Investments require an understanding of economics, business and psychology. That’s why I am drawn to investing — learning about companies, researching market trends, peeling away the operational layers of a business to determine if purchasing its stock is a wise choice.
When you are buying stocks, you are buying a piece of a business. You need to understand what is going on in the industry, as well as what’s going on in the company. You must study the trends and the people who are operating the business.
My career is focused on guiding The Fedeli Group, but my other business is investing. As an investor, I’m a student, an eager learner and hungry for information. I read everything I can get my hands on to educate myself about the investments I’m considering. In business, if you work harder than 90 percent of your competition, you’ll be successful. Now, to get to that top 1 percent, you must work smarter and have a better team, and so on. But tenacity is a start — a strong one. With investing, you can work as hard as you want, but if you invest in the wrong stocks, it doesn’t matter how much time you put in.
Put your emotions on a shelf
There is a strong correlation between being a savvy investor and a successful businessperson. Stocks are businesses. You buy a piece of a business or an entire business. I buy what I love and invest in the businesses I care about, so I enjoy the research and following its performance. Stocks are a lot like business because you’ll excel if you love what you are doing. If you care about the companies you’re investing in, you’ll enjoy learning about them and you’ll make informed investment decisions.
Now, the impetus for most of us who invest in the stock market is to make money. But many people do not have the time or interest to really learn about investing, so they follow the crowd (never a good idea) or make poor decisions. They typically allow their emotions to steer a move to buy or sell. With investments and business, you must put your emotions on a shelf.
Invest in the investor
None of this is easy: the time, the research and the discipline. You must have experience to invest successfully. The concept is simple. The execution is challenging. You don’t want to be a know-it-all. You want to be a learn-it-all. That’s why, in my opinion, most people need a coach. Rather than doing their own investments, they’d be wise to act as a “co-investor” by finding knowledgeable mutual fund managers and investment professionals they trust. Basically, invest in the investor. Let the professional do his or her job.
What many learn the hard way is that time and experience are necessary to invest wisely. That’s why a knowledgeable coach is critical for most people investing in the stock market.
Umberto Fedeli is CEO at The Fedeli Group