Experience only comes with time and investors improve at trading stocks every year. Think of each New Year as a chance to reassess your investment strategy, figure out ways to play to your strengths and learn how to stop making the same mistakes. Here are five tips to help you make better stock picks in 2013.
Listen to the Experts
At the beginning of every year, Kiplinger, Forbes, and other financial publications usually publish a list of “hot” stocks they foresee doing well in the upcoming year. Does that mean you should buy each and every one of these stocks? No. Do your own analysis. Some of these stocks may be beyond your risk tolerance level. On the other hand, you may get a new idea or inspiration from reading what other investors are doing.
Do not throw yourself off a rooftop just because you have a bad day. Keep the big picture in mind and realize that what you lose in one month, you may earn double on the next month. It is tempting to let fluctuations in the market affect your moods swings, but that leads to emotion-based decision making which is the wrong way to go. Keep a clear head and make your decisions based on your experience, knowledge, and the information you have available.
There are going to be times when you make a bad stock decision. Accept it and move on. If you have a strategy that is working, stick to it and do not let yourself get disheartened or second-guess your approach just because it does not work out sometimes. Stick to your guns and only change your techniques when it makes sense to do so.
Do Not Just Watch the Market
Granted, watching the stock market is critical, but pay attention to the news as well. For example, as of this writing in early 2013, there are still serious negotiations going on in Congress that could have a huge impact on investors. Do not just brush situations like this off as “boring politics.” Big changes in Washington often coincide with big changes in financial markets as well, whether you’re going the traditional route or looking for value stocks. Keep track of current events so you know if something is coming that might hurt your investments.
Remember Your Taxes
Tax rules and regulations are often updated on a yearly basis. Do not wait until the end of the year to find out what the new laws are. Keep track of what rules may have expired and what new ones exist. You might find that some of your investments that you were keeping for tax breaks are no longer such a great deal. You can save yourself a lot of grief if you keep up with changes in the tax laws.
The New Year brings new opportunity, but it can bring new obstacles as well. As an investor, you should think of each year as a new starting point and realize that the “rules of the game” are likely to change a bit. If you keep ahead of the curve and stay informed, your investments will be much more profitable.
About the Author: Joane Uzdygan loves to watch the financial markets. To learn more about trading, visit http://valuestockguide.com/premium.