Making money in the stock market has been my dream and has come true, sometimes. This may sound strange coming from a stockbroker, but believe me when I say brokers are no more likely to make money in the market than a common investor. Success belongs to few and many have been disappointed. Everyone wants to be in the successful category. Understanding more about the market helps you in knowing how to invest, but nothing but a strong stomach will see you through to real success.
First, I would like to be clear that the chances of becoming rich on stock market investing alone are slim. Moreover, the chance of becoming rich overnight is nil. You do not hear stories from the average investor, the stories of making riches are not average. I never lost everything, nor did I make myself rich overnight. I have learned that you can make a better than average return over the long term.
I have learned the safer the investment the lower the return. I have also learned that patience is not one of my strongest traits. It was always easier for me to advise a client to hold their investment and be patient than it was to practice what I preached.
I found many quality stocks that merited investment but patience was required to receive better than average returns. I never seemed to have enough money to leave my investment alone to reap those benefits. A personal need or emergency always seemed to come along and usually just when the stock took a dip.
When I found a solid stock with a good dividend return, I made my best profits. I also made profits in mutual fund investing. Occasionally I would trade an option and make a “killing” but generally that gave me confidence and I traded another option only to lose all that I had gained.
There was a young broker, who had only had his license for a few months. He began practice trading on paper and soon convinced himself, he was good. He had made large profits on paper, so he asked his grandfather for the little bit of savings he had set aside. The grandson had the best of intentions, but soon lost all of the meager savings of the old man. He had learned the lesson the hard way. It is easy to invest another’s money, but when you are the one losing, or winning, it gets emotional. This is where the strong stomach comes in.
The only time I profit from a trade is when I am very confident in my original decision that the investment is good. Then I must remind myself when the stock goes down of all those reasons I purchased the stock and try to have patience and a strong stomach.
I have profited better since I retired from actively investing. I have a trusted broker who does excellent research and only recommends investment within my strategy and low tolerance for risk. This works for me far better than using a discount self-directed account. In addition, it is easier on my stomach.