All about having the right mindset
We've all seen them before; the pump-and-dumps touting 1,000% gains in a single day. A lot of us probably say, "Man, that would be nice." Some of us may even say, "Hey, I could do that!" If you threw in $1,000, and realized a 1,000% gain, you would've pocketed $9,000 in profits. $9,000 sounds great! But, it's not often realistic as a trader. A better bet is finding quality companies, and INVESTING rather than trading.
What is trading?
Trading is buying a company's stock, then turning around and selling it in a short period of time. This is often called day-trading.
What is investing?
Instead of trying to turn a quick buck, when you invest, you are finding quality companies and helping them grow, benefiting from their long-term success.
What is the investing mindset, and why is it helpful?
The investing mindset is essential. The first part is due diligence. Due diligence essentially means doing your research. Research is crucial BEFORE an investment, but it is also crucial AFTER the investment as an owner of a company's stock. Initial research builds confidence, continual research maintains confidence or tells you when to get out. Due diligence also helps you stay objective because you are making decisions based on fact, rather than emotional woes and snap decisions.
The second part is confidence. You have to believe in what you are buying. You buy a car after doing your research; you buy a television after doing your research; you buy a house after doing your research. You do your research (or read The Bowser Report's research) to know what you are investing in. When you know, you can make an informed and CONFIDENT decision. You have to TRUST your research and BELIEVE in your investment.
The third and final part is objectivity. What does this mean? Try and keep your emotions out of it. This is VERY difficult because you have poured your hard-earned money into your investment. Seeing that investment become less valuable hurts, but you cannot panic. Try to realize what is causing the slide and whether its something within the company (earnings, management, etc) or something outside the company (trading, emotions, etc). Then, make an informed decision on what to do.
Of course that sounds ideal, but does it work?
Investing does work! We've all heard the phrase "grow your money." You have to give your money TIME to grow. The Bowser Report has had a number of stocks do VERY well over time. Two examples are MICROS Systems, Inc. (MCRS) and Smithfield Foods, Inc. (SFD). Both of these companies are up OVER 10,000%, and were recommended decades before realizing these gains. Not all Bowser companies, or all companies in general will do that well, but informed INVESTING separates the great companies from the bad companies or even the decent companies.
If you haven't already, try getting into the investing mindset. If nothing else, it will keep your emotions out of the market, which should help you make money in the long run.
The Bowser Report is a monthly financial newsletter that specializes in small stocks trading for $3/share or less. Our goal is to provide the individual investor with relevant information on microcap stocks. Each month, we recommend a new company, provide information on past recommendations and report news surrounding the microcap marketplace.
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Information in this blog post contains references to past Bowser recommendations. This blog post contains no recommendations, and instead relies on data gathered on past recommendations from sources thought to be reliable.