The following is my answer to a Quora
question: “How
do I become a good investor?”
Perhaps the single most important skill we
all need to be a good investor is the ability to keep our head when the market
is panicking. Much of the market is not moved
by logic, but sentiment. When the market
falls, and people are selling, it is an excellent time to consider the value of
underlying assets and looking for bargains. It is important to remember that paper loss
only becomes realised loss when you cash out.
Conversely, look to invest for the long
term, after doing some homework on the management, performance, and prospects
of a company or fund. Investing should
not be treated like some sort of jackpot, where positions are taken based on
“tips”. People who do this might make
the odd profit, but they will underperform overall.
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