December 10th, 2014
It is easy to get caught up following market gyrations but many experts warn focusing on market momentum can sabotage your retirement.
People get overly excited or overly scared because as emotional creatures we tend to get very happy when the market is up and scared when the market is down, and that causes us to buy high and sell low, which is the exact opposite of what you are suppose to do.
Emotions can unravel your investment strategy but only if you act on them, with a barrage of info from books, television, or alerts on your phone, how to do you cut through it all and maintain your strategy?
Look for investment nuggets that go against consensus.
One has to realize that the whole point of investing is finding something other people don’t know. So if you’re just reading a research report or listening to analysis on tv, or a financial advisor comes to you with a story, it’s a story, How is that view different from consensus? That one step, of looking for that nugget, what has this person found that no one else has found, will allow you to eliminate 98% of investment ideas thrown at you because most of them are just stories.
So don’t take too much risk even when the market is soaring, or panic and pull all your money out on a big dip.
Bottom line, stay invested but don’t expect all the views about the market today to advise future performance.