Smart Advice From Famous Stock Investors That You Should Listen To

When it comes to investing in the stock market, there are a lot of approaches that ultimately define how successful someone can be while invested. Whether they are trading, short-term investing, or being in it for the long haul, there is a lot to know that can help determine how you choose to invest based on duration in the market.

Like many things in life, those who have long experiences in the market have developed expertise that is useful for those who are newer to investing. There are many words of wisdom that come from many of the famous investors who have varied approaches that have all proven successful. While some pieces of advice they may disagree on, others are consistent across the board. So here are five words of advice from famous stock investors that you should listen to.

Never Look at Stock Price

Ask anyone that’s been an investor, and they will tell you that looking just at stock price is not investing. The stock price is only a function of recent volatile price movements and will always fluctuate. It’s important to understand the right price that you want to buy a stock at may take a while to achieve due to short-term market movements, and you must be willing to either be patient or look elsewhere for opportunity.

Pay Attention to Analyst Price Targets

At the end of the day, the market price movement is a function of supply and demand. When people are down on a stock, the supply will exceed demand but may indicate a great buying opportunity if many believe the negative sentiment on a stock is temporary and not justified long term. However, sometimes when a stock price keeps moving down, it could also signify a long-term key issue. So how do you know when a downward movement in price is a buying opportunity? The answer is to look at analyst price targets. 

The reality is that as long as analysts keep believing in the stock long term and feel the price will eventually hit these higher numbers, it may be in your best interest to buy the stock while it’s down. An example would be Intellia Therapeutics and their ticker symbol NTLA stock forecast. Getting in early is risky in a downturn because it’s hard to catch a bottom, but if you can get in before significant upward movement then you will reach great returns.

Time in the Market, Not Timing the Market

Obviously, for many investors, the goal is to maximize their returns as much as possible and preferably in as little time. However many investors have gotten burned because they know that in order to do this, they have to time the bottom of a downward movement in stock price. 

It has always been advised that those who are true long-term investors should never focus on trying to time this and just stick to fundamental analysis. If a company is solid and is considered affordable based on metrics like the price to earnings, you should buy it when you deem it affordable and hold a long-term strategy, until a company meets the things that you want to be priced into it.

Invest in Companies That Are Well Run

There may be some belief that you can ultimately make money just by following momentum trades. But the reality is that there is much risk in trying to play the market all the time. To be truly successful, the approach should always be to find good companies and be willing to invest in them. Short-term price movements will occur based on news, but owning a quality business long-term will deliver the results you are truly looking to achieve.

Trust the Power of Compound Interest

A lot of investors may get frustrated at one point or another with the performance of their stock selections. But as any investor will tell you, that having a long-term view of investing is always the way to go, and that despite any downward price movements, stocks in the long term will always perform. Being invested in the right names, whether growth or dividend stocks, will utilize the power of compound interest and provide you great returns.

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