Monday, February 05, 2007

The Business of Investing

Successful stock market investing is very similar to developing a successful business: you create a strategy, implement, analyze, change, implement, analyze, change … and so on, until your strategy is where you want it to be.

Unfortunately, this overall system is so basic, that many people want to rush intermediate steps that often some of the key steps are often overlooked. When I started investing, I had an investing strategy, and I implemented it. Looking back, it worked quite well – for a week. After that gears started turning against me, and then the bolts fell off the wagon. I really did not know what hit me!
But to be honest, it was probably the best situation that happened to me.

Why?

Because you graduate onto the next step: Analyze. You analyze what went wrong, and you change it, while maintaining the components that worked. Most times, investors (new, and experienced ones alike) think that when their strategy doesn’t work, they should scrap it, and start all over again.

It doesn’t work this way. Why would you want to do all the work, all over again? That would be like quitting the business you are in, rather than analyzing and changing your business strategy. In the end, all you want is a system that works, and works with little maintenance. Investing is a business. People do this as a full time job. They are able to maintain it as a full time job by treating day to day operations to that of a business.

To create an investing strategy, or investing ‘business,’ you have to look at your goals, desires, and where your passion. The stock market is not just a place for getting these little stock certificates – it is a marketplace. Within this marketplace, billions of dynamic relationships being built. You have to find where you want to fit within this world, and you become good at what you do.

These next few weeks, we’ll look at developing an investing strategy, and how to build your investing ‘business’.

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