BEFORE YOU INVEST IN SHARES – LEARN FROM CHINA AND SOME CHINESE WISDOM

China has been doing rather well recently. Shares and funds of shares with exposure to growth in the far-east have been growing. This article does not advocate investing in China, but rather reflects on how the new investor thinking about buying shares might learn something useful from the Chinese.

 1.       There Is No One Strategy That Works

 ‘There are many paths to the top of the mountain, but the view is always the same.’ Chinese Proverb

 Making money from buying shares can be achieved in many ways. Some investors take a ‘trading’ approach, spreading their bets over short term positions in the hope of making a quick profit, then repeat. Others like Warren Buffet subscribe to the Benjamin Graham School taking a longer term value investor approach. Some investors like myself do a bit of both but not too much of either. See what works for you.

 2.       See Success And Failure In Equal Measure

 It is human nature to get hooked on success and to pay too much attention to failure. Both are equally bad.

 ‘He who rides a tiger is afraid to dismount.’ Chinese Proverb

 Fail to abide by your own investing framework, whether winning or losing, and your fear to quit and admit a failure or walk away from a success can lead to costly consequences.

 3.       Have A Financial Vision 

‘A journey of a thousand miles begins with a single step.’ Chinese Proverb

Be realistic in your financial vision of what you wish to achieve over time. Small investments in great businesses over time will compound your wealth. The sooner you start, the greater the compounding effect.

4.       Learn From The Worlds Greatest Investors

 ‘To know the road ahead, ask those coming back.' Chinese Proverb

 Learn as much as you can from the people who have been most successful at investing in shares, but recognise that those who have failed also have their story. Learn from both. Investing careers are as unique as finger prints.

 5.       Always Invest In Quality

 ‘A diamond with a flaw is worth more than a pebble without imperfections.’ Chinese Proverb

 Invest in great companies for a bargain price. Be patient and you may get the opportunity to witness a great company facing a temporary storm. That’s the time to buy.

 6.       Confident Investing Is A Contradiction In Terms

 ‘Deep doubts, deep wisdom; small doubts, little wisdom.’ Chinese Proverb

If you find yourself thinking that you have a system, stop. Even Warren Buffet has adapted his approach over time, applying his knowledge and skill in different ways to different opportunities. Confidence and under-confidence are two evil twins.

 7.       The Best Time To Invest Is Now

 ‘Dig the well before you are thirsty.’  Chinese Proverb

The earlier you get started with investing in quality stocks and shares, the better financial future you can look forward to.

 Jamie E Smith is the author of ‘Making Money From Stocks And Shares’.

This content was provided by one of our users, Jamie