You don’t need to be George Soros, or have millions on hand, to be a successful investor. Even everyday people can learn from his example. Here are five tips based on how George Soros views handles investments.
Readers are always looking for investment tips. The safest thing to do is probably put your money in some kind of mutual fund and let the experts who run it decide what to buy and sell in order to make money and stay ahead of the markets. Forget hedge funds. Those are for really rich people, not everyday people.
Many successful investors started out small. But if you are looking to invest, do not expect to be the next Warren Buffet. There is a reason why there are so few people like him who made a fortune just from investments.
But if you want to be an investor, to make your own decisions on what to buy or sell, whether for the long haul or short term, there is a lot of advice out there for the taking from the people who did make it big.
This is the first in a series of investment advice pieces based on what the top of the top, like Carl Icahn and Warren Buffet, have done to succeed. Remember, each one has a different philosophy. So try and find one which speaks to you. Some people love to take risks while others are risk averse. Some dream of making it big, while others just want a comfortable nest egg.
Whatever you want, you will need to work very hard and stay on top of your investments. There are no shortcuts.
Short Term Investing
George Soros is a short term speculator. So if you are looking for long term investments, like for your retirement fund, then his philosophy on investing might not be for you.
Also, you really need a fair amount of capital – cash on hand – if you want to make money from short term trading. Remember, there are fees to be paid every time that you buy and sell anything. And every time that you take profits then you need to pay the capital gains taxes. Capital gains taxes don’t have deductions.
Short term investing, it must be stressed, is not like day trading. Day trading is really kind of a myth. You can’t just sit at home, follow stock trends and expect to turn a profit from one day to the next. Short term means waiting for months to expect any return on your investment.
Be willing to take risks. This is George Soros’ style. If you are risk averse then his investment philosophy is not for you. Remember, the greater the risk the higher the reward, but also the higher the chances of losing it all.
Decide for Yourself What Works for You
This is one of George Soros’ core principals. Know about the field in which you invest. Read up on it. Ask people questions. Know the fundamentals. If you know science or medicine, look into those fields.
If you know computers and engineering, invest in this area after first studying the companies that are public. Have you studied economics? Then look at the currencies around the world, and even commodities like gold and silver, and decide for yourself whether to short the market or invest in expectation of its value going up in the near future.
Do your homework
You don’t need to understand what the difference is between a hold or a put, or what it means to sell short. You don’t need to go around picking the brains of Wall Street types looking for stock tips. Instead, pick the brains of people in the individual industries.
Do you have a friend who works for a media company or in entertainment? Ask them from time to time to tell you about what is going on in their field. But this applies to people who work on the business side, not the actors or entertainers themselves.
And at this point we all know people who work in computers, whether a programmer or an executive. They must know what’s going on. Your neighbor works for Microsoft, see what the people are saying about what the next big thing will be in software. Someone works for a company that makes hardware, or is a salesman for computer products, ask them about what could be the next iPad or which manufacturers have the best reputations for computer hardware.
This is basic networking which helps in any field.
Know When to Get Out
Do you remember that old Kenny Rogers song “The Gambler”? It’s like the line from the song, “You got to know when to hold them, know when to fold them.” If you have already lost a lot, don’t throw more good money after bad. Don’t let fear of loss cause you to turn a mistake into a disaster. Know when to accept your losses, take out what money you have left and to start looking for a different kind of investment.
Remember, this advice is for the short term investor. For the long term it may be too late already to avoid further loses on paper during a correction or a crash like what happened in 2008 with the subprime mortgage debacle. If you are a conservative investor and keep your money in stocks like Google and Amazon then they are sure to go back up to where they were in time.