Think You're a Better Investor? So Does Everybody Else

You might think that you are a better investor than most people. Everyone is looking for a competitive advantage in the market place. Many people think they can take advantage of all of the other investors in the market, and make some great profits. The only problem with this belief is that all of the other investors also think the same thing.

Mistaken Assumptions

One of the most common assumptions in the financial markets today is that people think that they are very talented investors. They think that they can take on the rest of the world and they will be able to make great profits because of their abilities. This is a fundamental flaw and it can end up costing you dearly. Unless you have spent years getting a formal education in finance and then spend many more years trading the markets successfully, there is no reason for you to believe that you have more of an advantage over anyone else.

Available Information

In the past, you may have been able to find out some information about the markets that gave you an advantage. Information was not as readily available as it is today. However, we live in the information age today and everything is available to you in real-time. If you find something online that you think can be beneficial to you, you should rest assured that thousands of other people know about it also. It is very difficult to keep any secrets in today's markets.

Contrarian Investing

Contrarian investing deals with going against what the majority of people in the market feel. For example, when bad news about a company is released, it will often drive the price of a stock down dramatically. Many contrarian investors will take this opportunity to buy the stock because they feel that the market sentiment is pushing the stock farther down than it needs to go. If this is the case, the contrarian investor can then buy stock cheaper than what they would ordinarily be able to and make a nice profit once the stock rebounds.

The downside to this investment strategy is that it does not always work. Sometimes, when a company declines in value rapidly, it continues down until it is worth nothing. In those cases, it is not always in your best interest to go against what the rest of the market thinks.

Stick to the Basics

Instead of trying to outsmart everyone, try to stick to the basics of investing. Before making any investment decisions, you should thoroughly research your investment options. Many times, you can separate yourself from the rest of the market by working harder and doing better research on investments. Once you find a good investment, you should consider taking a long-term investment position and investing a reasonable amount of money. Using time-honored investment strategies can provide you with consistent results.

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