Today in this post, we’ll explore key strategies to help you navigate the complex world of finance with confidence and prudence. Whether you’re a seasoned investor or just starting out on your investment journey, these principles will provide valuable insights to help you build a strong and sustainable investment portfolio.

1. Invest Within the Scope that Does not Harm Your Own Property

This is the most basic and crucial advice. The majority of those who cry out “stocks are gambling” have not adhered to this principle. Reckless investments driven solely by the desire for instant wealth are the starting point of ruin, not just in stocks but in anything considered an investment.

2. Acknowledge Your Limits

Becoming an expert is not a prerequisite for achieving satisfactory investment returns. However, it is essential to recognize your limitations and adopt a rational approach. Do not dismiss lightly the advice of those providing information about stocks just because they do not invest themselves. Instead, maintain a spirit of verification upon receiving information. Profit does not come from frivolous thoughts and pride. Quickly hitching onto the skills and luck of the general public and rejecting those promising quick profits are key. If possible, if you earn money alone, it is intentional to give it to others. The reading room is like that.

3. If You Have a Certain Amount of Initial Investment Capital or if You Achieve Profits Through Investment, You Must Have At Least One Dividend Stock

Hold at least one monthly or quarterly dividend stock. This creates a breathing space called dividends even if losses occur. Of course, annual dividends do not apply.

4. Consider in Advance the Maximum Loss You Can Endure

There is an important concept in investment called MDD (Maximum Drawdown), which refers to the maximum loss rate compared to the peak. In the case of stocks, MDD is much higher compared to other assets such as bonds or real estate. When starting an investment, think about how much negative your account can become while maintaining composure. Most people cannot withstand an MDD of 10%. Explanation of MDD

5. Focus on the Potential Productivity of the Investment Target

If it is difficult to roughly estimate how much profit the asset can generate in the future or how much it will affect other companies or customers, forget about it and look into other assets. You don’t need to be all-knowing, but at least you should understand the actions you take.

6. Investing Without Focusing on Productivity Is All Speculation

Focusing on future price fluctuations rather than future productivity of the investment target turns it into speculation. There is hardly anything as inappropriate as speculation. If you keep flipping a coin, initially everyone can win with a 50% chance. However, if you keep flipping the coin, no one can expect to keep winning. Likewise, the fact that the value of this asset has increased in the past is never a reason to purchase it.

Analysis or Predictions From Analysts, University Professors, Economic Commentators, Etc., Are Nothing More Than a Waste of Time

Listening to what others say about market trends, etc., is a waste of time. Not only does it not bring benefits, but it can also distract you from what is truly important, making it risky. Whenever you see experts on TV talking convincingly about how the market will turn out later, remember what Mickey Mantle (legendary hitter for the New York Yankees) said.

“Everything looks easy when you’re in the broadcast booth.”

However, this is only about predicting stock prices. Fundamentally, analysts are professionals in analysis, and they use concrete data and information for their stock predictions. Although target stock prices may be distorted due to pressures from listed companies, the numerical data and information they use as the basis for their judgments can still be referenced as a basis for investment. On the contrary, it is an extreme conclusion to blindly invest without even looking at reports under the prejudice that analysts are scammers. If analysts were merely scammers who could talk the talk, why would fund managers make decisions based on data from various analysts?