How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
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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.
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An interesting historical analogy is playing out right now between the World War I centennial, and Russia’s Ukrainian venture. In fact, you can’t help but wonder if Russia is stage-managing events to foster the analogy. This could balloon the unsettling effects of Russia’s current Ukrainian venture, and cut the cost of acquiring more Ukrainian territory. Comment on World War I mostly centers on the idea that a seemingly minor incident, such as the assassination of an archduke, can topple a series of dominos and set off a global war. From there, it’s not too great a stretch to wonder if another seemingly minor incident, the downing of a Malaysian passenger jet, can do something like that today. It’s in Russia’s interest to have North American and European voters think that way. If so, they are less likely to pressure their governments to get involved. Instead they’ll want a negotiated settlement, which Russia also favours. That way, Russia can acquire parts of eastern Ukraine at only a slightly higher price than it paid for Crimea....
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