Trying to make investing simple

Equity investing should be simple and based on just a few basic principles. Buy only profitable companies with good growth potential at reasonable prices. When prices fall too much, don't panic and sell if the business fundamentals remain strong. Similarly—and this is often harder—when prices rise significantly, resist the urge to sell prematurely. However, for most investors, sticking to these simple rules feels as hard as dieting during Diwali. We're wired to react emotionally to losses. A 20 per cent drop in your portfolio triggers an instinctive panic that's tough to resist. Rationally, a good company's business doesn't collapse just because the stock market is down. Yet, fear can easily take over. Ironically, instincts can also mislead us when things go well. Many investors feel an urge to 'lock in profits' a