In the following lines, I would like to come with seven tips from famous investors.
1. Warren Buffett: "Buy only what you know and give a fair price for it." ?Warren Buffett is probably the best investor of all time and today he is the second among richest people on earth according to Forbes. His best advice for brilliant investors is to avoid businesses and assets that they don’t understand. Many beginners ignore this rule. But, why you should invest in something that you don’t feel confident enough about? Forex traders are often tempted to invest in exotic or minor pairs because of their strong volatility, but the risk is very high since they don’t understand the pairs’ behavior very well. In other words, you should do your homework prior to making any investment decision and analyze the product or asset.
2. George Soros: "Big money is born in uncommon situations." ?Soros repeatedly said in his interviews that if everyone knew about an event, or everyone wanted to buy something, there couldn’t be much gain from it. Moreover, analysts often make mistakes. Thus, if the whole world says that an asset should be sold, then Soros begins to study the possibility of buying it. Well, it doesn’t mean that you should blindly go against the market sentiment – the important thing is to avoid following the crowd without analyzing the assets.
3. Sam Zell: "Look for companies with bad balance sheets." ?According to Sam’s theory, you need to choose good companies to invest in their stocks, but their balance sheets should reflect financial problems. In this way, you will buy much cheaper, and, as soon as the financial troubles would be solved, the stocks would go up in price. This goes against Warren Buffett’s approach, but it works. It’s important to note that this approach is suitable for investing in stocks rather than in Forex pairs.
4. John Bogle: "The most important thing is a good profit!"?Before opening a position, you must clearly understand the risks at all levels, as well as the potential profit. You should imagine an accurate ratio between risks and potential profit, and this ratio should be realistic and fair. Trying to make a couple of dollars by putting half of your deposit at risk is simply absurd. This is a quite important risk management advice!
5. Dennis Hartmann: "Always stay calm". ?Regardless of whether you are profitable or unprofitable, your mind should be clear. Do not let emotions overcome you. The history shows that no one can generate smart solutions under strong emotional influence, and it’s particularly true about investing.
6. John Templeton: "Buy when everyone says that you need to sell." ?Most people lose money in trading. Therefore, if you listen to their advice, you can follow their failures as well. Templeton has always repeated that when there was a general pessimism about an asset - it had to be bought. And on the contrary, if everyone is quite euphoric about an asset – it’s time to close your positions or just go short. It’s interesting that his advice is quite similar with what George Soros says.
7. Carl Icahn: "Do not listen to anyone except yourself." ?On many occasions, beginners open positions based on the advice of friends, analysts and other people that can be complete strangers. Icahn, on the other hand, gives an unequivocal recommendation - do the analysis by yourself and make all the trading decisions by yourself. In this way, you won’t blame anyone because of your losses and will become more responsible.
As you can see, most of the famous investors recommend beginners to be self-confident and don’t follow the crowd. This is why you should focus on studying the markets and getting complete knowledge about how the world of finance operates.