Everyone wants a system

Investing is more an art than science, and there is no formula to help you make the right investment decisions. There are so many variables to consider for every business and business model that no formula can be 100% accurate.

This fact didn't stop people from looking.

Understanding this point is part of being a better investor. There is no specific system that traders can use to find quality stocks, but there are certain features that link quality business. Buffett said, "Everyone wants a system ... They all want a [system] that you can go through a computer and simulate it. So, if past performance was the key to that, Forbes 400 would be installed. Librarians would look at it, it doesn't work that way, they want it to work that way." It would be nice if it did, but it's not. It's like picking a basketball team. You look for guys who are six feet tall, you look for a guy who can stay at school, there are many things, and there are some things that lead you to find the five best people on the field. I can't give them a formula. “Here's a little formula and Emporia is the best basketball team if you go to Kansas and apply this formula without seeing the guys playing basketball and working with them. "You won't."

There are no great strategies and free lunches, but as time passes by you, investors can weather nearly every storm we see on the stock market. However, an investor needs to have the discipline to focus on income in both good times and bad times. Knowledge is power, and many people fear the investment world because it makes the world more confusing every day to sell you something: stock options, technical strategies, books, videos, subscriptions with "secret ideas".

Let the Magic of Compounding Work for You

As Albert Einstein said, the eighth wonder of the world unites. Compounding is when you allow something (money) to continue to build on itself over time. In our case, we redistribute the dividends we receive to the same stock or other stocks that pay solid dividends. Then we let the component do its job. The hardest part of combining is in the last sentence of the paragraph above: "Your money continues to grow as long as you don't touch it."

This is called patience, and it's a must.

Disclaimer:

LUMIBASIS has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.