Good Advice

Jonathan Burton from MarketWatch had a recent article with some good bits of advice:

1. “There’s more good investing information available and there are more qualified professionals giving advice than ever before, yet investors buy and sell impulsively, shoulder too much risk, or put off actions indefinitely. When they do invest, buyers often feel remorse if a decision goes against them in the short run. Sure, we wonder if an investment will do all right in the future, but perhaps more importantly we want to know that we took the right steps now.”

2. “If you have a procedure, and you follow that procedure, and it doesn’t turn out, you feel less regret,” said Meir Statman, a finance professor at Santa Clara University who studies investor behavior. “Whereas if you get up one morning, decide to buy, and it doesn’t turn out well, you’re in a much worse position emotionally.”

3. “Find an approach that mirrors your way of thinking,” said John Buckingham, editor of the Prudent Speculator, a top-performing stock newsletter. “Most investors end up not really following anybody’s strategy and just cherry-picking ideas they get from variety of sources. What you need to do is stick with it, staying with the strategy. You need five years, if not 10, to prove a strategy works.”