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The passing of a year has always been a time of reflection for me. I'm a reflective person by nature and this time of year seems to focus that reflection with even more intensity. It also coincides with my entry into the world of investing. It was December of 2010 when I bought my first stocks. One learns something from watching the markets on an almost daily basis for two years. My thoughts on what investing means has advanced as well. Refined not only by more knowledge, but the wisdom that only comes from being actively involved in something. Being a spectator is one thing, but being a participant brings you to a whole new level in whatever activity you are involved in. What follows are a few lessons I've learned in the short amount of time I've been involved in investing.

1. Dividends Matter

The first two stocks I purchased where Baidu (BIDU) and Fluor (FLR). Now for a first time investor some of you may be asking why I was buying these two stocks. Good question. I wish I could give you an equally good answer. It probably had something to do with everything I was reading at the time that said buy what you know. I had worked for Fluor once upon a time so I thought I might "know" something about it. As for Baidu, well I have to sheepishly admit that I was sucked into the hype of Baidu being the Google of China. Come on guys, cut me some slack. I was a young and impressionable investor who had more cash than sense. Luckily I did well on these trades, breaking even with Fluor and gaining 45% on Baidu. But the reason I sold was this: dividends matter.

At the time I had no idea how I was going to do as an investor. I had no experience and little understanding of how to get started. I was very much on unfamiliar ground. I started reading about dividend investing and things began to make sense. I felt that this type of investing had something tangible to hold onto on those days my portfolio had more red in it than a Quinton Tarantino film! I may not have felt comfortable selecting a stock with hopes that it would trend higher, but I did feel ok with selecting one that would pay me a decent dividend every quarter. It made the noise of investing less intense and allowed me to keep my cool when volatility was high. When I sold those first two stocks I replaced them with AT&T (T) and McDonald's (MCD). The reason why? Dividends matter.

2. Taking a Loss Is Not a Cardinal Sin

This has been a hard lesson for me to learn. I think I understand a little more of the psychology as to why. Sure, there is the loss aversion aspect of it and that hope that we can always get it back if we just wait a little longer. However, I think the deeper issue is in our reluctance to admit we were wrong. Think about it, selling at a loss is the ultimate way of admitting you were wrong. It's adding insult to injury. You've not only lost some of your capital, but you are admitting that you were wrong. Ouch! If you are going to invest for any length of time some of your investment decisions are going to turn out incorrect. Accept it and put aside any personal feelings about the situation. If you can learn something from the error you have made then apply that to your next investment and see if you can make up the difference. Life goes on; don't get hung up on mistakes. Learn and move forward.

3. There Are Multiple Means To the Same End

Even though my investment roots are firmly planted in dividend growth soil, I'm learning that I may dabble in other investment styles as well. I lean towards fundamental analysis, but see value in some of the technical analysis techniques. I believe in the tenants of value investing, but have a few swing trader tendencies as well. What makes us successful in this venture is having a system. A well-defined system gives structure to our activity and decision making processes. It helps to reduce the random activity we are prone to and keeps us disciplined. Although others may use techniques that are unfamiliar to us, rejecting them as wrong and without merit is to miss out on broadening our understanding of the very large discipline of investment theory. The world is too large and we live too brief a time to dismiss that which is different from our own approach as invalid. Approach your investment philosophy as the Borg would: assimilate all that is useful no matter how different. You end up with the best of all worlds and an overall greater understanding of what you are studying.

4. The World Is Always Ending

Fiscal Cliff, Arab Spring, Eurozone Debt Crisis, BP Gulf Oil Spill, Japan Earthquake, U.S. Debt Ceiling Debate. Iran. These are just a few of the "crisis" events that I can recall over the past couple of years. I'm sure the next two years will bring even more such events. It's the nature of human activity. What would have happened if I let fear or uncertainty paralyze me from investing? I would have missed out on the gains I've enjoyed during that same time. Letting currents events dictate what your actions will be from a position of fear is not going to help you achieve your goals. Use uncertainty to your advantage and invest from a position of strength. The world is always ending.

5. Investing Is as Much of an Art as it is a Science

I would love to think that if I could only master mathematics then I could make all the money I would ever need from investing. I would write a book on my technique and make even more money. The reality is that being a math whiz is definitely helpful when it comes to investing, but it takes something else as well. This something else is why investing is a bit of an art form.

There are a lot of people using a lot of various charts and graphs that represent a visual depiction of data that is meant to guide one in their decision making process. Precision is the end goal of this activity, but there is something that always keeps us just shy of making meaningful predictions when it comes to investing. I believe that something is the unpredictability of not only what future events will transpire, but equally important, how people will react to those events. This is the breeding ground of inefficiencies and where patient investors can make money.

These are the major lessons I have learned over the last couple of years. I'm sure there will be even more lessons to learn as I continue investing and I hope that I can continue to report positive gains for each of those years as I have the last two. A lot can be accomplished with patience and a willingness to learn from others as well as personal experience.

I know a lot of you measure your investing experience in decades not years. I would be most grateful if you shared one or two of your most valuable lessons from those years of experience. I think it would be a great addition to the already wonderful resources that can be found here on Seeking Alpha. I thank you in advance and wish you a happy, healthy, and gainful 2013.

Source: The First 2 Years: Lessons Learned By A Neophyte Investor