Dear readers, in today’s post, I am going to share one factor that all investors should know for profitable investing.
There are many nuggets of thought that contribute to profitable investing. Some believe it is what you invest in. Others would think it is how you invest. I would say both play a part, together with the wisdom not to fall into greed and fear when it comes to investing.
But that is one other fact I would like to touch about here that investors should take note of. And it is none other than “Assumptions”.
Just to give you some examples, many technical analysis traders base their trading on previous trading charts. Trading based on technical charts to me is making assumption that the past is proxy to the future; which is always not accurate.
Then, there are others who may assume that Singapore’s blue-chip stocks, once the market darlings in the local bourse will continue to do well. But as we have noted, in today’s completely different landscape, it is more challenging for blue-chip stocks to do as well as before.
Then there are many who subscribe to the assumption that when it comes to stocks markets corrections, the stock markets will recover few years after the corrections and the capital invested will still break even with the corrections.
But I would tend to differ. What if stock markets undergo a major correction and the recovery of the stocks markets will take more than the few years assumed by many? What if it will take ten years for the stocks markets to rebound to pre-correction levels for the next stock markets corrections? Imagine, having your monies locked for ten years or liquidate at a loss!
That is why I am always sceptical when I heard people saying that it is alright to have bulk of your monies in portfolio, even when it comes to stocks markets corrections as the investor will get back the monies when the stocks markets recover in a few years. Don’t assume the stocks markets will take just a few years to rebound.
Instead, I will encourage all to standby an investment warchest now. When there is a financial correction, we can then take our time to study the situation and enter into the stocks markets at their lows and in tranches if need be.
That’s it for my insights today. I Thank you once again for your support of SG STOCKS INVESTING, your Money and Lifestyle magazine! Connect with me here to follow the daily exciting and useful posts on these two blogs, Thank You for your support!
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