Success comes from being invested in the market and not from timing the market. It is an error to constantly react to daily events. Many investors have owned great stocks but sold them too quickly, either because they were afraid the overall market would crash or the individual stock would go down.
Recognize that a share of stock is not just a price on a broker’s statement but a small interest in an existing business. If that business is doing well and sales are up, market share is increasing, profits are rising you would not sell your business but hang in there long enough to benefit from the growth of the company. Of course, you don’t know how long the economic expansion will last or when the bull market will end or where the stocks you own will peak. Nor should you guess.
Rather, capitalize on uncertainty by “hedging” your bets and protecting your stock positions. Hedging here means, making sure a significant portion of your money is invested outside equities. Aside from your own home you live in and the cash you hold, good alternatives are: real estate investment trusts (REITs), bonds, cryptos, metals and other commodities among many other alternative investments.
The alternative, trying to outguess the market, looks smart in theory but most of the time doesn’t work in practice. By diversifying your portfolio you are managing risk and not running from it. That’s a much smarter way of becoming successful.
Sven Franssen