What Sounds Most Right about Stocks, Bonds and Mutual Funds May Not Be So Right - 3
By Saghir Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Overall, a large majority of these companies are good investment. From my experience over a decade, I have found these companies to be good investment, year after year. As they have a great business model and perform well.
Fact # 5
INVESTING SHOULD BE FUN.
The single biggest warning sign that people are about to suffer an epic investment loss that they are having the time of their lives. Frequently trading is fun, exciting and even a bit sexy Day trading during the dotcom bubble and flipping houses during the real estate bubble made people downright euphoric – that is, until everything came crashing down. Beware the buzz you get from quick profits. Scans show it’s caused by the dopamine our brain releases, and the thrill isn’t all that different from what’s brought on by addictive drugs.
INSTEAD Investing should oscillate between dull and painful.
Owing the whole markets through investments in index fund- and investing more in those funds after they decline in value- isn’t fun or exciting or sexy. Most of the time, it’s boring. When the markets fall and you know you shouldn’t sell but should instead buy more stock, well, it’s downright miserable.
Yes, investing can be fun depending on how you look at it. On the other hand it can also be extremely hard work for some people it can be monotonous. I usually take the middle road by doing so, you will find that you will enjoy research, your homework, because from your homework it will bring good results if you follow all of this, it will not be boring, it will not be extremely hard work, because you do your doing, proper research, using proper tools to make sure that you are keeping in mind all the basic fundamentals in investing which I have shared with you many times is basically don’t get greedy, don’t fall in love with any stock, invest because it is a good investment. If you follow this theory it will not only be fun to invest you will also reap great results insha Allah. One thing you must keep in mind always is to make sure to take your time to do the proper research that will meet your goals of investing.
Fact # 6
HARD WORK PAYS OFF.
Here’s another case of something that works well in most parts of life but not so much in investing. Though it seems obvious that someone who does his homework should have an advantage in picking the right stock, studies reveal this is not the case. In reality, actively managed funds in which “experts” frequently buy and sell stocks- consistently underperform the market; any possible advantage is more than offset by the management cost. And these are investors with years of professional experience in the stock market, plentiful expertise on staff and access to expensive research. Spending a few hours investigating companies on your own typically won’t give you a better record than theirs.
INSTEAD Once you’ve built the right portfolio, be lazy.
When it comes to investing, doing nothing is the ticket. Embrace what’s known as the “lazy portfolio” strategy, built on laid-back methods such as aiming to hit singles (Rather than home runs) and not trying to guess which way the market will move.
The main rule of life is hard work does pay off. Sometimes we want to take the easy way in other words take the lazy way and we expect great results. Remember the old saying, “You get what you pay for”. If you do detailed proper research, check out all the details about the company, their product(s)- are they still in demand, what was great today in this fast moving world may not be half as good today. Companies that want to progress and want to stay above their competition must follow the trends. They must be willing, ready and able to change, quickly. In this fast-moving competitive business world, the only companies that will flourish are the ones who will watch what is happening all around and what does the consumer want. Companies that provide the latest in what consumers want are the ones that will flourish, progress, and will continue to make tremendous profits, pay good dividends. That is all great news for investors. These are the qualities in a company you are going to be looking for. (To be continued)
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
-----------------------------------------------------------------------------
