, if you stay consistent and patient, you will eventually break through the wall and start generating money.
The biggest mistake that I see investors make is panic selling. When things are not going their way and the market looks like it is crashing, many investors fold and quit the game. You can’t win the game if you don’t have a hand in it!
Investors should resist the urge to panic sell when things go awry and the market appears to be crashing.
The Right Time is Now
Waiting until next month or next year is not the right thing to do. Of course, the market will crash again, of course, there might be a better opportunity, but why wait for it? Often what happens when you delay something is that you won’t end up doing it in the end.
Sure it is better to buy low and sell high, but that isn’t always possible. The market is ridiculously hard to predict even for investors such as Warren Buffet. The time you own shares in the stock market is much more important than timing the market. Investing consistently will give you a much better chance of getting results. You can still buy the dip even when you own shares. There isn’t a rule stating that you can only buy the dip when you aren’t invested at all.
Stop procrastinating and start today!
Bear Markets Don’t Last
Most of 2022 and 2023 has been a tough period for the stock market. Naturally many investors are wondering when the Bull Market will return. Unfortunately, we are going to be stuck in a Bear Market for a while. Bear Markets are defined as a market that has dropped 20% from its previous high. The good news is that any Bear Market doesn’t go on forever.
The average Bear Market only lasts 289 days as claimed by the Hartford Fund. While Bear Markets are scary, they are very short-lived and they don’t survive more than a year. In the article called 9 Stock Market Secrets You Need to Knowby Jacob Wade Bull Markets are marked by a 20% raise from the previous Bear Market.
Luck is Part of It
As stated in the article 10 investment secrets that no successful investor will tell you..published on motilaloswal.com you may think that becoming a successful investor is all about skill. However, there is a whole lot of luck involved and even the best investors are extremely lucky. They will never admit that luck was part of their success, but in most cases, an element of luck has been involved. Of course, 90% of investing is about the skills you have and the skills that you learn.
Don’t be ashamed of the luck that comes your way, because when you work hard there will be an element of good luck you will get as a reward.
Summary
Firstly, attempting to time the market is not a smart move, as it is difficult to get right and can result in missed opportunities. Secondly, patience is key, as investment returns compound over time. Thirdly, investors should not wait for the “right time” to invest, as this can lead to procrastination and missed opportunities.
Fourthly, bear markets are short-lived and do not last forever. Lastly, while skill is important, luck also plays a part in investing success.
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