How many times we have had folks discussing investing or trading ideas about which stock looks good, which stock has value, and etc, etc. I am sure many of us have engaged in such discussions. Personally, I have tried to avoid such discussions on specific stocks. Almost always, I end up asking folks about their investing paradigm or what is their focus. Surprisingly, almost every time, the answer is on similar lines. That is, does it really matter what paradigm we use? Isn’t the focus just to make more money?
We individuals fall into the trap of focusing two much on one or two successes. And we fail to look from an overall portfolio perspective. We create a portfolio that is hodge podge of many different methods. There is no discipline. The ideas that we keep discussing in pubic, we never execute on them. It is for others to execute. e.g. Look at the financial websites, all the analysts and managers writing lengthy articles discussing pros and risks of a particular company. They will explain their reasoning for investing in it. When you look at the disclaimer, it’s the clients who would own it. On majority of the occasions, they do not own for personal accounts. continue reading rest of the article….
It is close of five year now that I have been a long term buy and hold, and dividend growth focused investor. When I meet friends, acquaintances, or colleagues, on many occasions the discussion starts from what’s market doing today and steers towards trading/investing is nothing but a poker game. I get a sense that many of these folks think that buying (and selling) stocks is just a gamble of some kind. Irrespective of this, I believe both, trading and investing, have their own set of pros and cons depending upon what context an individual is looking at it. In the end, both trading and investing is done to make money. Some use approach of capital appreciation, some use dividend income, some do trades to generate income. The key is to have a plan and execute it with consistent results.
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