Stock Trading Tip – Pay Attention
Do this: put your money in a stock, then for the rest of the year don’t ever look at your account or learn what’s happening in the stock market. What do you think your account will look like after the years up?
Think you’ll be a millionaire?
Here’s what’s really going to happen… If you are lucky, you’ll have some gains. If you are struck with bad luck, you’ll lose most of your money.
A “set it and forget it” approach is no different than gambling. During the course of a year, a lot of things can happen that will affect the stock you own. You need to pay attention to these things or you may regret it.
Even with winning stocks, they say their advances are short term. The big gains in these rare stocks will last from 1 to 3 years. Then like all other stocks, they decline and are no longer attractive to buyers that favored it.
On the other hand, a winner stock will give you many opportunities to add to your position and generate greater gains. If you practice the “set it and forget it” approach and didn’t pay attention, you would have missed an opportunity to pyramid your position.
What about mutual funds? Having a mutual fund that manages your account for you doesn’t relieve you of your responsibilities. Just look at how much money people lost in the most recent stock market crash. You would have gotten out near the top and gotten back in near the bottom that formed recently if you pay attention to the markets.
Investing in stocks isn’t a passive pursuit. It requires active participation and taking effective action if we want to minimize our losses and maximize our gains.
Copyright © Leroy Chan
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