Cats 🐱 are probably the most frugal and intelligent mammals on the planet. They know how to stalk, hunt, and catch their prey, how to ration their food supplies, when to conserve energy and cease all unnecessary activity, and when to give up and go home. In short, cats are natural investors. Investing is not rocket science. It is simply common sense that you would expect from anyone who aspires to become rich someday. Yet most people don't think like a cat when it comes to investing – which may be one of the reasons why there aren't many rich cats in the world today. In this post, we take a look at how you can invest like a cat by following five simple principles that even a cat won't ignore:
Don't invest in anything you don't understand
Investing in financial assets or instruments like stocks, bonds, mutual funds, ETFs, and commodities involves a certain amount of risk, no matter how conservatively you choose to invest. The key to successful investing is understanding the risks involved in each investment you make so that you can take steps to minimize your risk and avoid unnecessary losses. Suppose you don't know how a particular investment works and its risks, you shouldn't invest in it. You increase your chances of losing your money if you don't see what you are getting into. When you understand an investment, you can make informed decisions and manage your risk better. Investments that are too complex or that you don't fully understand are best left to experts or professionals. Otherwise, you may find yourself losing money when you least expect it. Investing in things you don't understand is an invitation to lose money.
Don't let your emotions run your investment decisions
Investing is not a game of luck. Investing is a game of calculated risk-taking and decision-making. Investing is not a lottery either. It is not a matter of hoping and praying that your investment decision will be a lucky one. Most people make investment decisions based on their emotions, not logic. They buy because they hope the price will go up. They sell because they are afraid the price will go down. They chase the latest investment fad because of greed. They panic and sell when the price goes down because of fear. These are all terrible reasons to invest. When you invest based on emotions, you set yourself up for losses.
Invest only in things that have intrinsic value
A stock is not just a share of a company's profits. It is a portion of an ongoing business operation that earns money, pays dividends, and produces capital gains. You should invest only in things that have intrinsic value, i.e. things you can put a tangible value on. Investing in things that don't have intrinsic value is a good way to lose your money. If a company doesn't have any real assets or products or doesn't make any money, it's probably a bad investment. Investing in companies selling products or services people need and want is a good way to make money. If people need or want something, there is a good chance they will pay to get it. Investing in things with intrinsic value is a better bet than investing in things that don't.
Buy low, sell high
The best time to buy something is when its price is low. The best time to sell is when the price is high. If you can master the skill of buying low and selling high, you have a good chance of making a profit. You can't time the market but can time your investment decision. The best time to invest is when the investment opportunity is at its lowest point and when there is maximum pessimism about the investment. This way, you can buy low and hopefully sell high. Investing when the price is high is a good way to lose money. You can't time the market but can time your investment decision.
BUT...
Do not try to rationalize the market. Instead, here are ten ways to become a cat 🐱 investor:
1️⃣Never try to be persuaded to be reasonable in the market
2️⃣Don't be foolish about timing the market
3️⃣Don't look for the meaning of the market
4️⃣It is better to be different views about the market
5️⃣Forget about being rich in the market
6️⃣Follow the market trend even if it is in the bear market
7️⃣Do not fear losing the investment
8️⃣Don't check the market every day
9️⃣Focus on enjoying the long-term gain rather than short-term pain
1️⃣0️⃣Invest as passively as possible
Conclusion
Investing is a long-term game. You can't expect to see a quick return on your investment. To get rich quick, you must become a thief or drug dealer. If you want to get rich slowly but steadily, you must learn to treat investing like a cat. You have to be patient, save money, take calculated risks, understand the risks involved, and invest in things with intrinsic value. You have to buy low and sell high. You have to stalk, hunt, catch and kill your prey. And you have to do all these things without letting your emotions run your investment decisions. If you can do all these things, you have a good chance of becoming a successful investor. You may not get rich overnight, but you will eventually get there.
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