The 3 commitments for sharemarket investing success


Three investing commitments and 7 ASX stocks firmly on our radar

If there’s one thing I’ve learnt in 15 years of working with The Motley Fool, it’s that mistakes do happen.

When it comes to sharemarket investing, mistakes happen too. One mistake we trust you didn’t make recently was to sell out of shares in a fit of panic.

Because, lo and behold, shares have recovered

We received several emails recently along the lines of…

“With everything going on in the economy now, is it worth pulling money out of the share market in order to buy back in a few weeks when prices are even lower?”

Trust me…this one is going to end badly

We know how such plans usually end. We’ve seen it all before.

  • Investor sells when the market is tanking, feels good, finally stopping the pain, the bleeding, the paper losses. Phew.
  • But shares bounce back up again. Did you make the right decision? Will shares go lower in the weeks ahead?
  • Shares do go lower in the weeks ahead. But you wait, you don’t buy. The economy still looks sick. Reading the papers, you surmise GFC II is looking increasingly likely. You sit and wait.
  • The Greek elections come and go. Markets move higher as the uncertainty is lifted. You still wait on the sidelines, waiting for them to fall back again.
  • The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is back above 4400. The Australian economy is stable — unemployment remains below 5.5%, inflation is around 2%, mining doesn’t fall off a cliff, the steady US economic recovery continues, and China keeps on growing around 8% per annum. You still wait, hoping shares will fall back.
  • The S&P/ASX 200 surges to 5,000. Phew. You’re glad you saw off that wobbly period back in the winter of 2012. Shares are flying. You don’t want to miss out on the party, especially in the small-cap speculative mining sector. You BUY. You LOVE stocks.
  • The index has another of its periodic wobbles, this time on the back of Middle Eastern unrest. The S&P/ASX 200 plunges back to 4,500. You can’t stand the pain. You pull all your money out of the market, in order to buy back in a few weeks time, when prices are even lower. Phew.

You think the market is rigged. You retire poor. You blame the government of the day, whichever party is in power. You blame everyone but yourself…

Make these 3 commitments…

To be a successful investor, we believe you need to make three simple commitments…

1) Commit to a lifetime of investing, and a lifetime of putting new money into the market, whether it’s up or down.

2) Commit to controlling your emotions, whatever the market is doing.

3) Commit to holding good companies for years.

Not mentioned above are things like ‘selling whenever markets wobble’, ‘selling winners and holding losers’, and ‘using margin loans when the market is flying’.

When you make those three commitments mentioned above, buying shares when all around are selling suddenly becomes a whole lot easier.

Stocks on our radar

7 stocks on our radar are Woodside Petroleum (ASX: WPL), ResMed (ASX: RMD), Seek (ASX: SEK), Carsales.com (ASX: CRZ), Monadelphous Group (ASX:MND), IMF (Australia) (ASX: IMF) and RCG Group (ASX: RCG).

If you are worried about the market crash, you might want to first check out our new free report, Read This Before The Market Crashes. It could save you hours of heartache, and thousands of dollars. Click here to request your report now, whilst it’s still free and available.

More reading

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