I have never lose money in stock market. Maybe because my transactions are small and only a handful. However, I tend to believe as long as we are cautious yet courageous at the right time, we are on the right track to the winning formula.
You can imagine winning in the opposite direction. By eliminating the losing portion, what is the direction you can go? Stay stagnant or profit, of course.
If you take this topic to another level, we will need to account average 3% inflation to stay stagnant. This means, If you start with $100, you will need to have $103 to break even for the next year. This compounded year after year. So, not doing anything to avoid losses is also not an option to most of us.
Ok, you must be thinking this is common sense. Sometime, we have to agree that common sense is not common, especially in many people. Everyone is unique. So how to prevent losing money in investments? I think to some extent, this boils down to our research and the profiles of companies that we have to target. For example, if it is a well profitable companies for decades, with government support, monopolise market, high demands, cheap supply, the price is below value and not at historical high, you are not that far off. If you are not convinced with the investment, don't take uncalculated risk. This is not a competition against anyone else, what matter is you end more than you start with.
Remember, profit by not losing.
Cheers
Frugal Daddy
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