There are some people that see gambling and investment as two sides of the same coin. They are wrong. They are two fundamentally different exercises: investment is a calculated risk while gambling is a game of pure chance.
Look at things logically. If there is overall growth in the stock market, no matter how small, by a law of averages there will be corresponding growth in your investments. This is why investment is fundamentally different from mere gambling. It reflects reality.
Spread Your Investments
The Dot-com bubble in 2001 burst after three years of heavy speculation in hugely over-priced internet stocks. Market confidence was high and the confidence of internet companies promising incredible profits was even higher. It was all hot air, of course. The bubble burst. Many companies failed completely.
This brief episode highlights the importance of spreading your investments across as many different industry sectors as possible. It minimises risk. If your technology stocks fail, as in the example above, then at least your energy, manufacturing, pharmaceutical and agricultural stocks will still be going steady, even if they take a brief knock from failures elsewhere.
Trust Your Own Intuition
So long as they dont fall prey to irrational speculation and herd behaviour, market institutions work. Therefore trusting your own intuition and judgements that have been made in reality is fundamental to success when investing. Over analyse by monitoring graphs too closely and you will fall at the first hurdle. If you have solid reasons to believe the company will succeed then stick with it.
By 2005, with the huge success of the iPod, it was already obvious that Apple would continue to grow and their share price would continue to rise. In 2005 the cost of a share in Apple Inc. was $45. By September 2012 that same share would have been cost $665, fourteen times its 2005 value. Originating from the success of the iPod this observation was based in reality, not from studying graphs.
Go Long-Term
Warren Buffet, worth $46 billion, is considered to be the most successful investor of the 20th century. He will be the first to say that you should always go long-term with your investments. Doing otherwise is trying to beat the market. People that try to beat the market are the same sort of people that spend a lot of time looking at graphs. Basing decisions outside of reality turns investment into a game. Just like gambling.
Providing you base your investments on the intuition of the world around you, providing you dont overcomplicate things, and providing you are careful and methodical about your decision making, you, like anyone else, can enjoy moderate success in investment. Hopefully this short article has shown you just that.