Tip #1: Managing your stock or investment portfolio is like tending a garden.
With your stock portfolio you need to treat it like a garden. You want to water the vegetables and pull out the weeds! This is another very simple concept. You want to sell or remove the weeds which are stocks that are losing money or aren't performing as planned. Losses are like weeds, once they take hold they drain resources and multiply rapidly. Your vegetables are your profitable stocks. You want to nourish them with fertilizer and attention. Like vegetables you also have to harvest them or if you wait too long (get greedy) they will take back what they have produced. By removing the weeds (minimizing losses) you also free up new ground for better ideas with potential of producing good fruit. The weeds also sap your attention and resources that can be devoted to your productive vegetables. This is a constant process and if you approach it that way, you're already trading and investing like a professional does. Many people do the exact opposite! They sell their winners too soon and hold onto their losers in hopes their weeds will mutate into a vegetable. Hope is not an investment strategy and it is a losing one, so don't do it!
Tip #2: Supply and Demand for shares is what determines the direction of stock prices.
You have to understand that the real forces which set stock prices in the very short-term are supply and demand just like with any other product. If the demand for a company's stock exceeds willing sellers at the current price, the price will move higher to induce additional sellers. If there is insufficient demand at the current price, the price will move lower in order to induce additional buyers. The stock market in this sense is just that, a market of buyers and sellers who come together and agree on prices. If you just understand this simple concept you have an advantage over other investors. They think there are other more mysterious forces at work when in reality that is what governs prices in the very short-term. The financial media adds to this because every day they try to report a reason or news item for why the market went up or down. This is a reason that emotions affect the volatility of the trading of stock prices. If you understand this concept it also gives you a much better understanding to have better insight from technical analysis which I will talk more about later.
Tip #3: Some of the best investments and trades of my career were totally obvious if others had paid better attention.
For instance I usually never trade or invest in technology stocks but when the IPAD was introduced by Apple I immediately knew I might have a winner. The media derided the product as one that really didn't have a purpose and female reporters mocked the product because the name reminded them of a feminine hygiene product. I watched the over hour long Apple presentation about the product and was astonished. I watched it two more times and immediately knew apple had another hit like the IPod and IPhone. I then looked at the company's fundamentals and found it very attractive. They had no debt, $60 billion in cash and marketable securities. They traded at only ten times earnings when earnings were growing at 30% plus. Unlike most technology stocks that trade at four or five time's revenue, they were trading at 2.25. I figured a company like this was worth three times revenue so with the stock trading at $210, I thought it could be worth $275. As we know now the stock eventually traded over $700, so this proves that one of the most obvious trades around was sitting there undervalued and unappreciated for months at a time. This was one of the few times in my entire career I bought a technology stock and while it paid off handsomely, I will admit I misplayed one of the best opportunities of my entire career.