Get Rich Quick Greed
Why do so many people, especially new investors, lose on the markets - even when they are going up? I think it all boils down to a lack of patience plus greed. Patience is just not something many investors seem to have, judging by a lot of e-mails coming in to me.
Investors press the sell button far too easily on their winners. They seem afraid not to sell after they've only gained a few points on a share when, in fact, they should be holding for 3 to 6 months rather than 3 to 6 days.
It's the get-rich-quick greed thing. Some investors want to buy a share and expect it to move up right after they bought it. They want it to double in a week and turn ten grand into twenty, just like that.
It's just too boring to hold onto a share for six months or a year and watch it gently going up, gradually increasing your capital. And that's it - people get impatient. They overtrade, and go in and out of stocks. Buy one day, sell it the next if it doesn't move. So they eat into their capital by paying tons of commission, not clearing the spread, and then wonder why they're not making money. It's why 98% of 'day traders' lose.
Impatient investors don't think: "this looks like a great company - I'll hold for a year, get 20 percent capital increase plus a 5 percent dividend." They think: "ooh, this share is only 5p - it could be 10p next week." Then they end up selling at 3p.
Dear readers - concentrate on building your wealth slowly. It's a long-term game. Make sure you preserve your capital.
OK teacher, that's enough lecturing. But it's for your own good, I'm telling you.
Markets continue to be very strong and although the FTSE has come back a bit, if you are picking stocks carefully there are plenty of good winners out there. Those playing oil stocks, like me, are having an excellent time. Dragon Oil (DGO), which I bought just seven weeks ago at 109p, has climbed as I write to over 160p!
And something investors seemed to have overlooked is oil support services companies. Two of my favourites are Hunting (HTG) and Sondex (SDX).
Hunting, bought for 235p, is now nearly 300p and Sondex picked up at 205p is now 245p. Plenty more to come from both of these; the booming oil companies simply need their services - and more of them.
One company often overlooked in a different sector is Vanco (VAN). I've made money on these, all the way from 181p to the current 460p and I've picked up more last week at 453p. I visited the company last year and was highly impressed. They are winning contract after contract - and all long-term.
Right! It's time to get back to my screen, relax
and be patient. I'm getting rich slowly - and that's the way I like it.