The most profitable stock market activity is not owning stocks, investing or even trading. If you want to become successful easily, sell the secret to success.
Everyone in the market has seen the countless advertisements about making big profits easily and quickly. One time they are selling a hot pick and another time it may be a special strategy for trading. They ask you to sign up and you will be given the ‘secret’. Then you can enjoy all the riches in the world.
But it is common knowledge that a magical secret for trading doesn’t exist. No one, not even the wisest investor, can tell you which stock will triple your riches overnight.
There is no secret—and that is the secret. You become successful by persevering and working hard. And even then, you will lose money and face challenges. You won’t go far with shortcuts. You need to learn how to bet the market. You may find an expert to help you but you will still have to put in effort.
The Passive Approach
Some people believe that you cannot beat the market. They tried and gave up. Since the market rises over time, they decided to just ride it instead of attempting to beat it.
In recent years, many investors have turned to the passive approach. The first ever index-based mutual funds, Vanguard Funds, were launched in the ‘70s. Over the last decade, index funds have grown tremendously.
But the passive approach has one downside, timing is still a human’s job. You can’t just leave your funds forever. Sometimes, passive funds don’t yield positive returns for a decade.
The Buffet Approach
Some other investors, in their frustration, have chosen to do the passive approach differently. Instead of indices, they opt for individual stocks. Their main goal is to stumble upon a stock that will perform amazingly over the long-term. Take Microsoft (MSFT) or Apple (AAPL), for instance. People who picked them up early on have undoubtedly done well.
The main issue is that finding a stock like this is extremely difficult, especially by prospecting. Looking back, it seems too easy for someone to have predicted what stock would be big. But when you try to predict the future, you realize that it is actually hard.
The Soros Approach
George Soros said that he is not better than other investors. But he is quick to admit his mistakes and focus on the next chance.
If there was ever a secret to success, this would be it. You don’t have to look for a magical strategy or hope that things will work out for you. Instead, admit that you made a mistake and move on. The sooner you admit your mistake, the easier it will be to grab the next great opportunity.
There are a few tips that can help you become successful. First, pick an approach that suits you. Find a way to get a steady stream of good ideas to combine with your approach. Then find a suitable method to manage positions.