Investing 101: Why you must ignore predictions and focus on what's important
On a daily basis, headlines bombard you. Whilst many of these headlines are promoting news events, a lot of them over exaggerate the underlying story.
When it comes to the financial markets, this is certainly the case. After a roller coaster ride on the markets over the past couple of months, it's easy to see why you could think the stock markets are going to crash.
But should you pay attention to speculation and predictions?
Let's take a closer look at the best course of action…
Successful investing means sticking to the facts
As an investor, you want to keep up with all the developments on the markets. But by reading a lot of financial news, you may form views about the markets that aren’t going to happen or aren’t factual.
With this, it’s important to be very careful about what you pay attention to in the financial press and what you base your decisions on.
A lot of stories you read are speculation. No-one knows for sure what’s going to happen on the stock markets, yet predictions
are common place.
When making investment decisions, it’s important to ignore speculation and predictions and work with what you do know.
For example, where is the market heading? No-one knows the answer to this. It doesn’t matter is you read or hear a financial expert’s opinion on this, because they don’t know what’s going to happen either.
How to make the best investment decisions
If you invest in stocks, the important thing about making decisions about these investments is that you delve into what’s really going on with them.
You need to understand the business, try to estimate what it’s really worth and what its future potential is. No expert knows with certainty what’s going to happen to it over the months and years ahead in terms of its share price.
Focus on the long-term picture and ignore daily ups and downs. Take all speculation and predictions with a pinch of salt.
So there you have it. Why you must ignore predictions and focus on what’s important.
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