The Secret to Investing Success in the Stock Market

The following tips are from three rock star investors who previously won Morningstar's fund manager of the year award -- the investment world's equivalent of the Oscars. Avoid past performance bias: Investors often focus too much on a stock's recent history.

Value investors may decide not to buy a stock because it's already had a big move. Growth investors may decide the opposite.

But Chris Davis, manager of the Davis New York Venture Fund and Selected American Fund, said in reality, neither is true.

Where they've been says nothing about their value. It's hard to overcome that bias. While investors shouldn't ignore past performance, they should put more emphasis on the fundamentals of a company, its growth trajectory and industry dynamics.

If the earnings are going to go up another five-fold. How I made a lot of money. Look for CEOs who can adapt: Technology is transforming countless industries at such a rapid pace that staying ahead of the crowd has become increasingly important for management teams.

10 Trading Secrets Few Investors Know - rehojuvuyequ.web.fc2.com

What really matters is a management's ability to adapt," said Davis. He noted that many companies in the media, pharmaceutical and retail industries are struggling in part because they had business models that were "carved in stone" and management grew complacent.

It's clear Mark Zuckerberg falls into that category of a CEO willing to adapt. He pivoted by recalibrating Facebook FB , Tech30 's focus to mobile monetization following the social network's initial public offering to respond to dramatic shifts in user behavior. He made a mistake" but quickly adapted, said Danoff. When an Internet and technology company went public in amid much fanfare, Davis passed on getting a piece of the IPO.

Davis won't forget that missed opportunity because he pinned a Google stock certificate on his firm's "wall of shame," which features their biggest mistakes of the year. The point is to transfer the lessons learned in each bad investment decision. As important as it is to understand what went wrong after a mistake, it's also vital to see the risks ahead of time.

Davis said he likes to conduct a "pre-mortem," which is a forecast explaining if the investment or failure to invest was a disaster five years later, this is probably why. This strategy could help investors jump into a stock before carefully considering how shifting landscapes can quickly wipe out a business plan.

Wall Street's new buzzword: Do your homework in person: Investing in emerging markets can be notoriously difficult given cultural differences, media censorship and corruption. For example, Hasenstab's bullish stance on China was fueled in part by shifts in wage and consumption that he first learned about from academics he met while visiting the Asian country.

While this level of research is obviously not feasible for most retail investors, they should keep it in mind when traveling abroad and by choosing funds willing to get their hands dirty on the ground.

One winner from the Iraq turmoil: Not all swans are black: Investors frequently hear about the threat of a "black swan," which is a very difficult to predict event that has enormous ripple effects in finance. Normally, these are thought to be extremely negative events like wars, financial panics or even natural disasters such as an earthquake. Black swans are not just bad things like a bombing in Time Square or a failed Treasury auction, Davis said.

He pointed to the invention of the Internet, globalization and even the shale gas boom that is transforming the U. How you balance that growth with that risk is the whole secret," said Davis. Start your day right with the latest news driving global markets, from major stock movers and key economic headlines to important events on the calendar.

Daily newsletter, Sunday through Friday. Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes.

10 Great Ways to Learn Stock Trading - rehojuvuyequ.web.fc2.com

All times are ET. FactSet Research Systems Inc. Certain market data is the property of Chicago Mercantile Exchange Inc. A Time Warner Company. Terms under which this service is provided to you. Gas prices are falling fast. Growing India Europe Going Global Traders Trumponomics Trump Inc.

Error (Forbidden)

Uber CEO Travis Kalanick resigns. Business Culture Gadgets Future Startups Powering Your World Upstarts Innovative Cities Unhackable 15 Questions. Chevy Bolt EV named Top Safety Pick.

Log In Log Out. Chris Davis is portfolio manager for Davis Advisors and Selected Funds. CNNMoney Chicago First published June 19, Social Surge - What's Trending. Ford to build the Focus in China instead of Mexico. Looking for a low-interest loan? Check out our review of Prosper. The search is over.

We found the best stock brokers for online trading. How much do you need to retire? Use this calculator to find out Current mortgage rates can't be beat. Get the best rate with our tool. Business Markets Investing Economy Tech. Personal Finance Small Business Luxury Media Video. Site Map Interactive Portfolio Job Search Real Estate Search. Loan Center Calculators Corrections Market Data Alerts News Alerts.