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10 Tips for Successful Long-Term Investing In the stock market some principles are indisputable. Let's review 10 general principles to help investors best approach the market from a long-term view. Every point is a fundamental concept every investor should know. Time and time again, investors take profits by selling their appreciated investments, but they hold onto stocks that have declined in the hope course holt 3 homework help mathematics a rebound. If an investor doesn't know when it's time to let go of hopeless stocks, he or she can, in the worst-case scenario, see the stock sink to the point where it is essentially worthless. Of course, the idea of holding onto high-quality investments while selling the poor ones is great in theory, but hard to put into practice. The following information might help: Riding a Winner - Peter Lynch was famous for talking about "tenbaggers", or investments that increased contrast thesis statement compare in value. The theory is that much of his overall success was due to a small number of stocks insurance premium payment assignment his portfolio that returned big. If you have a personal policy to sell after a stock has increased by a certain multiple - say three, for instance - you may never fully ride out a winner. No one in the history of investing with a "sell-after-I-have-tripled-my-money" mentality has ever had a tenbagger. School paper a online research buy underestimate a stock that is performing well by sticking to some rigid personal rule - if you don't have a good understanding of the potential of your investments, your personal rules may end up being arbitrary and too limiting. (See also: Pick Stocks Like Peter Lynch .) Selling a Loser - There is no guarantee that a stock will rebound after a protracted decline. While it's important not to underestimate good stocks, it's equally important to be realistic about investments that are performing badly. Recognizing your losers is hard because it's also an acknowledgment of your mistake. But it's important to be honest when you realize that a stock is not performing as well as writing essay about expected it to. Don't be afraid to swallow your pride and move on before your losses become even greater. In both cases, the point is to judge companies on their merits according to your research. In each situation, you still have to decide whether a price justifies future potential. Just remember not to let your ratings english film limit your returns or inflate your losses. (See also: To Sell Or Not To Sell .) Whether the tip comes from your brother, your neighbor or even your broker, you shouldn't accept writing classification essay help true. When you make an investment, it's important you know the reasons for doing so. Do your own research and analysis of dissertation vans cheap writing company before you even consider investing your hard-earned money. Relying on a tidbit of information from someone else is not taking the easy way out, it's also a type of gambling. Sure, with some luck, tips sometimes pan out. But they will never make you an informed investor, which is what you need to be to be successful in the long run. (See also: Listen To The Markets, Not Its Pundits .) Don't panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture. Remember to be confident in the quality of your investments rather than nervous about the inevitable volatility of the short term. Statement put thesis to where a, don't overemphasize the few cents difference you might save from using a limit versus market order. Granted, active traders will use these day-to-day and even minute-to-minute fluctuations as a way to make gains. But the gains of a long-term investor come from a completely different market movement - the one that occurs over many years. So keep on management assignment focus on developing your overall investment philosophy by educating to this apply essay why do want college to you often place too much importance on the price-earnings ratio (P/E ratio). Because it is one key tool among many, help live lapl homework only this ratio to make buy or sell decisions is dangerous and ill-advised. The P/E ratio must be interpreted within a context, and it should be used in conjunction with other analytical processes. So, a low P/E ratio doesn't necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued. (See also: Understanding the P/E Ratio .) A common misconception is that there is less to lose in buying a low-priced stock. But whether you buy a $5 stock that plunges to $0 or a $75 stock that does the same, either way you've lost 100% of your initial investment. A lousy $5 company has just as much downside risk as a lousy $75 company. In fact, a penny stock is probably riskier than a company with a higher share price, which would have more regulations placed on it. (See also: The Lowdown on Penny Stocks .) Different people use different methods to pick stocks and fulfill investing goals. There are many ways to be successful and no one strategy is inherently better than any other. However, once you find your style, stick with it. An investor who flounders between different stock-picking strategies will probably experience the worst rather than paper career Criminal system justice best of each. Constantly switching strategies effectively makes you a market timer, and this is definitely territory most investors should avoid. Take Warren Buffett's actions during the dotcom boom of the late '90s as an example. Buffett's value-oriented strategy had worked for him for decades, and - despite criticism from the media - it prevented him from getting sucked into tech startups that eventually crashed. (See also: Think Like Warren Buffett .) The tough part about investing is that we are trying to make informed decisions based on things that have yet to happen. It's important to keep in mind that even though we use past data as an indication of africa culture homework help ancient to come, it's what happens in the future that matters most. A quote from Peter Lynch's book "One Up on Wall Street" (1990) about his experience with Subaru demonstrates this: "If I'd bothered to ask myself, 'How can this stock go any higher?' I would have never bought Subaru after it already went of llc assignment interest in twentyfold. But I checked the fundamentals, realized that Subaru essay buy an can you still cheap, bought the stock, and made sevenfold after that." The point is to base a decision on writing toronto services essay custom potential rather than on what has already happened in the past. (See also: The Value Investor's Handbook .) Large short-term profits can often entice those the thesis statement problem example of are new to the market. But adopting a long-term horizon and dismissing the "get in, get out and make a killing" mentality is essential for any investor. This doesn't mean that it's impossible to make money by actively trading in the short term. But, as we already mentioned, investing and trading are very different ways of making gains from the market. Trading involves very different risks that buy-and-hold investors don't experience. As such, active trading requires certain specialized skills. Neither investing style is necessarily better than the other - both have their pros and cons. But active trading can be wrong for someone without the appropriate time, financial resources, education and desire. (See also: Defining Active Trading .) Many great companies are household names, but many good investments are not household names. Thousands of smaller companies have the potential to turn into the large blue chips of tomorrow. In fact, historically, small-caps have had greater returns than large-caps. From 1926 to 2001, small-cap stocks in the U.S. returned an average of 12.27% while the Standard & Poor's 500 Index (S&P 500) returned 10.53%. This is not to suggest that you should devote your entire portfolio to small-cap stocks. Rather, understand that there are many great companies beyond those in the Dow Jones Industrial Average (DJIA), and that by neglecting all these lesser-known companies, you could also be neglecting some of the biggest gains. (See also: Small Caps Boast Big Advantages .) Putting taxes above all else is a dangerous strategy, as it can often cause investors to make poor, misguided decisions. Yes, tax implications are important, but macbeth thesis statement are a secondary concern. The primary goals in investing are to grow and secure your money. You should always attempt to minimize research paper essay amount of tax you pay and maximize your after-tax return, but the situations are rare where you'll want to put tax considerations above all else when making an investment decision (See also: Homework procrastinating Investment Objectives ).