Do or be done in. Sol Palha
Best Investment Ideas; Start Off With Having A Good Strategy
Everyone is looking for the best investment idea or ideas but no one focuses on the strategy. Without a proper strategy, the best of ideas will not help you one iota. You need to have a plan, you can go to a fight with the best weapons but if your opponent has a superior strategy he or she is going to be in a position to give you a sound thrashing.
Contrarian investing would probably make it to the top of the list, but there is an even better strategy that takes contrarian investing one step further. If you are new to investing then this page has a plethora of free resources for the novice investor; Top 10 investment resources for Novice Investors
Best Investment Ideas: Master The Concept of Contrarian Investing
Unfortunately, most contrarians are nothing but fashion contrarians (discussed further below) who are full of hot air; in other words, they are all talk and no action. If you listen to such individuals make sure you take their advice with a grain of salt and shot of whiskey. The majority of these experts have not followed one piece of their advice. If they had they most would be bankrupt today and those that follow them usually end up losing their hard-earned money. These experts only role has been and bastardise the real meaning of the word “contrarian”. Therefore before you embark on trying to find the best investment ideas, make sure the people putting out these ideas are qualified to do so. In order to this, you need to be in a position to separate the riff from the raff. ”
Fashion contrarians are in it for the glamour; they want to create the impression that they are doing something different, but in reality, they are part of the crowd. These investors with the herd mindset only imagine that they are doing things differently, but the moment panic or doubt is in the air, they take flight like bandits being chased by the hounds of hell.
Tactical Investors Stance on Contrarian Investing
While we at the Tactical Investor embrace the concept of contrarian investing our true focus is on the joining the Primary rules of contrarian investing with the powerful concept of mass psychology. The combination of the two methodologies creates an incredibly robust system. Psychology is the key driving force behind almost every human action and understanding it could significantly improve your overall experience and results as an investor.
To this winning combo, we add technical analysis, and the end result is an unbeatable system. This is what led us to craft the trend indicator, a tool that magnificently combines the supreme elements of technical analysis with the most compelling elements of Mass psychology.
Key Contrarian Investing Rules
Discipline and patience are the keys to successful investing; nothing comes quickly, for if it did, everyone would be able to do it.
- Popular media (magazines, news outlets, newspapers, TV stations, etc.) should be viewed in the same light as sewage; a waste product with a very bad smell. Use these outlets to determine what the masses are frothing about and what you should avoid or start getting out off or into. Emotions should be at a boiling point before you make any move. You do not oppose the masses just because they have jumped on the bandwagon; it’s only when the bandwagon is overloaded and about to buckle under its load that you should look for an exit and vice versa.
- Technical analysis plays a key part when it comes to investing, regardless of whether you choose to be a contrarian investor or not. It is imperative that you take the time to understand the basic tenets of this crucial field. Try not to follow or focus only on the most popularly used Technical analysis indicators. You will be amazed at how effective some of the lesser known indicators are once you get to understand how they function and operate.
- Spend time understanding the markets you are going to target or the sectors of the stock market you intend to play. Formulate a sound plan. Don’t be foolish; no work equates to losses. The plan should include profit targets on each and every trade, and, an exit plan, in case the trade does not work out.
- Learn to relax; if you don’t relax it’s hard to win.
Mass psychology takes Contrarian investing to the next level
A real contrarian is familiar with the basic concept of mass psychology. If you are not familiar with these rules, you are doing yourself a disservice and should catch up on them ASAP. The most basic tenet of mass psychology is that one does not abandon ship until the emotions have hit the boiling point and vice versa. For example, if the market is in a bullish phase, you do not abandon ship just because the masses have jumped on the bandwagon. Instead, you wait for them to move from the cautious to a euphoric phase before bailing out. Once you have a sound strategy in place you can start looking for the best investment ideas because you will now be in a position to do so. If you know how to invest then finding what stocks or sectors to invest in is relatively simple.
A genuine contrarian only jumps into the investment as the asset is trading at mouth-watering levels, and blood is flowing liberally in the streets. An astute investor buys when the crowd is paralysed with terror and panic and sells when the masses are jubilantly buying. When you are feeling ecstatic, flee for the exits.
Overconfidence is a sign that you are treading on thin ground. Even the best traders can, and so suffer setbacks, the key is not being too confident or arrogant, as it is very difficult to pick yourself after a fall. Always utilise stops as the markets are currently very volatile.
Investing is really about emotions. You are overcoming your emotions and preying on the emotions (trepidation or gluttony) of the crowd by taking a far-reaching position that is usually in opposition to that of the crowd.
When you take a position, and people look at you with contempt or disbelief, you know you are doing the right thing. When they tap you on the back and they nod in agreement, then it’s time to flee for the exits. Buy low. Sell high.
Other Contrarian Investing Articles of Interest
How to build wealth in 6 steps (March 28)
Another Name for Fake News Is Misinformation (March 20)