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5 Most Important Factors In Stock Investing Success

90% of retail investors lose money or underperform and even 75% of professional investors underperform the market. A huge reason is that most investors are focusing on the wrong things. As a professional investor, here are the 5 most important things for investors to focus on, in order:

    1. The Psychology of Investing

    The same factors that make you a success in life often make you a failure in investing. For example, you need to be fearful when something bad is happening. But professional investors much never get fearful so they must learn to stop fear. We are told from childhood that the only way to succeed in life is to work hard. But investing doesn't pay you to work hard at all but to work smart.

    2. Risk Management

    Most people's fear in investing is that they will lose money. Fair enough. But a professional trader cannot allow fear of losing money to stop their investing. All trades have risk so the professional must control the risk or the risk will control them. Most people have no idea how to control risk so often get into situations where they lose a lot of money.

    3. Asset Allocation

    This is another factor that people spend little time on yet is the third most important factor for investment success. Asset allocation is how much of your money you allocate to investing or to the stock market. For example, I have one client who was bearish in 2020 so allocated his resources to the bear side of the market. And missed the biggest bull market in history. The more bullish you are the more assets you should deploy to the long side of the market.

    4. Stock Analysis

    Once again, few people do serious funadamental analysis of stocks or sectors. Instead, they rely on brokers, or newsletters, or tips, or their own weak ideas. All of these are money losing sources of trading ideas. Yet people will persist in spite of the evidence that it doesn't work. But the alternative is to actually understand what makes stocks move and then analyze that. Oh, but that is too much work. Better to keep on losing money. Amzing!

    5. Entry And Exit Techniques

    This is where most people spend all their time and attention. Go look at Amazon and you will see that 90% of books are on the timing of stock entries and exits rather than on the four elements ahead, all of which are more important. So most investors learn techniques here, which may be very good techniques, but avoid the topics above. But skipping just one of the topics above will doom their investment program

    The key to trading and investing success is to learn the topics above in the order above.

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