How should a stock market investor think?
Welcome, today’s blog will be about the mindset and thinking process behind a super successful investor.
We would all love to become a successful investor and the key behind this is to learn about how they think and process information.
- Long term thinking
Thinking long term about your investments is the first key point, it is the way in which top investors like Buffett think. To create massive wealth in the stock market you need to be able to hold a stock for the long term and be in it for long term rewards.
Why does this work?
Well, it is simple. If you are patient, the stock market rewards you. That’s about it….
Compound interest comes into play and that allows you to be able to create massive wealth. Patience is rewarded in the stock market and it is vital if you are seeking to build wealth. It is not a get rich quick scheme but it does have huge value. Holding assets for the long term, buying them cheap enough and you make money. It’s not that complicated….
Focusing your efforts on creating wealth in the stock market means that you would have to think about utilizing compound interest. This allows you to build wealth exponentially and it is rewarding.
Einstein said that “compound interest is the 8th wonder of your world”
It can really pay of big time to create wealth through this, you can turn thousands into millions, even billions if you are patient enough.
2. Rational: not speculative
A top investor has a logically thinking pattern. Thinking about what the asset will give you back over the long term is where the money is made. If you can anticipate businesses which have huge competitive advantages and you buy them at a reasonable or discounted price. You win. It’s just that simple…
Stock market investing is not a complicated game, it’s simply laying out cash today to get more back in the future and there is only 1 rule behind this.
“ Do not lose money”
3. Focusing on finding bargain issues
There are plenty of fantastic businesses out there, This does not mean they are good investments. A successful investor is usually those who are able to find good businesses, selling cheap. The cheaper you buy it, the better. You don’t want to over pay for fantastic businesses, you will ultimately have to find good businesses selling at discounts.
Bargain issues are typically stocks that were once hot and have since gone cold.
Be fearful when others are greedy and greedy when others are fearful: Warren Buffett.
4. Constantly growing your knowledge base
A successful investor is the investor that constantly learns new things. You can’t expect to make huge wealth if you are not hungry for learning and knowledge. The more you learn about investing, the more you will make. Focusing your efforts on creating wealth by learning as you go is the right way to think about this.
The best approach is to take an investment approach and to constantly evolve and improve it with time. If you keep on adding to your investment approach, you will keep on improving your potential to create big wealth. A note to this is that you don’t want to try to do it all. Focus on 1 investment strategy and go deep in understanding it. If you do this and you are patient, you put yourself in a strong position to create wealth.
Investing over the long term is simple, but it is not easy. You should think about investing as a game which is a test of patience and discipline. People act on stocks too frequently because they are liquid. You will want to be in it for the long term and to hold the stock for a minimum of 10 years. The more effort you put into practicing patience, the more likely you are to succeed with stock market investing.
Learning as you go is the bests way to sustain high performance in investing in the stock market.
5. Wait for the fat pitch
The magic in investing lies within your ability to say no to stocks. The more stocks you browse the better you will do in the stock market. Wait for the gem. Don’t rush the process and you should focus on loving the work behind finding stocks. You could wait for months, even years before making an investment. The better you are at practicing patience in the process of finding stocks, the better you will typically do.
Put your efforts into finding a stock that is unique and offer’s as a bargain issue, especially if you are investing small amounts of money.
If you are investing larger sums, index funds and larger companies can be better, as they offer more security and would be seen as a good approach to take.
Thanks for reading,
Regards,
Jagdip
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