Winning investors hold patient cash as a sure sign of someone not following the herd. Such investors can consistently outperform indexes. A willingness to hold cash and patience distinguishes winning investors. They move fast when opportunity presents.
Managing Investment Markets Risks, Lesson 8. When conditions are right, winning investors move fast putting cash to work. Winners show patience. Both in holding investment positions and while waiting for clear market direction. They patiently watch markets but do not expect any specific market moves. They listen to markets.
The two leading characteristics of winning investors
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Cash – willing to hold
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Patient – willing to wait
1. Cash is good
You do not have to invest in the market all the time. At times, the best investment is 100% cash.
Cash is certainly king in tumultuous times. Cash in abundance always comes in very handy. Especially at market bottoms! Having cash than positions you best to seize buying opportunities. Every market produces such opportunities at every market bottom. No exceptions, ever!
Buying low is the most critical half of the buy low, sell high adage. However, once the market moves well off a bottom, opportunity is not lost. Still, nothing beats the profit-making potential of buying well. So be ready for the best buying opportunity, the bottom.
That simply is the nature of the market. Cycles are long and generally up. Still, when there is a downturn we must not hesitate to go to cash. That preserves our precious capital and gains. It also sets us up for winning the next cycle.
Cash positions ua best for the bottom. We can then immediately move in and quickly enjoy being among the winners. Remember, a willingness to hold cash and patience distinguishes winning investors. Join that exclusive and small happy crowd.
Best yet, it puts you among a very profitable group! We win the most by being on the up or bull side as soon as possible in any new market advance.
Being paralyzed by panic, refusing or hesitating to go to cash in a downturn can evaporate more portfolio value than any other single mistake an investor can make. Cash is an investment. It is the most conservative holding in a downturn. Go there as soon as you know a downturn is underway.
2. Patience
Activity is good for the body but bad for your portfolio. Patiently riding a portfolio positioned well in rising stocks, consistently outperforms the results produced by traders. Patience pays big dividends.
Activity and exercise is good for our health but when it comes to investing, little or no activity delivers the best portfolio health. Being a superior investor does not mean being continually active in the market.
Go for a walk or to the gym for exercise but don’t exercise your portfolio.
Patience is a distinguishing characteristic of superior investors. It certainly does not suggest any lack of aggression. Be aggressive and move fast when opportunity presents itself. Be mindful that most of the time fierce predators quietly wait.
Don’t chase opportunities that are not there. Wishing or imagining do not work. You can not force the market. We can not push the market anymore then we can push the tide. It will do what it does. As superior investors, watch and act only when needed.
We learn by observing what the market does. We act in response to that. We wait for the market to tell us when the time is right. When the market is trending up, the time is right. Then we quickly and aggressively move in.
Direction or trend changes catch most speculators well offside. It also devastates most traders. There is no profitable room in the turmoil of a falling market for any but the most experienced players.
When the bear shows up, quickly take your capital out. That is the best response. Take the cash and just sit on it. The willingness to go to cash and the patience to wait for direction will put you ahead. It will distinguish you as a winning investor.
There are alternative strategies for playing downturns and bear markets. We can discuss them in other conversations. Simply going to cash is easy, low risk and works.
Under such circumstances go to cash until you become a more experienced investor. Even then, remember, a willingness to hold cash and patience distinguishes winning investors. Be one.
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Managing Investment Market Risks, lesson links:
Introduction to Managing Investing Market Risks Lesson 1
Dangerous dividend warning signs Lesson 2
Investor retirement saving dangers Lesson 3
Exotic ETFs blow-up portfolios Lesson 4
Stock scam awareness defense Lesson 5
4 Stock scam tips Lesson 6
Bitcoin fraud trust and psychology Lesson 7
Investors hold patient cash Lesson 8
3 Risk or opportunity signals Lesson 9
Option risks, dangers and opportunities Lesson 10
Cautious look at options Lesson 11
Selling low melts wealth Lesson 12
Next lesson 11: Selling low melts wealth
Have a prosperous investor day!
Bryan
White Top Investor
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great pictures…oh yes also the message…have a super weekend
Thanks, they are learning and having fun doing so!