Stock Investment Skills or Luck?

Written by asad sami | Last modified on:

Stock Investment Skills

If you have some spare money to invest in stocks you may wonder how best to go about doing so. Many individuals who don’t invest money in the stock markets regularly might fear to lose their capital quickly and feel they are at the mercy of fate. For those not familiar with how the stock markets work, they can appear seemingly random with prices going up or down on a whim. However, there are many people who not only successfully invest in the stock market but who actually create stock investment skills.

So, what is the really going on with investing in this way? Is it luck or is it a skill that brings success?

Successful Investors show That it is Really Skill

When you closely consider the way that the markets work and the sustained level of success that the top traders have seen over long periods, it becomes clear that stock investment skills and knowledge are the main factors. Some who claim that stock market investment is a gamble and is all down to luck doesn’t really understand how it works.

They see it in that way because they have never informed themselves on how the markets function and how to invest properly. As a result, they play the markets in such a way that it does become a random game of chance – but that is down to their poor skills, lack of knowledge, and lack of research.

If it was pure luck, would Warren Buffett have had the years of sustained profits he has achieved? Sure, he would have lucked out on a few trades but there is no way on earth that he could have consistently won in the manner he has in the long-term.

How Does Skill Come Into Investing?

If you are new to investing in stocks, then the below advice shows why the stock investment skills are the most important factor and how it comes into the equation:

Latest Information Drives Decisions

Latest information drives decisions one of the key skills all traders have is the ability to keep up to date with the latest news and to make informed trading choices based on it. This skill to analyze what is happening, and to make informed choices on their investments, shows that luck is not the man factor. Getting the best share tips is vital to allow their sharp investment skills to come into play.

Specific Skill-Set Needed to Succeed

Specific skill-set needed to succeedto be a successful investor, you cannot simply choose some shares to buy at random and hope it all works out due to good luck. All the best investors will have honed a very specific skill-set over time that gives them a feel for how the markets work and how to pick shares in which to invest.

Previous Education is Key

Previous education is key here is masses of evidence that shows that skills developed by gaining a better education help you achieve better financial success later in life. That is just as true for investing as it is for anything else and once more shows that success is down to skill, not luck. If it were pure luck, your education wouldn’t make a difference to how your investments performed.

Luck is a By-Product of Hard Work

Luck is a by-product of hard work any perceived luck in investing is actually not luck at all. It is merely positive outcomes happening on a regular basis that work out because of your skill and hard work. The people who class it as lucky simply do not understand the hours of work that have to be put in before investment decisions are finalized.

Close Attention to Detail is Needed

Close attention to detail is needed when it comes to investing, you need to pay close attention to your portfolio and how it is performing. This involves assessing what the market is doing, where you think it may head next and whether to close a trade. That cannot be done by pure chance as it would be a recipe for disaster. The markets are in fact not as random as they seem to the outsider, and they need uthe understanding to profit from them.

Investing is Highly Skilled

The problem with investing in stocks and shares for some is that it looks like gambling. They think that it is the same as playing a hand of poker or betting on a baseball game. That is in fact, false, as investing relies far more on your stock investment skills and your understanding of the financial markets. It will be entirely down to your trading skills as to whether you buy shares that increase in value or plummet to a loss-making position.