When looking for savvy investment advice, you need to look no further than your next-door neighbor or even your brother-in-law. Because let’s face it, when it comes to the stock market everyone’s an expert.
People will tell you that there is only one way to invest–their way. Even though they may not be active in the stock market at all, they’ll assure you that if you follow their recommendations you will become a millionaire in no time. Even some well-intentioned professional investors will tell you that their way is the only way.
So let’s apply their reasoning to a completely different capitalistic endeavor. Let’s look at something as simple as driving.
We could argue that there is only one way to effectively profit from driving and that is as a taxi cab driver. But what about driving a truck? A truck driver could make money operating anything from a delivery truck, to an 18 wheeler. And then there are chauffeurs, racecar drivers and heavy equipment operators. We must also include boats, trains and airplanes. So what is the right way? There isn’t one single right way.
When it comes to the stock market, it doesn’t matter if you are a trader or an investor, whether you use technical analysis or fundamental analysis. For that matter, it makes no difference whether you trade stocks, options, currencies, or pork bellies. All that matters is that you are making the money you desire from a strategy that matches your own personality and risk tolerance.
However, there is indeed a wrong way to invest, and that is any way that causes you to break Warren Buffett’s rule #1. Don’t lose money!
