How do I become a better investor?
Graduated in 2016. I work in tech consulting space and understand the stock performance from the perspective of demand from clients, if the company has good after sales response to customers and product reviews from within the company, ralative comparison with it's competition and there by decide whether to invest in a company's stock or not. While I understand that this is by no means a strategy, I was able to reap good profits this year just because the market has performed well in general. I want to be a better investor going forward. I know that I should be understanding the balance sheet of a company and gauge it, understand external influences like oil prices, fed rates etc. I don't know where to start from. Can you give a few pointers from your own experience please!
Hilarious nickname
Hehe. Here is another for you.
Read some good books. Any of Warren Buffett’s shareholder letters are like good investing books. Benjamin Graham is The Godfather of investing. His stuff is good. The basic principles haven’t changed.
Reminder - You Cannot Predict The Future: Timing the market isn't investing; it's gambling. And how would you react if I said I planned on funding my retirement through gambling? Ask, "What Does Money Mean To Me?": Make a simple plan and then make sure your investments serve it. Feelings Can Be Very Expensive:Investing is boring. And make sure it stays that way. Don't "play" the market. That's how you get played. Use the 72-Hour Test: Very few things need to be bought immediately. Let them sit in your shopping cart for 3 days to prevent impulse buys. (The only exception is my book, which should be purchased immediately and in bulk.) Automate Good Behavior: Until our robot overlords arrive, make sure to take advantage of our robot underlings. The best way to be consistent about good behavior is to automate it. Use The Overnight Test: If all your investments got sold, which ones would you actually re-buy? And why doesn't your portfolio look like that now? Know The Fundamental Rules of Investing: Pay off debt. Diversify. Keep costs low. Eliminate unsystematic risk. Be Ignorant And Lazy: "TMI" is a bad idea with people you've just met and with investing. If your money is already hard at work, why interrupt it?
Just let a professional manage your money. Or invest in mutual funds or ETF. Actively managing your money takes a lot of time and a lot of skills that you almost certainly don’t have (unless you have a degree in finance). Great that you made profits, but everyone did since 2016. Did you beat the market? Have you differentiated your portfolio?
Most professionals don’t beat the S&P 500.
Well in order to beat (or even match) the S&P 500 you’d have to invest 100% in stocks. Obviously that’s a BAD idea. A professional would differentiate. In any case, it’s not like professionals always know what they’re doing. But they definitely have better chances of knowing than OP.