How to Succeed in the Stock Market

Here's a piece from MSN on how to succeed in the stock market. Their advice is summarized in the final two paragraphs:

While many people think you need to be a brilliant financial mind or have developed some intricate, highly complex strategy to make money in stocks, the reality is that you don't have to be a rocket scientist to beat the market. The common pitfalls I've outlined above aren't problems that occur because investors lack intellect, intelligence, and financial or mathematical acumen; they occur because most investors allow their emotions and short-term anxieties to dictate their decisions, rather than sticking to a proven long-term plan.

As Peter Lynch has said, stomach is the key organ when it comes to stock investing -- not the brain. You have enough brainpower to succeed in stocks; if you want to avoid the mistakes I've discussed here, however, you're going to have to have the intestinal fortitude to shrug off any short-term market angst and stay focused on long-term results.

Really, you don't have to have much brainpower either. Simply develop an index fund-centered portfolio, invest in it regularly, and let it grow for a few decades. Do this, and you'll end up rich.

For related thoughts, see these posts:

• Why Most Investors Can't Beat the Market

• A Reason to Stay Invested

• Investing Advice from a Guy Who Manages $22.5 Billion

Comments

[Hannah]

My strategy is simple. Risky, but simple: I find four or five stocks that I think have real potential and I put all of my money in them. I'm up 5% on the year so far because I don't have any stocks really holding me down, and when one or two of my stocks do well, my portfolio surges.

Of course, should any of these stocks fall upon bad times, I'll find myself in the red pretty quickly. That's the risk!

[Zook]

Please, no one use Hannah's advice or idea of how to manage your money.

It is a strategy for failure and angst in the stock market.