Timing is everything when it comes to investing. The goal is simple; buy low and sell high – all the while thinking long-term and controlling your adversity to risk. Generally there are no silver bullets and investing takes patience and knowledge; some say a bit of luck too.
Of course getting that knowledge takes a little doing, but after you have lived through a few cycles you learn about how things work. One thing I recommend that future investors do is be very careful until you learn the ropes and start following the financial news.
Why not scan the headlines each day and try to understand what they mean in relation to your investments. Let’s take the headlines of February 20, 2009 for instance; below are the headlines before the news day actually started:
Stanford Financial Fraud could reach $50 Billion
Stanford served in Fredericksburg, VA; girlfriend’s house
GM to kill the Hummer
Saturn maybe bought by their Saturn Dealer Network
Republican Critics getting bolder, Obama’s ratings drop 5 pts in one week.
Boston Tea Party event actually planned for Chicago when weather warms
DOW closed below its Nov. 20 bottom, new test, analysts worried & ready
Palm Springs City Council votes for Pot Smoking Co-ops
Energy Analysts; Expect 35% or more raise in cost of energy next 3 years
Currency Traders shorting Euro based on the Eastern European Crisis
Sales Tax up 1%
12 cent raise in Gasoline Taxes
Vehicle Registration Fees Raise 1.15%
Worse Combination Possible
This will prevent recovery and growth
Businesses will leave
Car Dealers will fold
Small Businesses will be hurt
Write down the headlines each day and then write down what you think they mean and how they could affect your financial future. Then in four or five months review what you wrote and learn from your previous predictions. I’ve been doing this for 2-decades and it is amazing how good you get with practice. Think on this.