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Classic Wall Street Wisdom
Author: Mika HamiltonA classic story told to new investor is the one in which a young investor seeks assist from an old investor. The young investor had a serious problem. He had invested in extremely expensive stocks and the market was turning on him. The market was overvalued and he thought perhaps had invested in too much risk. Not knowing what to do he went to the elder investor to question advice. The young man didn't rest or eat because he was so nervous about his decision. After hearing the young man's problem, the old investor told him to sell and sell back to the sleeping point.
This is perhaps simple wisdom from a simple time. However, there is truth in the advice. The old investor was telling the one young to sell enough not to destroy his financial stability but hold enough that if the market does increase he wouldn't kicking himself in the behind. Obviously neither investor knew what the motion of the market would be - after all it is about speculation. This are the same concerns that new and old investors alike have day in and day out.
This begs the question, what is a sleeping point and how do you find it? A sleeping point is determined by a investment formula. These formulas are designed to assist you inject caution into your investment portfolio when risks are high, and assist reduce safety measure when risk are relatively low. This allows you to benefits when prices do increase. Investment formulate work automatically, once the formula is decided upon based on your needs and wants as an investor. A sleeping point refers to the specific point of a specific investor in which he feels comfortable financial (thus allowing him to sleep). Sleeping points differ from investor to investor. Some thrive on the thrill of an volatile market while others perhaps steady and unhurried grow of a flat cycle.
Choosing an investment formula is only one of many tools which can assist with investing. Remember formulas can be changed at any time to fit an investors changing needs or level of confidence. Never let an investment formula overrule sound research, and your own comfort level. Investment formulas assist you with risk but certainly can not tell you what stocks to purchase or what currency to trade. These are merely guidelines to assist you figure out what direction you would like to go in your investment endeavors. For example if you are interested in a particular security you can use your formula to determine how far you are straying from your own investment goals. Alternatively it can also display you how well your selection adheres to your preset portfolio guidelines.
Additionally, formulas allow for the casual investor to have professional assist without having to pay professional fees. Financial advisors are worthy sources of information however, with each investment movement (buy, sell, trade) the advisor takes a commission. Your financial advisor profits even when you don't.Find your sleeping point, develop a investment formula, and go with your gut - these are the ways to achieve financial freedom.
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Keywords:
investor investment help sleeping formula young market financial point