For great investors, investing is an all-encompassing task, even when not formally trading. At this time in history, the American economy is on an ongoing moderate bull run. Many complain that there just aren’t deals to be found in these market conditions, that most securities are fundamentally overpriced.
This has professional investors sitting on larger piles of cash than normal. They’ll be ready when a dip invariably comes, but until then value investors must be content with waiting in the wings. So what do investors do when they’re not investing, while still increasing their edge when buying opportunities do eventually arise. We’ll talk about some of the tactics of the greats, as well as new methods of the up and coming.
- Read. Warren Buffett reportedly spends 80% of his waking hours reading. In his early days, Buffett says that he would read as much as 1000 pages in a day. This is a voracious habit by anyone’s standards, but it’s not an arbitrary practice. Buffett reads about the world, and the businesses and industries which inhabit it. By making himself aware of the global financial and cultural ecosystems, he gives himself the larger context by which to judge potential opportunities long before staking actual cash. Reading is the key to valuable perspective, and valuable perspective is the key to profit. If you want to become a better investor, stop day trading and start reading. When you have a more rarified notion about how the world works, you’ll be much more likely to make great investing decisions.
- Practice Using Other Forms. If you don’t have a specific security in your sights at the moment (at least for ownership), then try some financial activities which will better inform your future formal investments. ETX Capital makes spread betting available for people all around the world through the speed and connectability of the internet. Users can make value speculations on the future values of stocks, bonds, indices, commodities, and other financial products. If these cash-staked speculations correspond with future value developments, the user can make a great deal of profit. Others enjoy the kind of stock market in miniature that is emerging in the cryptocurrency world, where startups are representing shares in their companies as self-sustaining currencies. Many of these coins are not worth the pixels on your computer screen, but others have tremendous returns (often 1000% annual growth or even more). Even if you’re just using this field as a way of exploring innovative technologies, it will give you a leg up on other investors when more of these companies go mainstream.
- Talk to Other Investors. What better way to pass the time waiting for market opportunity than to talk with people who are in the same field. If you have access to an older or more experienced investor, this person likely has information that can benefit you. Perhaps you know a young investor who is steeped in contemporary investment theory and is eager to find someone who will listen to them talk about it. Wherever you find these conversations, try to surround yourself with investors who are intelligent, informed, and successful. This will invariably help you become a better investor.
Investment doesn’t start and stop with a purchase of securities. Part of being a great investor is waiting for your investments to grow, and learning to develop your knowledge and instincts during times that are not conducive to major buying decisions. If you constantly fill your days with habits that will give you advantages as an investor, these advantages will be manifest when it’s time to act. Always prepare and you’ll always be ready for what future markets hold.