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Rule #1 - Do not lose money! Rule #2 - Never forget rule number 1! ( by: Warren Buffet )For comments or questions please email: : admin@equityresearch.com |
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Speculation versus InvestingIf you rely on someone else's advice, you are speculating. If you do not understand your margin of safety in the stock, you are speculating. Speculating will most likely lose you money while investing will most likely gain you money. The difference between speculation and investing is that the investor takes a lot of time and patience to understand the companies, the markets, and make their own calculations on what they estimate. If you leave the math to others, you are going to most likely fail at investing. Hot StocksNew issues of stock or obscure stocks ready to break out will most often produce losses. They should be avoided. Choose companies that have stable earnings over a long period of time. If you look at the stock exchanges, you will see that many companies that were once doing well are now out of business. Don't confuse short term prosperity with the idea of a good investment.AnalystsAnalysts work for the stock they are recommending. Most of the information is just plain bogus because of conflicts of interest. Analysts never tell you to get out of a stock before the price has already plunged. The only time a sell recommendation is ever given is after the stock has already tanked and that isn't going to help your portfolio. My recommendation is to simply ignore all the analysts and do your own calculations.Main Investment StrategyAnalysts will lead you down the wrong path. Brokers are mostly good at sales and not analysis. People sell “unique” strategies all the time. Here is the thing. If a large group follows a particular pattern of investing the uniqueness wears off and returns will go back to the average. If you want to do better than average, you must (1) stick to your investment principles and (2) you must use ideas that are not popularized with Wall Street. If someone finds a unique way to invest in the market, do you think they will make billions in the market or will they sell their lucrative idea for $99.95 on late night television? Nobody is going to give you the golden goose. You need to do your own math and your own research. |
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