Skillful Investor or Lucky Dumb

Mainly defensive investing and avoiding mistakes are two strategies for investors to make sure that their luck does not fail them in investing.

Oct 08, 2014 10:10 IST India Infoline News Service

Luck is an element that holds a different degree of importance for different investors. Some investors blindly believe in the presence of luck, while others sideline it as they consider skills as a critical element to be successful. However, the big role played by luck could not be completely denied when it comes to investing. If the past is visualized carefully, then most of the times it appears that an investor made huge gains just by being in the right place at the right time. Mainly defensive investing and avoiding mistakes are two strategies for investors to make sure that their luck does not fail them in investing.
 
Be Defensive
When it comes to investing, an investor should adopt a defensive approach, taking care that he is not hitting losers. Unlike offensive investing, which is more skewed towards playing it aggressively, a defensive investing lays emphasis on 'not doing things wrong'. In fact, if this approach is combined with a few offensive investing tactics, then an investor could take advantage of both the extremes. For example, an investor can choose to take more risk, but limit it to a specific percentage so as to be both open to returns and in the right way.
 
Covering Pitfalls
An investor faces a series of pitfalls during his investment tenure. Either he could be loaded with too much of an information, while at other times, the emotions of fear, ego, pride could be haunting him. For instance, at times an investor could have oversupply of capital that he eagerly invests in a number of assets, which otherwise are extremely risky leading to bad results. So, in a nutshell, an investor should be alert and open to accept the things happening around like the supply or demand of capital and his eagerness to invest it. Channeling emotional pressures wisely into making a sensible investment decisions is the ‘mantra’ to be skillful.  

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