Warren Buffet once said, “When the tide goes out, you discover who is swimming naked”. In this legendary quote from the stock market legend himself, he states that during a period of strong economic growth, it is difficult to tell which companies have poor financials or governance because there is a general upward trend in the market. You find these companies and their stocks dipping drastically and within the blink of an eye during volatile market conditions or economic turmoil. Here are some timeless investing tips for becoming a successful investor who can avoid these kinds of investments.

Warren Buffet once said, “When the tide goes out, you discover who is swimming naked”. In this legendary quote from the stock market legend himself, he states that during a period of strong economic growth, it is difficult to tell which companies have poor financials or governance because there is a general upward trend in the market. You find these companies and their stocks dipping drastically and within the blink of an eye during volatile market conditions or economic turmoil. Here are some timeless investing tips for becoming a successful investor who can avoid these kinds of investments.

1. The Concept of Time

First, you must learn how to time the market and not how to time the market. In most cases, investors want to achieve exponential returns in a short period of time. A few misconceptions still persist in many parts of the country about stock market investments, like doubling money in a few months or so. Investing in the market or investing for a long time is the key to earning a good return on your investment.

2. Learn to Diversify

The key to investing in the stock market is diversification, and it may seem cliché to most ears, but diversification is one of the most important things to consider. You can lose all your eggs if you put them all in one basket. The best way to maximize your returns and minimize your risks is to diversify. 

3. Understand the implication of cycles

To earn great returns, you must go against the cycle. For instance, if you invest in a company that makes winter garments, the company’s revenue increases during the winter, and so does the stock price. In order to achieve above-average profits from this stock, you need to invest during summer months, when revenue is low and stock prices are lower. 

4. Guard your emotions

You should be invested in your investments but not emotionally. Investing judgment and logical thought should not be clouded by emotion. 

5. The art of rebalancing

As a result of market movements, rebalancing your portfolio is ideal if your asset allocation is hampered. Under all market conditions, this would enable you to maintain your ideal asset allocation.

6. Learn to differentiate between news and views

Is it a good time to invest after hearing the news? Is it true news or is it just a rumor? Investing solely based on the news can be gruesome, even while listening to and reading the news daily is important. Before taking any action, you should recheck and analyze the effect on your investment. 

7. Corrections are normal

Market corrections are natural, but investors must be patient enough to observe whether it is a normal correction where stock prices move around 8-12 % up or down. It may, however, be the sign of a bigger event if the change is beyond normal. 

8. Make learning a constant habit

Successful investors are also constantly learning. Reading economic news, journals, stock analysis reports, or financial blogs can help you improve your investment skills. 

9. Analyse the risk potential

Your friend bought a stock that will probably give exponential returns as per his analysis. You also invested in the stock. Both of you lose money when the company fails. However, your friend has a monthly income of Rs. 2 lakhs and you have Rs. 50000. Therefore, the loss may not affect your friend as much as it does you. You can discuss investing with your friends and family, but investing according to their plan is never a good idea. The first step is to analyze your earnings, your risk appetite, and your investment goals. 

10. Think differently

The key to success for investors is to think differently. Investing when the prices are high and selling when the prices are falling is not part of their herd mentality. They analyze, observe, and invest regardless of market timing. As technology has advanced in the investing arena, investing has become easier. However, these above-mentioned rules of investing remain relevant today. It is important for every investor to abide by these rules regardless of market volatility.