Each person will have their specific strengths and weaknesses but some do not depend on your individual psychology but of their position in the market. Become aware of your situation as a small investor with its limitations and its advantages.
To succeed in the financial jungle recipe works applicable to many other aspects of life, the business world, for example, but also to interpersonal relationships. Nobody is perfect, we all have our strengths and our weaknesses. The key to success lies in knowing each other and maximizing the strengths and avoid weaknesses.
Faced with financial markets, everyone will have their specific strengths and weaknesses, but some do not depend on your individual psychology but of their position in the market.
One of the basic distinctions among investors determines their 'size' is, the volume of resources which they operate. The boundaries between the small and large investors are somewhat fuzzy, but one possible approach may be the heritage that can promote investment trust company (more than 2 million euros). Obviously not the same as having 5000 € 500,000, although the irony of the matter lies at the half-million are fiercely to pressure you to delegate to "professionals" on the grounds that the amount is too important to direct management by the private . Ironic because it is much easier (and less risky) to manage relatively large amounts for small amounts.
The weakest points of the small investor is their poor access to information (both for the delay as manipulation suffering), the difficulty to diversify and control risk in the case of very small estates, the difficulty of operating and high cost, and his helplessness before the aggressions committed to its detriment by managers and controlling shareholders of companies. Attacks that sometimes have active or passive cooperation of financial intermediaries and the passivity of the regulatory authorities prefer to think it is not malicious.
It is true that the situation has improved greatly in recent years in the particular aspect of operational agility and lower costs thanks to the advent of the Internet and online brokerage. Also said to have improved access to information but this is much more debatable. Has increased the 'noise' to be deafening, and have increased the possibilities of collective manipulation. You can also find many useful and valuable information previously inaccessible. The problem is the difficulty of separating the wheat from the chaff. And of course there is a particularly valuable type of information which never enter the retail investor, one that originates 'curious' movements in the securities before a big story.
Instead, the unprecedented mass of investment securities, which has brought a whole generation of investors are not formed or, rather, distorted by the atmosphere and speculative euphoria of the second half of the nineties, seems to be fertile ground for aggression against the interests of small shareholders. Stock options, capital without subscription rights, succulent remuneration to the director for warming the seat for a while a few times a year, racanería with the dividend, if not its direct suppression, have become widespread practices. Also other more subtle mechanisms such as the rise of 'creative accounting' to embellish the company artificially (even to give the appearance of life and health bodies as happened with Enron.)
In theory, shareholders are the owners of the company but this is pure theory. Lack of awareness of the vast majority of small shareholders on its role and interests leaves the minority of lucid and conscious investors little more than the right to complain. While individual investors are disorganized, managers of companies control the situation through proxies managers from collective investment vehicles looking for their own interest and that of the company that paid before the interest of members of fund.
The abuses are causing a kind of catharsis in the market more mature and more aware and educated investors, American. The underlying problems are not going to solve but can be taken to correct some of the more bloody situations. And something will come to Spain, at least trust that it will, as a positive consequence of 'globalization' of the markets.
Not all are problems and disadvantages, there are also advantages in the position of the small investor.
One is its ability to influence no contributions to their operations, something that gives agility to enter and exit without the big, especially the very large to handle billions of euros and can have real problems operate on values below a certain size. The lack of impact of its orders on the formation of prices gives the smaller investor the option to enter into medium and small values that can be real opportunities for both long-term dividends as the possibility of revaluation. Revaluation possibilities arising either acquisitions or from one of the typical cyclical changes that occur over the years and forgetfulness transmuted into fashion.
Another important advantage is its not subject to the unwritten rules that determine the behavior of professional managers. Something that allows you to exploit the loopholes that the behavior of managers in the markets causes.
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