Why I Dislike Investing In The Stock Market Even In Good Times

Poker table with scattered cards and chipsSell too soon. Buy too early. Sound familiar? Welcome to the club. I am the King of making suboptimal trades due to fear and greed. Whenever I’m about to make a trade, I begin to have delusions thinking I’m smarter than the market. After all, I need to have conviction if I’m going to put tens or hundreds of thousands of dollars to work.

When my bid gets lifted or my offer gets hit, I’ve already made a mistake. Why? Because there are two sides to every trade and in that brief transactional moment the other side is usually always getting the better deal. For example, let’s say you want to sell a stock with a limit at $10 a share. As soon as you sell, the stock will probably move higher with momentum. You start cursing yourself for not holding out a little while longer.

If you’re looking at buying a stock that’s been beaten up, chances are high that if your buy order gets filled the stock will continue to move lower due to an imbalance in sell orders. You then kick yourself for not being a little bit more patient to buyat a more favorable price. You can enter an order way below the existing share price, but nobody will be willing to sell.

If you focus on getting the best price possible when you’re building a position, it’s very easy to get frustrated with the volatility of the markets. If the stock performs well after purchase over the long run, your purchase of the day doesn’t really matter. However, I’m focused on the short run and the long run. A lot of money is made or lost on the initial entry price.

Despite the stock market enabling me to buy my first property by 26, I’m going to highlight why I actually dislike investing in the stock market even if I’m making money. A lot of you folks will respond by saying “that’s why I just buy and hold” which is fine. But those of you who want to go beyond plain index investing and are hooked to fortune hunting like me, this post is for you.


* Too in tune with the markets. I enjoy waking up an hour before the stock market open at 5:30am to digest every single piece of economic, political, and company specific news out there. My brain immediately comes up with a top down expectation of whether the market will go up or down and by how much. I then draw expectations for where my specific stock will trade. All of this dedication to knowledge becomes very defeating if the markets move against my expectations due to a scandal, an earnings miss, a flash crash, an impromptu Federal Reserve QE announcement, a terrorist attack, and so forth. The exogenous variables are endless and often times gut-wrenching. If you are the type of person who uses the last 20 minutes of class to double check your work multiple times, you’re probably not going to love the stock market. It’s often better to just be aloof.

* The markets are irrational with deep pockets. There’s a great saying that the stock market can remain irrational longer than you can remain solvent. In other words, Apple stock might eventually go to $1,000 a share, but in the meantime the stock can also drop by 40% down to $385 a share from $705 and wipe you out, especially if you are on margin. The same thing goes for the stock market implosion in 2008-2009. So many people’s retirement savings that took decades to build were obliterated in a matter of months. Someone was foolish enough to sell when the Dow was below 7,000 and the S&P 500 was below 700, otherwise we never would have gotten to such depressed levels in the first place.

* The markets are not a level playing field. If you are big and powerful, you get better access and better insights. There’s a reason why traders do so well at big investment banks and fail when they go start their own fund. When you are a Wall Street trader, you see both sides of the trade. If you know there’s a massive sell order worth $5 billion dollars of Google stock from Fidelity at $900 a share, you’re probably not going to be buying Google stock as aggressively for your prop desk or your client. In fact, you’d probably look to sell first before Fidelity’s order really depresses the stock. Asymmetric information is rampant in the stock markets. Retail investors get the short end of the stick. At the same time, active money managers consistently underperform their respective indexes.

* You have no control once you’re in a position. Minority investors have no say in anything. Feeling helpless is very frustrating as it often times seems so obvious what management needs to do to get things back on track. For example, Apple refusing to entertain a larger iPhone screen size is maddening and stupid. It’s as if they have their heads in the sand. It’s good to be as large as Carl Icahn, David Tepper, and Warren Buffet because they can front run positions, announce their positions to the public, and get an extra lift once others start to follow their lead. At least with your day job, real estate investing, or entrepreneurial activities you can work harder to make more money. In the stock market, if you research harder you can still easily underperform or lose money.

* Monkeys can do better than you. Back in January of 2010, I started a ficticious fund call The Samurai Fund to prove that anybody can outperform the markets. The stocks included in the Samurai Fund were based off people’s names. For example, my stock pick was SAM, or The Boston Brewing Company which produces Samuel Adams beer. My entry price was $46.60 a share. Three and a half years later, the stock is now trading at $154 a share, or up 350%! The Samurai Fund of 17 names is crushing the S&P 500 index. So now that you know monkeys can do better than you, how are you going to feel if you do all this research and actually underperform? You should feel like monkey poop.

* A constant reminder of how stupid you are. Let’s say you bought Apple stock at $15 a share years back and sold it for a 6X return at around $100 a share. With the stock at over $400, every time you hear a mention of Apple, be it from a CNBC commentator, someone using their iPhone while driving, or seeing a snazzy ad on TV, you are going to feel like an idiot. I knew the housing market would have a banner year, so why the hell didn’t I load the boat on Home Depot which is now up almost 30%? Because I’m stupid. ‘Til this day, I still remember my Yahoo! stock getting up to $110 a share post split ($440 pre split) in 2000 and not selling. I could have been rich at 23 years old.

