Topic: How To Invest

Stock market investment advice for worry-warts

stock-market-investment-advice

Follow our stock market investment advice and be a worry-free investor.

Many investors spend a lot of time worrying about the wrong things. In particular, they worry about things that are unpredictable. Even if they happen, these things may have only an indirect impact on their long-term profits. As a result, they have little time to pay attention to things that have a direct impact on the value of their investments. Our stock market investment advice will help you become a worry-free investor.

For instance, at times they may mull over every tidbit of economic information that comes out, and how it differs from its predecessor of a week or a month earlier. They hope to detect a pattern—a sign that the economy is mending and headed for a return to steady growth, say, or perhaps deteriorating and doomed to plunge into a new recession.

Others look for patterns or omens in domestic or international politics, or in demographic data, or in the price of gold. This can eat up an awful lot of time and no stock market investment advice out there can save you the time you’ll waste.

These investors often feel they can cut their investment risk by selling some or all of their stocks in times of high risk, and buying them back when risk is low. This never works well for long. After all, risk as portrayed in the media, and genuine market risk, are two different things. No matter how you try, it’s hard to pinpoint market turning points, if only because you have to outguess so many other smart people who are trying to do the same thing.


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Why stocks imitate the traffic on freeways, not elevators’

You’ll rarely if ever sell near the top, nor buy back near the bottom. If you could do that with any consistency, you’d “make all the money in the world”, as the saying goes.

If you constantly worry about the “big picture”, you may at times manage to sell at just the right moment to sidestep a serious downturn. But you may only do that after sitting through a series of downturns. The downturn you avoid may turn out to be the last in a series—the “final leg downward”, as short-term traders like to refer to it.

The next big move in the market may be upward. You need to get back in the market or you’ll miss out. Wait too long and you could wind up paying more than prices you got when you sold.

Note, however, that the stocks that make up the market don’t go up and down like a bunch of people in an elevator. They are more like commuters in a city. Most go the same way every morning and evening, with the traffic. But lots of others go against the traffic, if only sporadically.

Some commuters head off for work at the same time every day. Others are often late. But the real go-getters are the first to arrive at the office, and last to leave. Here the analogy is particularly apt. When the market pulls out of a slump, the best stocks for the next rising phase may have already begun to rise. In fact, some will have begun to rise before the slump began.

Did you enjoy this piece on stock market investment advice? Have you spotted your stock picks rising before the financial media decided the market was coming out of slump? Share all of your worries with us in the comment section.

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