Nobody can claim to know everything about the stock market. Even the most successful people in this venture still attribute part of their success to luck. However, that does not mean that all new investors are at the same level with luck; there are people who are close to success and there are those who keep moving away from it.
Stocks and forex markets are not gambling grounds; unlike their counterpart, they require sound financial knowledge that only very few new comers ever care to look for. These are likely to make it while the trial and error types learn hard lessons and follow the right way, or give up and walk away, or drown into debts and never recover from the abyss of bankruptcy.
Assuming you are among the chosen ones who have decided to follow the right path of stock wisdom, history has a lot of lessons for you. Meet some of the world’s greatest investors and learn free from them:
Known today as the father of security analysis and value investing, Benjamin Graham’s name grabbed people’s attention in the early thirties, but not for the same reason as it does today. In those days, he was only mentioned in discussions of critics who considered him the foolish investor of the century. And wasn’t he? No one in their right mind would have challenged experts at Wall Street whose words were sacred.
When other economist warned people against buying “dying” stocks, Graham encouraged his followers to do the opposite. But in all these, he emphasized caution and deep research. He warned people against buying shares from big firms just because of their size; instead, he told them to analyze their statements and avoid companies with huge liabilities. Warren Buffet is one of the few who listened and succeeded.
The story of John Templeton is a story of consistency. Right from his early life, John underwent circumstances that should have discouraged him against making investments; only that they did not. To begin with, his father, who was a businessman, lost almost everything during the great depression. He told John to quit his university studies because the family could no longer afford the fees.
Through doing menial jobs, Templeton managed to push through until he finished studies. He spent frugally and at times survived on only one meal a day. He would show the same spirit in the stocks trading field years later. Despite the falling of values, he never gave up on the shares that he trusted. Templeton invested more and waited for them to rise.
It is because of this tenacity that the biggest world economist still travel to Toronto every year for the Templeton Fund annual meeting. There is also a documentary about him, directed by Mary Mazzio.
The most unique thing about Livermore is that he did not have as much education like other great investors when he was entering the stock market. He did this when he was just a teenager. Add this to the fact that information in the 1920s market was not as readily available as it is today. Yet the young man was among the biggest investors of his time.
Jesse’s decisions were not random. He kept a neat record of the trend of every stocks he was interested in and only made a move when he was sure that circumstances favored him. A few times, he erred by going against his plans and those are the times when he lost.
Thomas Rowe Price Jr.
Branded as “the crowd opposer”, Rowe’s life is one of contradictions. Despite studying chemistry at the university, he had the guts to leave the “prestigious” but less rewarding science profession to go into forex markets. In Henry David Thoreau’s words, “It is not enough to be busy; so are the ants. The question is: What are we busy about?” It seems Thomas Rowe Price Jr. had realized the weight of these at heart.
When people ran to buy shares in the big firms, Rowe took his time to gather sound financial knowledge of all aspects. Since he was a long term investor, he avoided companies with cutthroat competition; he understood the concept of stock market balloons when people were doubtful about it.
In addition, Rowe put his money only on shares that he was sure would earn him something meaningful after settling the costs of inflation. Despite all these calculations, he was still watchful; he would pull out of an investment immediately it started showing a consistent drop.
While stock trading is not about sticking to other people’s ideas, it is about playing safe. These heroes seem to have read from one major rulebook, which whose main paragraph of emphasis says, “You are allowed to practice all the crazy ideas you can ever think of as long as you analyze them correctly.” And analysis is never complete without information at hand.
What it means for you
Learning from other people’s achievements and mistakes is a good way of trading the safe paths of stocks forex markets. There are lots of information on stock market online. However, you should not gobble up all these without thinking over them and doing your own observation. The best investors have not made it by talking and listening to others but following their own instincts.
Be careful especially about unsolicited emails telling you to put your cash somewhere; the current market, apart from being highly volatile, is full of white collar criminals.
On the other hand, you stand a better chance of making it in this error than Templeton, Graham, price and the others stood at their time. That might only happen if you stick to these and more tips from world’s greatest investors.
One day, people might get lessons from you too. But before you stand any solid chances of making it there, learn to trade as much as you can, keep up to date with the current happenings, keep emotions away from business, avoid crowd mentality, work with people you can trust, and most importantly, stick to your investor’s plan.
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