The Five Winning Habits Of Successful Investors

The key to successful investing goes beyond just tactics and strategies - those are easy to learn, and easy to do. But a great deal of it boils down to our habits in what we do in the stock market.

In this blog post, I reveal the five winning habits that I noticed from mega successful investors.

#1. Quality Ideas Only

In my beginning years of investing, I used to jump on all sorts of hype investing opportunities. In fact, if I were the same person I was in 2017, chances are that I would have jumped onboard the meme stocks like AMC and GME. Now, even though these meme stocks actually made money - I would explain why I wouldn't invest in them anyways from the start later on.

These days, I am only focused on investing in quality companies that are proven to do well over time. By quality companies, I am referring to companies that passed the 8-Point Checklist.

By investing in quality companies, I know that my portfolio is going to go up for the long term.

Also, try not to over diversify across into more than 10 companies. Instead, of allocating more money in your 11th idea, why not reallocate that money into some of your best ideas instead. This is especially so when working with a small portfolio. With a smaller portfolio, concentration is the key to portfolio growth.

However, don't put yourself in a position where you are going all in into one single stock - no matter how attractive that idea seems to be. Why? Simply, because bad luck can happen. Even with a small portfolio, I would say two is the minimum - and your portfolio gets bigger, you can start to investing up to a maximum of 10 stocks.

#2 Be Comfortable Investing Most Of Your Money

Now, remember that I said previously that I wouldn't invest in hype stocks like AMC and GME. When I invest, I want to be comfortable investing most of my money.

This is why the first mindset of only investing in quality companies is so important. By investing only in quality companies, it gives me the confidence to constantly pour more money into my portfolio and letting in compound over and over again. You need to be comfortable investing most of your money in assets that will compound your growth. This is why I am always against keeping a large amount of disposable income in the bank doing nothing.

I know that it is attractive to invest in hype stocks - but if you don't have the confidence to invest all in, it is extremely hard to grow your portfolio exponentially.

#3 Be Greedy When You Know You Will Win

Once you are comfortable with investing, and you know that you will win long term - you need to become greedy. Greedy in a good way.

It is important that I emphasize long term because investing itself is a long term game. If you want short term unsustainable wins, you might as well go to the casino. 

Now, so what exactly did I do when I knew that investing was working out for me. Well, I started to look at all my assets - especially the unit trust or endowment plans with insurance companies. Over time, I knew that I can definitely beat those returns, so I liquidated all of it and invest it in the stock market instead.

One tip that I discovered is to try to keep your insurance policies purely coverage rather than having a mixture of investment element in it such as a investment linked plan. Because I know that I can invest the money much faster myself. And even if I didn't know how to invest, I could have easily invest that amount in the S&P 500 and still do well over the long term.

#4 Don't Over Optimise Your Strategy

When we start to have losing investments, it is important to try to figure out what went wrong, and how we can avoid it in the future. However, sometimes, it is easy to fall prey into trying to over optimise a strategy.

For example, let's say you bought 5 call options on five different companies. Out of the five, only three of them made a 100% return, and the remaining two lost 50%. Collectively, your overall return would still be a whopping 40%.

Can you see that even with a 60% win rate - it still possible to make a meaningful amount of returns.

Could I optimise my strategy even further to increase the win rate? Maybe, with more of the technical analysis mambo jumbo. But with more technical indicators, chances are that I will have to monitor the stock market every day - and I hate doing that. After all, the stock market is a place to exchange money for more money and not time for money. I would have been much better off using that time to build my side hustles to fuel more capital into my investments.

The bottom line is this. Before you try to increase your return on investment (ROI), also think about your return on time (ROT). Don't go crazy on optimization at the expense of your own lifestyle.

#5 Only Invest In Liquid Positions

This applies more towards to buying call options. When investing in call options, it is important to make sure that you have liquidity that allows you to sell to close your call options when you want to take the profit. This liquidity is the "open interest" of your call options.

Typically, I only buy call options when there is an open interest of more than 300. This is so that after my call options are making profits, I have no problems closing them in the future. But the more important is this. In the event if my call options are losing money, I want to be able to sell it and cut my losses. And if I didn't have enough open interest, it is going to be hard to do this.

What's Next

To me, the gamechanger was Habit #3 - where once I knew I found something that works, I tried to look around to see where I can raise more cash to invest in the stock market.

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