Signs You Are Relying On Luck For Your Stock Investment

Are you employing luck or proper analysis or both for your stock investments? Here are signs that show you if your investment strategy is just luck.

Luck is all about chance. It represents the success or failure of a venture or course of action that is brought about by chance as opposed to the actual set of actions carried out.

Luck is attributed to so many things from chance winnings like winning lotteries or even narrowly escaping fatalities. In this same vein, there are people who employ luck while investing.

As opposed to carrying out careful analysis, they hold on to unfounded beliefs in possibilities. Needless to say, the risks that come with this investment strategy are numerous.

Are you employing luck or proper analysis or both for your stock investments? Here are signs that show you if your investment strategy is just luck.

If You Choose Stocks Like “Eeny Meeny Miney Mo”

“Eeny Meeny Miney Mo” is a children’s rhyme that is used to select from a list of options. Based on the system in use, the option that ends with “Mo” is chosen.

If your method of choosing stocks to invest in is to chant this or anything else, cross your fingers, close your eyes, or randomly pick one based on the ‘aura’ around them, then you are definitely investing in sheer luck.

Stocks should only be chosen after careful analysis of their capabilities or potentials and based on your strategic imperative.

Holding On To Specific Stocks Or Industries

Sometimes, we determine what luck is based on certain patterns. For example, you might have realized that every time you invest in stocks in certain industries you earn profits.

However, when you invest in stocks in some others, you always seem to lose. As such, you focus on investing in the stocks you seem to keep winning with. If you do this, you’ll realize that it’s only a matter of time before you experience the risks that come with being overweight on a stock or investment.

The correct way to mitigate such risks is to diversify your portfolio. Spread it across a number of industries and to cover a number of securities and keep your portfolio balanced across board.

Timing The Market

Timing the market is another act of luck. An example of timing the market is investing now and setting a fixed date sometime in the future to sell your shares. What you’re doing here is leaving that date to chance.

The market may move to terrible extremes and you might indeed not panic until it gets close to the date you have set. If this is you, your investment strategy is as shaky as simply investing in luck.

There are many other actions we take that have no founded theories on why they should work. If you have made decisions like this, then you will do yourself a great service to go back and review each decision made with a broader and more comprehensive system.

Written by Lawretta Egba