In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
[text_ad]
Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
[text_ad]
One common problem is that the IPO sales process drums up a temporary wave of buying that can push up the stock’s price....
“As long-time readers know, I always have an idea about where the market is headed, and the path it might take to get there. To stay on top of this ever-changing idea, I look at what has gone on in the market during my career....
As we often remind investors, using acquisitions to expand adds risk....
For example, some investors look at P/E ratios as a great guide to investment value.
P/E ratios (the ratio of a stock’s price to its per-share earnings) are widely available online and in various publications....
The fund charges investors an MER of 0.89%, which is high by ETF standards....