Wednesday, 13 April 2011

Rationality in Investing

Many investors include me have read lots of books on TA, FA, value etc and came out with certain trading/investing rules for ourselves.

These are my rules. I update them once I learn new things.

Your rules may be working for you, but if you never follow it, what is the use?

However, it is easiler say than done. When YOUR hardearned money is involved, it is quite tough to stay rational and invest according to your rule. Most of the time, people end up buy high sell low instead of buy low sell high.

One way to make sure that you execute your rule RATIONALLY regardless of market condition is writing down your rule and keep reading them before you make any action on the market and make sure that you follow them.

It is tough but it is important and I think there are many veterans in LP's cbox that had done it very well and get good returns from the market. Let us learn from them :)


Createwealth8888 said...

You said:"Your rules may be perfect."

There is no perfect rules in the market. Period.

The rules may be working for you; but to be sure you must seriously and diligently track and measure your portfolio perfromance against your investing goals.

Only when you are moving towards your investing goal; your rules are STILL RIGHT.

If your goal is just to beat inflation rate or FD, save your time and effort in investing for other activities.

Go and do cost averaging in STI ETF. It will beat inflation rate and FD

OT83 said...

Hi Uncle8888,

Currently my portfolio performance is very lousy as compared to my investing goals. I aim to grow wealth and not only beat inflation rate or FD.

I will keep on diligently tracking and measure my portfolio against my investing goals and I will be changing my rule to make sure I am moving towards my goal.

Thank you very much for your advise.

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