When I got back into the stock market in 2009 after inheriting some money, I made the mistake of listening to this guy who guessed wrong a lot. As a result, I lost money with some bad investments. Now I listen to him less, while listening more to The Motley Fool and a few others I trust.
Oh, the guy who guessed wrong a lot over the last eight years or so? Me.
— R. L., Cincinnati
The Fool Responds: We’re glad that you trust us, but don’t sell yourself short so quickly. A big problem in the scenario you described can be boiled down to one word you used: guessed. The less guessing you employ in investing, the better your results are likely to be.
Sure, no one knows exactly what a given stock or the entire market is going to do in the next day or year, but the more you know, the fewer surprises you’ll likely encounter. If you study a company you’re interested in, learning about how it makes its money, what its competitive advantages are, how financially healthy it is and what its growth potential is, you can make an educated estimate of its value and its attractiveness as an investment.
Remember, too, that you’ll never be perfect in your investment decisions. We’ve made our share of regrettable calls, and the world’s best investors have erred, too.
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