Successful investing isn’t easy. In addition to having a basic level of financial competency, successful investors must also exhibit a high degree of discipline and emotional control. Without all three of these characteristics an investor’s returns are likely to disappoint. After all, one can be as financially astute as Warren Buffett or George Soros; however, if he or she lacks the emotional control and poise to go against the herd then they’ll never have great success.
As a case study, I bring you the story of The Simkin family: Getting back on the retirement horse
“Jason and Patty Simkins, both 40, have saved next to nothing for retirement in the past year. They were rattled by the rocky market, which caused the value of their portfolio to tumble 40% at its low point.”
“So when Jason switched jobs last fall… he neglected his new 401(k). Saying, “I didn’t want to throw money into it if it was just going to be lost.”
“But now they’re disappointed to have missed out on additional gains from the market’s rebound.”
“Realizing they need to catch up on retirement (and, with two kids, save for college), they’re ready to put a toe back in the water.”
A year has past since the credit crisis wreaked havoc on the world’s financial system. During that year of reckoning, firms on Wall Street that were lucky enough to survive (or should I say get bailed out) reduced annual bonuses by nearly 45% from the prior year.
Today is the first of a series of posts dedicated to properly researching stocks. As you’re probably aware, it’s always important to do proper research on a company before purchasing shares of its stock. Buying a stock without doing your homework is akin to jumping into the cockpit of a plane without proper training. In either situation, you’re bound to get hurt.
Don't Ignore Risk
By taking extra money and investing it in the stock market, one is forgoing a risk-free return on their money in favor of an investment that’s inherently risky. Read More…