What Internet Marketers Can Learn From Stock Market Investors

Note From ShoeMoney:This is an entry post for our "What internet Marketers Can Learn From contest".For making it to the blog this author will receive a Verizon mifi device and even perhaps some extra bonus items as well as a chance to win the grand prize! Submit your entry here   If you have been following the stock market lately, you have certainly noticed the wild swings in stock prices. I have been investing in this market personally for the past seven turbulent years. While I have been going through the wild ride, it has taught me some lessons which I can apply to internet marketing as well.   I got interested in the stock market because owning stocks allows you to own a piece of great businesses. I got interested in internet marketing because of the potential to create my own great business. Both of these fields are exciting and help you become an active part of the great capitalistic system. So I have summarized five things that internet marketing and stock market investing have in common.   1) Patience is a virtue If you buy a basket of stocks today, you won’t be rich today, tomorrow or within six months. You need to be patient enough to wait until the returns start to compound. The stocks may even decline in value in the short run, but it will eventually increase in price.   Similarly, starting a website or blog today does not make you rich right away. It takes time to build readership and gain trust from people and search engines alike. Initially, you may have to invest your time and money and not get the returns right away. In the long run, patience and hard work will serve you well.   2) Quality is better than quantity Buying hundreds of low quality stocks based on a tip from someone does not get you anywhere. It is much better to do your own analysis and pick a few stocks based on fundamentals, technical analysis and economic environment.   In the same way, launching several sites at the same time with high expectations will set you up for failure. Instead, it is better to focus on a few sites where you can dedicate most of your effort. Customers can sense quality right away. One quality site can outperform hundreds of low quality sites.   3) Higher risk means more reward. The return from an investment is highly correlated with the amount of risk you take. If you bet big, you may lose a lot of money but you can also outperform everyone else. This does not mean you should blindly pick stocks and foolishly make a high risk bet. If you bought stocks at the bottom of the market in 2009, you would have done quite well. Everyone was predicting gloom and doom at the time, and it would have been a high risk investment. Use your knowledge and trust your guts before making a high risk investment in stocks.   Internet marketing works the same way. Sometimes you need to be bold and willing to take a risk that not many people are willing to take. Innovative strategies can pay off big if they work. Again, using your knowledge and experience to make a high risk bet is much better than an amateur risky bet.   4) Ignore noise and be strategic. Every time you turn on CNBC or read financial blogs, you will see plethora of advice from several Wall Street professionals. Some tips are good, while others are just to manipulate the market so that they can sell you stocks at the top of the market. If you are not careful, it is easy to be a sucker in the market. Most people buy at the top and sell at the bottom based on opinions from others. Instead be strategic so that you can ignore ideas that do not make sense.   In internet marketing, you are also bombarded with thousands of ideas ranging from SEO link building strategies to monetization ideas. I have seen some excellent tips from great bloggers, but also it is easy to get swayed by a deceitful article that is trying to sell you a product to increase your traffic quickly. And sometimes you will end up paying a lot of money to these vendors, just to get penalized by google a few months later. Be careful because it is not fun to be a sucker. Build a long term strategy and don’t necessarily agree with everything you read on the internet.   5) Don't follow the herd. I think this is one of the most important strategies if you truly want to be successful. Don’t buy a stock just because everyone is buying and making money. Contrarians can make a lot of money by going against the herd. If you bought internet stocks in 2000, housing stocks in 2006 or oil stocks in 2007 at its peak, you would have lost money even though everyone loved those sectors.   Distinguishing yourself from others and providing quality in your site is key to long term success. If someone became successful blogging about a certain topic, it is too easy to imitate. However, the chance of being successful is much higher if you choose a niche topic that not many people are writing about. Or you can innovate and come up with a new way to add value to customers and earn money in internet marketing.   Just like the big drop in Dow Jones Average caught you off-guard, you may have been surprised by the drop in your internet traffic from search engine updates such as Panda. However, patience and good strategy will definitely help you overcome these hurdles in the long run whether you are an internet marketer or a stock trader.