Without any doubt, all types of investments demand excellent understanding of all the risks, opportunities and economy tools. Even if you have several decades of experience, you can, be sometimes wrong and make mistakes while investing. In this article we’ll analyze and speak about the things investors need to focus on. The whole situation concerning investments is a very controversial one. Sometimes, it’s better for investors to focus on the larger picture. What issues should to be focused on?
Never predict the next hot trend. Interest rates decline. It seems that all investors are loading up on gold stocks. There’s no any necessity to predict which of the sectors are going to enter the game next. Try to own most sectors, to reduce portfolio volatility, and finally pay less in taxes.
Quarterly reports are not that important. Most of us are interested whether this or that company beat or missed expectations. Investors often react to the latest changes and news. However, it’s always better to focus on longer trends not at their part.
There will always be some losing stocks. It’s always necessary to pay attention to a portfolio approach. What does this mean? Let’s examine! 5i Research will provide you with a model portfolio the investors should follow. It also has a specific portfolio focused on growth. This portfolio is almost up 26% this year. Along with this it has some lower stocks. There are even some stocks decline of which reached almost 50% or even more. As a rule, most of the investors pay too much attention to these. However, the main thing that really matters is the total return in your portfolio. Even few successfully invested stocks can completely swamp all the losses on the losers. For example, a stock up 1.000% is able to make up for many mistakes. If you’ll think only about the mistakes it’ll distract you from taking a portfolio approach we’ve mentioned above. And vice versa complete absence of losing positions will bring you just mediocre returns. It’s a well-known fact that risk is a vital part of any investment.
Do not go to cash. Nowadays, the inverted yield curve and the looming recession bother almost everyone. Investors are interested whether going to cash will be profitable and will protect their portfolio. Changing economy never lies. All recessions, come and go as well as other periods. When you are going to cash you miss rather big gains. Of course, you can also miss some rather big short-term losses, but what will you do with cash? Will re-spend cash with perfect timing? Surely, you won’t. Will you make so bold as to buy at the market that plunges? We do not know such precedents. Remember that every stock you’ve bought and then made money in it was sold to you. And the person who sold you every stock had no any thoughts about future market decline. So, nobody who buys stocks from you will ever think about future consequences for you.