Sunday, 31 January 2010

Aim for durable, long-term outperformance in your stock market investing

Long term investors in the stock market will know that most go through hot and cold streaks.

More importantly, investors should aim for durable, long-term outperformance.

However, many investors either
  • lose in equity investment or
  • end up in a no profit-no loss situation.

Often, it happens that you start putting money in equities and the market moves to new highs. Then you are tempted to put in more money, since you are getting higher returns. Suddenly, the market starts to slide down.

Forget returns on investment, you are not even able to recover your capital. This is a common grouse of most investors.

Why? Is it because you make wrong decision or because the market is only meant for speculators and gamblers?

No, that’s not true. We go through this pain again and again because we do not learn from our previous experiences in the market.

Only the ‘smart investors’ survive the ups and downs in the market and make pots of money.

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