Getting Back to Basics With Your Investments
July 30th, 2007 |However, sharp market declines should usually not cause one to sell long held mutual funds or carefully chosen equities. I must admit at times my confidence has been shaken. For example, prior to the decline beginning on February 27, 2007, I had begun a program of diversifying some of my assets out of stocks (I had been almost 100% invested in equities for some time). When the market broke, I quickly concluded this program of diversifying so that I sold near the price I had intended. In retrospect, concluding this program at the time of the market break was not the optimal course of action, but I call it as much a lesson as an insurance premium to achieve the diversification I wanted. We can only go with our best knowledge and with the odds in our favor.
We can increase our knowledge of how to invest profitably by reading books on the subject of the stock market written by the best investors out there. Books by Peter Lynch and John Neff are favorites of mine. By imitating the investing behavior of the best investors, I believe we can greatly increase our odds for success and be reassured to a certain extent that we can get through difficult markets.
In my book, A Way to Wealth - The Art of Investing in Common Stocks, sold on my website, I present a method of investing that is easy to understand and that most anyone can apply. Further I have found that the method is capable of producing sizeable gains in a portfolio of stocks and equity funds over time. Over the time I have been using the method I describe in the book, my invested assets have grown very well.
In many of the mutual funds in which I have invested I have multiplied my original investment. I chose most of my funds in the manner described in my book, by doing some very basic, but I believe very profound research. This research begins with perusing the mutual fund rankings as presented periodically in Forbes magazine. I discuss the necessary further research elsewhere on my website and in my book.
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