Childish Stock Market Tips Produce Grown-up Results

Written by: David Wilkening

Stock market investment tips come from both successes and failures. You’d rather take the successful ones’ word for it, of course, but how would you know? The failures still give advice…with the rest of us not often totally aware of their track record.

However, for real tips on successful stock market investing, even experts can’t go wrong in heeding childish advice. It’s almost like that series of books that tell you all you needed to know was there in your kindergarten class.

No, not really kindergarten because that’s really childish.

But what if your child or even grandchild asked you about your own successful tips to buying stocks…as an amateur part-time student of the situation who never pretends to be an expert?

Here’s what you might tell them.

—Always keep it simple. Forgot those guys with the elaborate charts tracking daily ups and downs. They rely on past patterns to predict the future. They are right at times but you can’t count on the past as prologue (as your grade school teachers remind you when they talk about Henry Ford who rightfully berated history as mainly false and termed it “bunk).

—Never invest for the short-term. It’s not like ice cream. Pleasurable if you eat it before it melts. Not satisfying long-term.

—Always be patient. Wait for the right “buy” just as you wait at the school crossing light for the green. This particular “green” is for stocks that have a low value or temporary setbacks. So cross the street when you see clear potential.

—Don’t totally rely on professionals but look to your own research. Estimates are that 80% of professionals give advice that “underperforms.”  It’s like listen to your parents but skip that advice from your best friend that suggests you says don’t do your homework because the teacher won’t ask for it for another month.

—Don’t believe everything you hear, as mom might have said. Experts all say you should diversify and that’s probably good advice if you understand what it means. You can’t know enough about all stocks to keep up. Limiting your study with a far smaller number of stocks is a better bet for an amateur.

—Dividend payments might be viewed as a gift from an uncle. Great, thanks. But dividends are often deceiving. Remember the many failed businesses such as Schwinn Bicycles?

—Keep your greed in check. You don’t stuff yourself at those all-you-can-eat dessert bars either, and the same principles apply to the market. So when a stock begins to go up, consider selling because it will only go so far. Learn to say no.

—Your history teacher may warn you about monopolies and their negative impact on freedom in a capitalistic society but ignore them in the stock market. Some long-established companies have what is known as a “moat.” That means there’s a high cost to try to compete with them. Sorry, teachers, but moats often indicate good investments.

There are always times when things will go wrong. You made a wrong investment. So what? You can cry for a few minutes about it but no long grieving. Instead, learn from it, as mom and dad said. Go back to school, get back in the same.

And to paraphrase another book: “Don’t sweat the small stuff.” And remember it’s (almost) all small stuff.


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