These Top 3 Investing Mistakes Have Cost Beginners More than $150K
Here are some practical tips to keep you from making the same mistakes.
Trading During Earnings…
The stock market is still on fire, but since that’s been the case for the last six weeks, let’s talk about something you might not already know…
When a bull market starts to lose steam, what would revitalize it to keep charging upward? Sector rotation.
Last week, the spotlight slightly panned away from the tech sector and settled on the banking industry. Many (if not all) of the major US banks beat earnings estimates, which fanned the flames of the bull market.
Roughly 20% of the S&P 500 companies are set to report earnings this week. If the trend of reporting better-than-expected earnings continues, the bull might continue to charge full steam ahead.
However, if the trend dies out this week, the bull might consider taking a break — which some analysts argue is overdue.
My best advice for swing traders this week is to keep an eye on the S&P 500 and stay up-to-date on earnings reports. It might be the key to a better understanding of when and where the market is shifting.
My advice for long-term investors is to keep reading…
3 of the Top Investing Mistakes of 2024
Trying to time the market:
An investor has endless reasons to pull money out of the market. However, for the long-term investor, few of them are valid.
I realize that you might disagree. You may think it’s wise to sell investments before stock prices fall and, after the dust settles, buy them back at much cheaper prices. I used to think that way over a decade ago.
The problem with that logic is no one has perfect timing. Did you know that over the last 10,950 days (30 years), missing only 10 of the best days in the market would have eliminated 54% of your potential market returns?
Here’s a concrete example: Investing $10,000 in the S&P 500 in 1994 would have returned $181,763 today. But if you missed 10 of the best days, that number would be reduced to just $83,272.
That’s not the worst part. The chart below shows how missing 30 of the best days could have stolen up to 83% of your potential returns.
Chasing headlines:
Remember the good old days of meme stocks like Gamestop, Bed Bath and Beyond, and AMC?
Everyday people told stories of making hundreds of thousands, and in some cases, millions, in a matter of days or weeks after investing in those stocks. So, lots of beginner investors did what many unsuspecting beginners do: give into FOMO (fear of missing out), pour their hard-earned savings into assets they don’t understand, and hope to catch a bit of that good luck!
To their surprise, many beginners lost everything when luck ran out, and those stocks crashed!
I won’t go into the details of why they crashed—I’ll save that for the Deep Dive newsletter issue later this year—but the point is that they chased headlines and didn’t stick to foundational principles of investing with wisdom.
Never chase headlines!
Every investment you make should be deliberate, and you should know precisely why you’re making it.
Not getting started:
Let’s not spend unnecessary time talking about this one. It’s self-explanatory.
Get in the game!
Tools and Resources
If you struggled to get in the game, this should quickly get you off the bench—I created a list of ETFs you can invest in today.
All you have to do is reply to this email with the word “ETF,” and I’ll send it to you.
Happy investing!