ASX newbie

This article was contributed by “Traph.” a well known contributor from“Topstocks.
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Afternoon Troopers( traph)

We talk of current market moods and how to ultimately deal with our investment, should we, could we, would we?

The main point I feel is relevant at this time and while we had a great run of late is have we done the right thing? Have we invested correctly? and how did we get here and based on what?

Well, we all invest based on many different methods and outlooks. While some of us look long term others look medium term and even short term. But, really nothing should have changed because our investment basics are basically similar. The ending result being an appreciation in value which is the common denominator for any investment.

Have we done our homework and as such are we in a good position while the global market is so poorly placed at the moment?

Before investing it is wise to grasp the bad signs of poor judgement, lack of understanding, incorrect time frames and above all what are we attempting ultimately.

There are many reasons to invest in a certain company, some based on price, some based fundamentals and some based on the future outlook being relevant to fundamentals. Some companies may have peaked! do we know if the investment contemplated is heading in the right direction or not?

All these points are the basis of investment being the basic and most fundamental in thinking.

So, what are the bad signs that could be triggers bringing about change in the overall mentality to becoming a better investor.

1. Research x 10. Without the most basic of research we are simply gambling money away in hope. Hope is a fantasy and is not a true feeling of success. As a matter of fact hope introduces a false feeling of success and plays a big part in indecision.

2. Do not hesitate on sound fundamentals. Hesitation is more often linked to “I should have!”. Once hesitation plays a part in any decision not only investing but also life in general we then begin to doubt ourselves and our abilities, bringing about an inferior complex hard to distance ourselves from.

3. Long term hold should be just that! Why have an investment for a long term hold only to be watching the share price on a daily basis. In this case it is not a long term hold and is based on lack of certainty, analysis and understanding. A long term hold should attract a time frame we anticipate should be the realisation for success.

4. Do not discount announcements while holding a long term investment. Just because it is a long term, things could easily play part meanwhile.

5. Some investments need care. It is vital to understand a long term investment. Many companies go through phases new and old and as an investor we should not be concerned as much about the share price more than the fundamentals. The share price will forever fluctuate but fundamentals should remain on track.

6. It is no harm to sell out of an investment and get back in for a better time in future. We see this now! how many of you could say “I should have got rid of this and bought back cheaper because the fundamentals have not changed”. Many will get nervous selling out in fear of not being able to buy back! Timed correctly that should be a great decision and a very fulfilling task being part of any investment plan.

7. Selling out at a loss just because everyone else is! This is a very bad sign of an investor lacking market knowledge. The initial basis of investing is not based on price!!! if it was we would all be virtually broke by now!

Just some heads up understanding the emotion and getting a grip at what the market is all about from a personal view. These points are not taught, they are experienced over many market cycles.

Traph also has his own website at “Stock Fundamental Analysis”. Your online source for Stock Analysis. For more information go to :- www.21stcenturypl.com