Many people invest in stocks, and many lose money. In 2022, for instance, the average retail investor saw their portfolio value decline by 28 percent, actually above the decline for the market as a whole. For smaller players, it has been a punishing few months as markets adjust to higher inflation, the spectre of war, and other potential catastrophes.
So what can investors do to exceed their stock market goals? Let’s take a look.
Many people get out of the market as soon as they sniff a downturn. They believe that whatever challenges the market is going through right now will last indefinitely, and there will never be a bounce. They think that the West is going to become the next Japan.
History and demographics, though, tell a different story. There’s still a long way to run before things start going downhill, so remaining invested in always the best strategy. Companies will continue to make profits, regardless of market sentiment. And, eventually, the price will reflect fair value.
Learn To Make Money On The Ups And Downs
Many of the most successful traders in the world learn how to make money on the ups and downs. They use the best indicators for day trading to predict when the market is going to rise and fall, both for broader indices and individual securities.
Understanding the market and learning how participants react to new information can be the difference between success and failure. If you know the direction things are going to go, you can make a fortune, both when prices rise and fall.
The trick here is to learn the principles of technical analysis. Once you understand how day trading works, and the principles that allow for better predictions, you are in a much better position than your peers. You can see the writing on the wall when they can’t.
Waiting for the market to adjust to the level you believe is “fair,” is generally a bad idea. Over the medium-term, it’s almost impossible to predict whether stocks will rise or fall.
Therefore, don’t wait. Instead, jump into the market as you find it. Even if stocks have been declining for a few days, don’t view that as a sign that they will continue to drop. Dramatic turnarounds are possible. Likewise, don’t tell yourself that you will buy back when the price falls lower after you sell. It might not. In fact, you could wind up selling for a higher price. Don’t fall prey to greed. Just buy at the price that the market is quoting and then see what happens.
Trading and investing is a long-term game. Many people don’t make significant money until the 10-year point. It is only when they have been in the game for a considerable length of time that they start to make real returns.
Boredom often sets in. You expect your investments to be exciting, but when they return just 1 to 3 percent for five years, you feel like giving up. You wish they would give you more in return for all the effort you expended acquiring them, but they don’t.