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When a stock falls 89% below your cost and you are losing money, you hope it will go back up/ But you rally should be fearing that you might lose more money. And you should react by selling the stock and cutting the loss.
When a stock goes up in price and you are making money, you fear you might lose your profit. So you sell too soon. But the fact that the stock is going up is actually a sign of strength and an indicting that you may be right.
The only way is to establish buying and selling rules derived from historical research, rules based on how the market actually works, not on personal opinion and preconceived idea.
The more you know about the past, the more you will be able to recognize future opportunities.
Analyzing history also provides perspective on the market as a whole. Daily and weekly market fluctuating intimidate even the most experienced investors. But a look at the past will show that there is an overall uptrend in the market, cycle after cycles that creates a huge ongoing opportunity for investors.
The fact is, investing is stocks is not the dam ting as buying a dress or a car on sale. Stocks sell for what they are worth at the time. And when you buy cheap stock, you get what you pay for
Of the best performing stocks of the last 45 years, the average per share price before they went on to double or triple or more was $28 a share. This is a historical fact. Cheap stock involve a greater risk.
Many people want to get rich overnight which just does not happen. Success takes time and a willingness to connectively and honestly analyze your mistakes. That is the key to getting smarter at anything in life.
Make a few new rules that will prevent the same mistakes in the future. If you do in to look at what you are doing wrong, you will never become a better investor.
