Our purpose at the Motley Fool Singapore is to help the world invest, better.
Earlier this month, I invited our fellow readers to share their most important investing lesson from 2017. Several brave souls answered the call. As we were looking through the responses, we couldn’t help but marvel at the simplicity of the lessons that our readers had shared.
We also noticed that the lessons shared were within the reach of a common investor. With that in mind, I am excited to share with you three of the best answers we had received.
1. A simple quote to live by
Quartzite had a simple quote to share:
“Enjoy the ride of market sunshine, persevere to ride out the market storm”
Stock markets can decline from time-to-time . Over the long-haul, the stock market rises more than it falls. Between 2002 and 2016, a period of 15 years, there were a whopping 13 years where the Straits Times Index (SGX: ^STI) declined 10% or more (from peak-to-trough). The frequent declines would seem to suggest the stock market did poorly over this period.
However, that could be the wrong conclusion.
From its inception on 11 April 2002 up to the end of 2017, the SPDR STI ETF (SGX: ES3) rose at around 7.5% per year. The SPDR STI ETF is an exchange-traded fund that mimics the fundamentals of the Straits Times Index.
Holding stocks for the long haul, through the sunshine and the storm, would have produced pleasing results.
2. It’s not what we do, but what we don’t do
Another reader, Toptrader, had this lesson to share:
“Do not touch stocks which we do not understand or are not familiar with.”
As investors, we can sometimes get caught up with the many opportunities that present themselves on a daily basis. Sometimes, we might feel the pressure to act on them, fearful that we might miss out on any upturn in the stock price.
But, Toptrader believes that our discipline in avoiding companies that we do not understand will save us from a lot of headaches later on.
It’s a simple and effective rule that Warren Buffett uses too.
3. Learn the language of investing
Sin MP spent much of 2017 with a noble aim:
“Learning to understand the financial statements in the annual report.”
Avoiding companies that you don’t understand keeps you away from mistakes. However, beyond that, we also have to study the companies that we are interested in. In 2017, Sin MP made the prudent decision to pick a book and learn how to read a financial statement. I am certain that it will serve him well in his investing journey.
A Foolish Takeaway
Investment lessons can come from anywhere. The best ones could come from the like-minded people who are around us. Do not miss the chance to learn from them.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chin Hui Leong doesn't own shares in any companies mentioned.