When investing in stocks, exchange traded funds (ETFs), fixed income or any other investment tool, it is important to have guidelines that you adhere to in any economic climate.
Next Up Research outlines the some commandments to live by when investing; we’ve got a few ideas we’ve thrown in, as well. (Note that the link to the original story is a pdf).
1. Really know the fundamentals. Do some research to find out what’s happening and to further support your decision to make the investments you do.
2. Be proactive and not reactive. Try to anticipate and be ready for something down the line to avoid getting caught off guard. This is tough because no one can be 100% certain what will happen in the future. A good way to abide by this commandment is to have a strategy for entering and exiting the markets, and stick with it.
3. Don’t over analyze investments. Often the best investments are those that are easy and intuitive. By letting trend lines be your guide, you can save yourself hours of pontification and just let the markets tell you what to do instead.
4. If you make a mistake or are wrong, fess up to it and admit it. Wise investors always examine their behavior and identify areas where they can do better next time. Nobody is perfect. Not even you (sorry!).