Stockscores commentary-
***Commentary
I think that success in the stock market has as much to do with avoiding mistakes as it does with doing the right thing. In fact, I would say that picking good stocks is relatively simple compared to avoiding the emotional traps that cause small losses to turn in to big ones.
Investing in the stock market is a probability game. You can not possibly by right all of the time, and as a result, you have to expect that some stocks that you pick will be losers. The first step to success in the stock market is admitting that you will be wrong some time. Everyone reading this, particularly we men, needs to say this out loud. “I will be wrong some of the time.”
Accepting that the losses will come is important because it is the first step to actually selling and taking a loss when the time is right. By not holding on to a mistake, we can minimize the amount that we lose, and improve overall portfolio performance. The alternative, falling in love, is painful and typically leads to heart ache.
Now, most of you can appreciate the importance of taking small losses when you are wrong, but we all have difficulty admitting that we are wrong until it is too late. My wife would be a good stock trader because she has no problem asking for directions, while I would rather drive around and figure it out. A few days later, I might (emphasis added) admit that I was lost. But by that time, it is too late.
If we have a stock that is not doing well, and has proven us to have made a mistake, we should admit it and move on. However, humans like to avoid pain, and it hurts to take a loss so we try to rationalize why this stock purchase is performing poorly, and why we need to avoid taking the loss and instead hang in there.
“The stock is down because the overall market is down, but it is still a great company.”
“The short sellers have been hitting the stock, but they’ll get squeezed and the stock will shoot back up.”
“I won’t be swayed by short term gyrations of the market; I am a long term investor.”
“It is those damn day traders that cause this volatility; I’ll just ride it out.”
“I hope it turns around soon.”
Hope is what turns savvy traders in to long term investors. There is always a reason why stocks down, and knowing what that reason is does not change the fact that the stock is going down. And the lower it goes, the harder time it will have to go back up because downtrends bring pessimism in to the hearts and minds of investors.
To succeed in the market, accept that you have to lose money to make money. A penny lost at the right time is often worth many more pennies gained.
News 
Market Data 
Discover 
