The biggest problem for investors is always the bull market itself.
When the “bull is running” we believe we are smarter and better than we actually are. We take on substantially more risk than we realize as we continue to chase market returns and allow “greed” to displace our rational logic. Just as with gambling, success breeds overconfidence as the rising tide disguises our investment mistakes.
Unfortunately, it is during the subsequent completion of the full-market cycle that our errors are revealed. Always too painfully and tragically as the loss of capital exceeds our capability to “hold on for the long-term.”
As 2018 comes to an end, it is time to review my “New Year’s Investor Resolutions.”
These are the same resolutions I attempt to follow every year. There is no shortcut to being a successful investor. There are only the basic rules, discipline and focus that is required to succeed long-term.
Investor Resolutions For 2019
Here are my annual resolutions for the coming year to be a better investor/portfolio manager:
- I will do more of what is working and less of what isn’t.
- I will remember that the “Trend Is My Friend.”
- I will be either bullish or bearish, but not “piggish.” (Pigs get slaughtered)
- I will remember it is “Okay” to pay taxes.
- I will maximize profits by staging my buys, working my orders and getting the best price.
- I will look to buy damaged opportunities, not damaged investments.
- I will diversify to control my risk.
- I will control my risk by always having pre-determined sell levels and stop-losses.
- I will do my homework. I will do my homework. I will do my homework.
- I will not allow panic to influence my buy/sell decisions.
- I will remember that “cash” is for winners.
- I will expect, but not fear, corrections.
- I will expect to be wrong and I will correct errors quickly.
- I will check “hope” at the door.
- I will be flexible.
- I will have the patience to allow my discipline and strategy to work.
- I will turn off the television, put down the newspaper, and focus on my own analysis.