Before investing in a stock, it is important to do your homework. There are so many choices and variables to consider and it is easy to become overwhelmed and make mistakes. While there isn’t a perfect recipe for success, having a guide to follow and knowing the right questions to ask before handing over your
Read More- "I'm no genius like Warren Buffett"
- "There's no way I could be on the same level as the top billion-dollar fund managers"
- "I'm not smart enough"
Why It's Hard To Beat Smart Money
Here's why... Beginner traders with an over-inflated sense of confidence in their abilities (not to mention ego) often don't understand that they're not just up against the 'face' of institutional investors and managed funds (e.g. Ray Dalio of Bridgewater, Bill Ackman of Pershing Square and Carl Icahn). These fund managers have teams of investment analysts (sometimes computers with pre-programmed algorithms) that help them identify and research the best investment and trading opportunities. To highlight the reality of this situation, imagine you're sitting at home alone doing your own research on opportunities to buy and sell stocks. Now imagine going against this whole team of experienced and university-qualified investment analysts working full-time discussing and sharing opportunities at Bridgewater Associates (Ray Dalio's fund)...How To Take Advantage Of Smart Money
Just because you're not 'Smart Money', doesn't mean you're at a complete loss, however. You may not have billions of dollars under management, nor do you have a team of 1500 employees helping you do your research. But you can make use of 'Smart Money' resources, and here's how... Many managed funds in the US market have requirements from the SEC (Securities Exchange Commission) to disclose their holdings every quarter. This also includes individual investors (e.g. Bill Gates) who hold more than 5% ownership in any particular company. With this information, you can then use them as a 'reference guide' to give you more confidence behind your own investment and trading decisions. For example, imagine you're about to place $5,000 into buying a share of a company, and you find out that Warren Buffett or Bridgewater Associates is also buying into the same stock – only they're buying $100 million (or even $1 billion) worth of this stock instead. That gives you that extra bit of confidence, doesn't it? So in summary, while you can't be Smart Money, you can use Smart Money to your advantage. You just have to make sure you conduct your own research first and then treat Smart Money as extra confirmation of your buying and selling decisions, rather than just blindly copying the trades of successful fund managers. TerryYou may also like
Fundamental Analysis VS Technical Analysis VS Macro Analysis – Which is Best?
There are three main types of analysis that investors use when making decisions about where to put their money: Fundamental Analysis Technical Analysis Macro Analysis. But which one is the best? And which one should you be using? Today, I’ll share with you my experiences with each of these methods. This post will probably stir
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