Investing scares most people, even professional advisors frequently worry about the buy-sell decisions they make. But then most of us worry about something every day, whether it be that car approaching the intersection too fast or will I have time to finish breakfast and relax before leaving home for the day.
The real question when it comes to safe investing is can I manage my account, my IRA, retirement account or any other portfolio is a reasonable amount of time, say 20 minutes a week, without losing my shirt or being so frustrated it just isn’t worth it.
The answer, in my opinion, is an emphatic, YES.
The key to not just safe investing, but to profitable investing involves only a few factors. And these investment principles can be followed by anyone.
- Profitable investing is dependent upon making logical decisions. This means taking your emotions, your personal likes and dislikes (within reason) out of your decisions. The best way to do this is to rely upon a technical investment program that analyzes market data to make recommendations based strictly upon facts and not upon «what we think» or what «we like».
- Develop investment strategies that are back tested for reliability and propensity to recommend profitable investment timing signals; the signals of when to buy or sell or even exit the markets temporarily.
- Develop a method to double check your strategies to be sure they are steering you in the right, profitable direction.
Keeping in mind that you may be selecting your investments from different groups or universes of stocks, ETFs or mutual funds, it is important to remember a few critical facts:
- Not all investments or strategies move up at the same time (I know this is a no brainer but read on).
- Different strategies of the same group will give different results depending upon market conditions. This mean you need to know which strategy is the best right now or at any particular point in time. The easiest way to do this is to have a chart showing the performance of all your strategies for each particular investment group.
- Don’t put all your eggs in one basket – yes, you’ve heard this before – but look at your portfolio from many angles such as:
- Different means of analysis work for different types of groups
- Sell rules are not universal and each group, each strategy should have its own unique set of sell rules (easily done with an investment program)
- Have two, three, perhaps even four buy-sell strategies for each of your investment groups so you can use the one that is providing the best profits in today’s market.
You can spend hours every day or every week going over market data, market information. You can watch TV and hear different recommendations on what to buy or sell. But you can simply your process with an investment tool so you can simply look at the analysis, a few charts, perhaps a list of recommendations and know both where you stand and what you need to do – all in a short period of time. It takes me only 20 minutes a week at the most.