3 Chinese traits to apply when investing in stocks
Investing in the stock market is not just about knowing the macroeconomic of the conditions of the country.
Nor is it just about checking the fundamentals of the company to see if that company is undervalued, cheap, earning, growing, and has a lot of cash.
It is also not just about market sentiment and using charts to know the perfect time to buy, sell, or hold on to your stock. These strategies and tools are all important for you to make the right decisions.
However, your mind, will, and emotions also play a great part on how you manage your investments.
Because you can have all of these strategies and know all the facts but if you do not have the proper mindset and character traits to put all of these together, you may just end up disappointing yourself and not get the returns that you want.
So, start your journey toward financial freedom with the proper foundation.
In line with the Chinese New Year celebration, here are 3 Chinese traits that I have found to be useful in trading and investing.
Majority of the Chinese people in the Philippines trace their roots to immigrants from the mainland who started from scratch and made their way up in life. They started with relatively small amounts of money and made the most out of the opportunities that came their way.
That is why I always tell my clients to always start with a relatively smaller amount even if they have enormous cash that they can use for their trading and investing.
So they get exposed first to the volatility and experience first-hand the swings of the market.
If you would put a large amount on your first trade only to see your stock drop 10% to 25%, you would feel uneasy and anxious since you are exposing yourself to a relatively large loss in your very first trade.
By starting small, you can also develop your own strategy and technique that you can implement in your trading and investing. When you become confident, that is when you start adding and using more cash. The more confident you become, the more cash you can put in, and you will be surprised over time that you are actually trading 10 times more than the amount you initially decided to start with.
One of the reasons why the Chinese people have been very successful and have grown wealth through the years is that they delay whatever urges they have to buy items that do not appreciate in value.
Thus, the best way for your money to grow is to delay plans to enjoy now for later, and reinvest your capital over and over and over until you hit your goal.
So, if you are in the stock market to fund your retirement goals, should you earn 200% in one stock over two years? No matter how good the return is and how tempting it is to celebrate, it would be better to stick to your goals first and continue to reinvest the money.
Stay invested and continue to maintain your allocation until you have hit your targets. When your targets are met, by all means enjoy and take off portions of your earnings.
The Chinese are hardworking people. When they set their eyes on a goal, they try their very best to hit and achieve that goal. This motivates them to go the extra mile when no one else wants to.
The same determination must be found in your stock trading and investing. Majority of newbie investors either lose money or underperform on the first year. Some of them quit and stay away from the stock market altogether.
No one though plays a perfect game in the stock market. Each trader and investor has his own share of mistakes.
What is important is that if you stumble, you bounce back and do not give up. If you bought your stocks out of rumors or tips, and lost money because of such, then it is time to learn fundamental and technical analysis so that you do not have to base your trades on other people’s opinions.
You must be dedicated to be in the market for the long haul until you have developed the emotional skill and fortitude to earn well in stocks.
People always quote Warren Buffet as being the greatest investor of all time but what people do not see is that Warren Buffet started investing at 11 years old and is now 84! Even if you look at him now, he still has the same grit and determination to succeed in the stock market.
I hope these 3 Chinese traits help you in your trading and investing as you move toward financial freedom.
Happy Chinese New Year! – Rappler.com
Marvin Germo is a registered financial planner, an author, personal finance consultant, and a stock market trader and investor. He has around 7 years of experience in the Philippine financial industry. He specializes in technical analysis and position trading. Read his blog. Follow him on Twitter: @marvingermo
Businessman worried about stock prices image via Shutterstock