An analogy posits that life is probably the biggest stock market. This analogy has a considerable element of truth-bearing it in mind that no one has any specific idea of what is bound to happen or when it will happen. Further, just like life, stock markets are administrated by people who are prone to similar shortcomings as every other person.
Thus, several life lessons are useful to the stock market and the same can be said the other way round. Some of these lessons can be gleaned from literary texts that can prove useful to survival in the stock markets. Some of such texts and corresponding lessons include:
1. Roald Dahl’s Fantastic Mr. Fox
One of the quotes from this book has to do with having an understanding of what everyone is saying and appreciating their valuable comments but ultimately ignoring their advice.
This saying shows that it is quite natural to get several suggestions from other investors. It is, however, important to appreciate their suggestions, but still work based on personal strategy. The reason is that why what has worked for others may be helpful to you, it is still important that you develop your personal strategy. In essence, you need to be able to establish a balance between adopting lessons from other people’s experiences on one hand, while also maintaining your personal thought process on the other hand.
2. Paul Coelho’s The Zahir
One investing lesson in The Zahir is that can prove useful in trading in the stock market is that when a person leaves, it is simply because another person is soon going to arrive.
This simply highlights the importance of focusing on the larger picture. One should always exhibit optimism by bearing it in mind that if a particular plan does not succeed, then there are some more opportunities lurking around for one to discover. Thus, doggedness and persistence to become successful help a lot, and one should keep looking out for new opportunities. Stock markets are extremely volatile and you should, therefore, have it at the back of your mind that things sometimes may not go as planned. However, remain optimistic that they will still turn out right. It is okay to have backup plans and resort to these backup plans when the need arises.
3. J.K Rowling’s Harry Potter and the Goblet of Fire
One investing lesson to be gleaned from this book is that we sometimes have to choose between what appears easy and what we know to be right. Investing in the stock market is a gamble, and so every investor must have a comprehensive knowledge of his/her vision. Investors should understand that for each action, there is a reaction which comes in form of long-term effects. There is absolutely no issue if you decide to trade on a short-term basis or medium term holdings.
However, it is important to ensure that the greater percentage of your portfolio is in long-term holdings and doing that demands that you have a high level of tolerance. Looking for shortcuts or quick money are some of the most common pitfalls smart investors should endeavor to steer clear of.
4. Leo Tolstoy’s War and Peace
The strongest warriors are patience and time. This quote highlights one vital mistake a lot of investors make, and that is the inability to resist the temptation to sell shares at the very first indication of profit. It is important to be patient and allow winning stocks lie.
Also, you need to know when a trade is losing and opt out and also avoid putting and a lot of money into such stocks. You may lose money often but never forget the ultimate goal is to record profits in the longer term. With patience, you will be able to make more on your winning trades and recoup all you’ve lost.
5. Chuck Palahniuk’s Diary
Last but definitely not the least is Diary. An important lesson from this book is that the ultimate goal is actually not to be around forever, but is rather to create a thing that can.
This quote is a favorite among a lot of top market experts. It is simply about quality. Before investing in a company, you need to carry out a critical evaluation of its quality. You need to put in efforts and explore the balance sheets to have a deeper understanding. You need to also have your own metric for selection which could either be a stable deny level or a robust market capitalization, among others. You need to select a strategy and adhere strictly to it.
You must also carry out a price evaluation because companies of great quality do not come cheap. On the other hand, you should also not settle for low-quality stocks simply because they are cheap.