The difference between a successful trader and a losing trader has a lot less to do with the successful trader’s ability to pick winners than you might think. All traders are going to experience losers and lots of them. It’s a fact of the business.
Simple money management wins over time
By Joseph Stuber
The difference between a successful trader and a losing trader has a lot less to do with the successful trader’s ability to pick winners than you might think. All traders are going to experience losers and lots of them. It’s a fact of the business.
The difference between a successful trader and a losing trader has a lot less to do with the successful trader’s ability to pick winners than you might think. All traders are going to experience losers and lots of them. It’s a fact of the business.
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A nice article, Owen. Diversification is the investor's hope to span enough companies and sectors to make the tally end up in the plus column and not the minus column. That is our ardent hope and thankfully, it can be done with intelligence and experience. But that does not mean we still won't have those, "Oh, what in the hell?" days, does it? :o) But in the end, correctly diversified, the old story of the rising tide lifting all boats does come into play. Not bailing out during the falls is also another consideration, one that costs many far more than they would have ended up with had they stayed calm and remember that the market cycles.
ReplyDeleteI definitely agree. If someone were to look at the market historically, say from 1920, you see a gradual increase in the stock market. Breaking down that history into 20 year time periods you see the ebb and flow of markets. If we allow that upward bias for 8% historical returns to take effect, we can easily do better than most investment funds without much effort. It is certainly more costly to not participate than to simply remain long in solid investments of a long time period, say 10 years.
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