For many US people, the year 1989 meant nothing more than neon lights, big shoulder pads, voluminous hairstyle, and other typical ‘fashions’. But these were not typical for Dennis Stattman. At that period, he started his career in investment. He was a manager and one of the founders of BlackRock Global Allocation Fund. The decision of creating such a fund was an innovative idea. Now, for more than 2 decades after this event, there is nothing new about that, but the business of Dennis is stable and profitable. This particular fund was and still is a big success, and Dennis had a big contribution, maybe a decisional one, in this story.
Now he shares some of his secrets that have helped him during the career. If you are a beginner or a professional with a great experience in investing, you should pay attention to these simple, but providential principles that will keep your business going on. It is not a complex theory and some challenging rules. These are some clear principles borrowed from life experience. Here are the 7 steps or secrets for great profits in your investment business and career:
- Diversification, reasonable prices and planning – the main secrets of successful investment
The masters and virtuosos of diversification always say: all the markets and assets do not depend on the same factors and behave very differently. That is why the diversification of the investment wallet will allow you to significantly reduce the risk and be resistant to the number of sudden attacks.
Never overpay for the investment. Taking for the ‘right’ price, you will get more chances to get to your ‘right’ price – that is what the experienced investors say.
And finally, it is simply crucial to act within a well-thought-out plan. This is not less important, because it will help you to keep going with rational and efficient decisions. Having a good plan will help you to move in the right direction even when the volatility will tempt you to deviate from the determined course. Keep in mind that, when risking, you can be successful just once or some times, but this is surely not a stable and continuous path.
- Do not risk a lot of money only to get some pennies. Risk with pennies to get all!
The experienced investors know that investment success depends not only on choosing the right assets, but also on rejecting and avoiding the poor ones. For example, some notorious professionals who understood these issues very well, refused to invest in dot-coms, even if these were very popular in the late 90s. Not everyone could understand their way of thinking. Actually only a few agreed with them, but in the end, the remaining investors who agreed, where really pleased with the results.
- Everything changes! It is very important to be flexible.
How do you think, could anyone anticipate 30 years ago that the US interest rates will be reduced from 15% to almost zero? Everything is in change, and sometimes it is very quick and unpredictable. For this reason, experienced investors say that flexibility is a very important characteristic and ability. To be successful, despite the ever-changing economic cycles is really a difficult task. You should adapt to new market realities in a timely manner if you want to cope with this.
- Positivity on the markets is actually an alarm! The downturn in the markets can open up new opportunities for you.
Do not be euphoric. You should be only rational and always think with a cold heart. Pure ration can allow you to see new opportunities before they become obvious to other market participants. The conclusion is that you should search for undervalued investments at attractive prices, so that one day you could get out of them with a good reward. This kind of strategy allowed some notorious investors to avoid hidden mines and obstacles for many years, and, in the end, to survive in a highly competitive environment.
- Do not allow the analysis overshadow the common sense!
Considering the world economy and the macro indicators, the analysis is obviously very important. But some intelligent managers of an investment fund were the first who recognized and claimed that numbers and statistics cannot always tell the whole story. It is much more important to have the ability to interpret and operate with these numbers. This particular ability will open the eyes for the next secret.
- Work with smart people and you will be a successful investor!
For a very experienced investor, this secret means to create a strong team of investors who might like to inspire each other, and argue with each other as well. This kind of approach allows us to generate more than 700 unique investment ideas and capabilities. It is quite a number, and some of these ideas may change the whole situations. It is very similar to the butterfly effect, in which a simple idea or action can change the whole history. For individual investors, this means a wide range of successful strategies with smart management factor that they receive in the long run.
- Trade with pleasure and passion!
You should love what you do! The real investors were living with this attitude of dealing with numbers from very young ages. It should be in your blood. The experienced investors work for decades and they feel refreshed and as if they have only begun their preferred activity.
If you are informed about some other proved secrets, share these with investors and challenge the competition with the best ideas and best strategies. Adaptability, anticipation, decision-making, passion, are the greatest characteristics of an ideal investor profile. Make sure you don’t skip anything from these principles and following these should be natural and spontaneous. For good investors, these principles are actually simple observations of their whole experience in trade. They follow this unconsciously. However, if you are a beginner, make sure to define things and plan your actions under clear rules