Most investors know there is limitless advice available on how to invest. Shareholders must be discerning enough to weed through the advice and use only that which will be most useful to their overall investment goals and their personal portfolio management style. Advice must be vetted carefully, so here are three pieces of traditional investment advice you should reconsider:
Don’t automate processes.
Some advice indicates shareholders shouldn’t automate any of their investment processes because they would be giving up their control of the situations. One example of an automated process that can help investors immensely is using trailing stop loss orders. These orders are only effective at limits pre-set by the investor and don’t go into effect unless the share price drops below the stated limit. Once the limit is exceeded, a market order is automatically submitted. This process helps the investor by removing the necessity of constantly watching the market action and manually submitting requests.
Don’t purchase unpopular stocks.
Every now and then, a stock that isn’t popular with many shareholders makes a turn for the better and ends up becoming profitable for those who looked beyond the surface and took a chance on the possibilities. If everyone wants a particular stock,a higher purchase price will reflect that demand.Remaining open to leaving room for growth can help a shareholder find the proverbial “diamond in the rough”.
Follow your instincts.
Emotions can be helpful in making certain decisions but may not be as useful in investing. The unpredictable nature of the stock market can trigger emotional responses from investors. Premature sales and hasty purchases can become burdens on a portfolio.
Approaching investment advice with an open mind will help investors of all experience levels to weigh the offered guidance against the reality of how useful it will be in helping achieve their ultimate investment goals.