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1. You must reject 100 stocks before you select one
Stock selection is a much more laborious and annoying than you would care to imagine. It is estimated that an average investor must reject at least 100 stocks before Focusing on the fact that a stock could be a multi-bagger.
2. One wrong decision may affect your performance
It’s important when you’re still a small investor. But we have seen the largest investors lose most of their earning in a handful of trades. Don’t underestimate the capacity of the market to snatch your earnings, irrespective of how big it is.
3. No one became a millionaire by consulting others
Stop asking for tips and this is something that no successful investor will ever say to you. No one has become a Warren Buffet or George Soros by going around asking for trading ideas and investment lessons. Take your own lessons and glean your own wisdom. There is no other way to do it.
4. You may be able to make more money with passive approach
Whether you like it or not; but over a longer period of time, you will earn more money simply by investing in an index fund. There will be odd years where your skills will be important and multi-baggers will come your way. However, in most years, you will be in a better off in an index fund.
5. Most hot stocks are too expensive because the market is more intelligent
Nothing is cheap and especially not good and of great quality stocks. If everyone on the street is aware of a story, you can be sure it’s priceless. The key to smart investing lies in taking on that big risk for the leaders of tomorrow. A plain vanilla approach of following the crowd will not get you very far.
6. Smartest of investors look for quality businesses and diversify risk
Smart investors don’t buy stocks, they buy the underlying businesses. There is a simply many complex than it appears because there are just more dynamics involved. Very importantly, remember that everyone from Buffett to Soros to Lynch does diversify their risk. A concentrated approach is not very smart in the real world.
