Diagram for success. We fools operate on a few basic principles. For example, corporate investments. Or long-term holding of shares, as long as their investment thesis does not change.
But there is one pattern that I can tell you about: follow it and you will definitely not be a successful investor. Following this path may seem intuitive. However, those who are particularly successful in the stock market are adept at resisting these temptations.
A simple scheme for failure
The pattern is actually relatively simple: buying stocks that are doing well at the moment. True, every investor thinks they are doing something differently. Or just a different approach. However, the rally and proofreading show just how different your approach is.
At the moment, for example, there is a market phase where bullish stocks are not very successful. A simple conclusion is to stay away from this segment and stop investing. Other areas, such as value stocks or classic stocks from the old economy, work better. Some investors like to invest there, which is why stock prices rise. Jumping into these trends leads to a pattern that doesn’t make you a successful investor.
It is true that a good corporate-focused investor will bet on winning the shares. Proven long-term players often tend to continue to perform well. However, the clever fool likes to invest when winning stocks are available on particularly favorable terms. Or if nobody wants to buy their own stock, which you think is particularly promising at the moment.
Those who break the popularity pattern and avoid popular trends can sometimes seem like a loser in the short term. However, these are precisely the steps that are expected to be particularly successful in the long term. It is about quality at a good price, where the price is a variable that fluctuates from time to time.
It is not always good
It is not easy to succeed and break the pattern of popular trends. An investor who buys oil stocks now may look smarter than one who buys the rises. Maybe he too. But it’s usually wise to look at stocks that are not particularly popular with investors right now. This leads to long-term success and the pursuit of a wider market is not very promising.
A small note: Conversely, it would be wise to buy oil stocks in 2020 when everyone else was rushing towards rising stocks. But as I said, the market practically turned 180 degrees here.
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