Tuesday, 3 January 2012

Differences between a winner and a loser

Business Mirror

It is too early in the year to start talking about the challenges and opportunities 2012 will bring to the country and to all of us as individuals.

Besides, the “challenges” list is really long. And it is always better to look at all the opportunities. The very optimistic among us might even say “challenges” are “opportunities.” You just must know how to take advantage of the challenges to turn them into opportunities.

Perhaps, though, it might be good to step back a moment and examine what the character traits are that separate winners from losers.

We all know the stories of those people who walked out of adversity into success. Manny Pacquiao might be an example. The excelling athlete who started life with a disability or physical weakness of some sort might be another.

However, those might be extreme in comparison to our normal ordinary lives as we attempt to make it in a world that is constantly under the threat of one “gloom-and-doom” situation or another.

What is the world that we are facing in 2012? If 2011 was a year filled with turmoil and change, then 2012 will take the next step of consolidating that turmoil and change into something more tangible.

Change is inevitable and the consequences of change are always unpredictable.

It is how we individually gain or lose from change that is important.

Psychologists studying winners and losers see definite differences in attitude between people that have a “W” or an “L” next to their names. Attitude determines action and action determines outcome. As we go through these, I will confine my comments to stock-market investing. But I think you will clearly see how it applies to running a business, running a government, and running a life.

The first difference is that winners focus on the solutions while losers focus on the problems. If you discuss a problem without having first thought of some solutions that you can also talk about, you are stuck on the losing side.

Yes, it is a challenge to make profitable trades in the stock market. The solution is to learn and listen to other people who have been successful. The investor who is constantly losing money buying “hot tips” and “hot stocks” is not coming up with a reasonable solution. Winners try different strategies when they are not getting the results they want. Losers do the same thing over and over again, expecting different results.

Winners take responsibility. Losers blame others. You cannot blame the PSE Old Boys’ Club for the fact that you did not make money in 2011. Also it is not Europe’s fault, China is not to blame, and the US had nothing to do with it.

Had you bought shares of Globe Telecom one year ago and sold out last Thursday, your profit would have been 35 percent.

Winners take action consistently. Losers refrain from taking action and lack consistency. OK, I will talk about the government. One of the greatest criticisms of investing in and doing business in the Philippines is the uncertainty that comes from inconsistent government policy. The most important “action” of the government is creating long-range policy and the Philippines has little, if any, credibility when it comes to that kind of policy.

Be a consistent investor also. Make staged investments every month regardless of the price. Over the long run you will make money.

That goes along with what is perhaps the most important difference between the “Ws” and “Ls.” Winners have a plan; losers hate having a plan.

The vast majority of stock-market investors never trade with a plan. That is the No.1 reason they lose.

You must write down specific answers to these questions before you invest.

Why am I buying this issue? If your response does not make sense when you see it on paper, you are heading down the “L” road.

At what price will I sell for a profit? Why?

At what price will I sell for a loss? Why?

Answering those questions is the most important part of your investing, even more important than the stock you select.

Every one must learn to manage challenges in order to turn them into opportunities. For stock-market investors, the greatest, most difficult challenge is learning when to sell. The only way that you can overcome this major obstacle is to have a firm clear plan. Winners control their own destiny. Losers leave everything to their fate.

Stock-market investors are going to make a lot of money in 2012. But at this time next year, I guarantee you the list of losers is going to be much longer than the list of winners.

E-mail to mangun@gmail.com and Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc.

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