You can improve your odds of investment success by doing the following:
- Avoid margin, as margin calls can shorten the time available for your investments to work out; time is one of your most powerful allies when it comes to investing.
- Recognize a value-driven strategy is designed for winning financial marathons and not sprints, and give it enough time to work without demanding or expecting benefits to become apparent immediately.
- Avoid evaluating value driven strategies by listening to your friends, neighbors, colleagues, other herd-following investment managers, or the general print and broadcast media--such strategies by definition will be at odds with most, if not all, of these sources.
- Avoid sitting on losing positions that have very little chance of breaking even or would take too long to do so; suppress your ego, so you can reinvest sale proceeds into something with better capital appreciation potential going forward.
- Develop an effective coping system to deal with the fear and greed that come from inevitable market volatility; an effective way would be to avoid looking at your accounts more frequently than once a year.
- Expect alternating periods of strong and lackluster account progress; avoid being tempted to change strategies during inevitable intermittent slow periods.
- Do not extrapolate the recent past into the indefinite future; markets, businesses and companies have a strong tendency to regress to the mean; the further a trend has run, the more likely a reversal and an inflection point are close at hand.
- Look at a long-enough period of time before reaching any definitive conclusions about your investments; taking too narrow a snapshot time-wise gives you a distorted view of their long-term potential, after all the peaks and valleys are evened out over time.
- Resist harmful financial habits.
- Maintain realistic expectations about your investments and what they are able to do for you.
- Welcome intermittent periods of market weakness, as they produce lower entry prices that form the foundation for future long-term appreciation for you.
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