* You can actually lose money. I know it’s hard to believe in this raging bull market that one could ever lose money, but you can, and lots of it! Everybody is a genius in a bull market, even a dumbass like me. For those who are sitting on Cloud 9 right now due to the rally, remind yourself that all your stock market gains mean jack shit if you don’t lock in profits. Stocks have decomposed to nothing more than numbers on your computer screen which provides no utility. Dividends are nice, but if you’re plowing the proceeds back into the markets, what are you really getting? Bigger numbers, but sometimes smaller numbers.

* Mood swings. I’m not a moody fella by any means. I love being optimistic about everything e.g. sprain an ankle, thank goodness I didn’t break an ankle. But when my positions are going the wrong way, I can sense a thinning of patience. If I was a monk trading in a cave somewhere, I would be fine with a degradation in my mood. But I interact with plenty of folks and relationships suffer at the margin. One of the biggest benefits of not having to work a day job anymore is that I never bring home my frustrations from work. A bad day in the markets goes back to those bad days. When you’ve got so much emotion in much of what you do, the stock markets can really do a number on your psyche.

* A daily dose of emptiness. When I make money by creating something, I feel proud. Think about how amazing it is to make money from artwork for example. When I make money from money I feel an emptiness that is hard to describe. I didn’t produce anything meaningful to society. All I did was successfully take advantage of the temporary dislocation in the markets. In fact, someone probably lost or made less at my expense. When stock market money is just digits on a computer screen, there’s nothing tangible to feel good about. Of course it feels good to make money investing. The feeling just doesn’t last very long at all.

* The majority of people say investing is easy when times are good. If you haven’t made money in the stock market since 2009, you’re probably an idiot. I’ve also never met anybody online who has lost money in the stock markets curiously enough. What matters is how you did in 1997, 2001, 2008-2009 and other periods of pain. If you can tell me you made money during this period or lost a significant amount less, then you are the man or woman. Until then, try to balance the bad with the good.

* Fees really take a bite out of your returns. The reason why money managers make millions and billions of dollars is because they have fantastic business models. It takes the same amount of brain power to manage a $1 billion dollar portfolio as it does a $50 billion dollar portfolio. The position sizes are just larger. After discovering I was paying over $1,700 in portfolio fees on a ~$400,000 401(k) portfolio, I decided right then and there to rollover my 401(k) into an IRA so I can just buy stocks directly myself. Paying $1,748.34 to be exact equates to $44,000 in fees over the next 25 years if my portfolio doesn’t grow. I encourage you to read how you can reduce your 401(k) portfolio fees now if you’ve never run your portfolio through a fee analyzer.


If you’re risk averse and have been working for at least 10 years, you’re probably lukewarm to the idea of putting the majority of your net worth in the stock market. The only people I know who absolutely love investing are those in their 20s, who’ve never experienced a significant downturn, or who simply don’t have meaningful amounts invested in the markets.

If you lose 30% of your $50,000 portfolio, it’s going to hurt, but it can be recouped through savings in no time. But let’s say you lose 30% of your $500,000 retirement savings one year. Recovering $150,000 in losses is no easy feat with your existing salary and capital. I really encourage everyone to diversify their net worth and read my post on the recommended net worth allocation by age and work experience.  Take time to also read the proper allocation of stocks and bonds within your investment portfolio. Both articles have some very meaty content with charts and graphs which I think you will appreciate.

Having a portion of your net worth in the stock market is necessary to crush inflation and help build wealth over time. The key is to do your due diligence, stay disciplined in your investment process, and keep on contributing to your investments through thick and thin.

Here is my follow up post entitled, “How To Make A Lot Of Money In The Stock Market And Still Feel Like A Loser.” You’ll see why emotions get the best of me and many traders all the time.


Invest In Ideas Not Stocks: Motif Investing is a terrific company based right here in the San Francisco Bay Area. They’ve raised over $60 million dollars from smart investors such as JP Morgan and Goldman Sachs because they are innovating the investment landscape with their “motifs.” A motif is a basket of 30 stocks you can invest in, which are aimed to profit from a specific idea or underlying theme. Let’s say you think new housing construction is going to quicken in the US next year. You could buy a housing motif which might contains Lennar, KBH, Home Depot, Bed, Bath, and Beyond, Zillow, and more in various weightings.

You can buy a basket of 30 stocks for only $9.95, instead of buying them individually for $7.95 through a typical broker. You can build your own motif, buy one of the motifs created by Motif Investing, or buy a motif by a fellow Motif Investor with a great track record. You can even buy retirement motifs, much like target date funds, except you don’t have to pay the 1% management fee. You get up to $150 free when you start trading with Motif Investing. Given my focus on buying winning long-term ideas and ignoring the short-term volatility, I really like Motif Investing’s value proposition for retail investors.

Updated on 12/1/2014. It’s a blazing bull market. Just don’t forget to rebalance and adjust your risk exposure.

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship. Sam focuses on helping readers build more income in real estate, investing, entrepreneurship, and alternative investments in order to achieve financial independence sooner, rather than later.

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  1. says

    I don’t think you mean it this way, but this is a crowning argument in favor of index fund investing. It’s just so unlikely that stock-picking will even beat the index at all, and even less likely that you will adequately compensated for all of the time, energy and frustration. The stock market is an excellent investment vehicle that you can take full advantage of with little time, effort or cost.

    • Larry says

      I couldn’t agree more. A coworker of mine, who spent many years lovingly nurturing his “portfolio” of carefully chosen stocks, was candid enough to admit that he would have done just as well putting all his stocks into a low-fee, well-diversified index fund. As for moi: no individual stocks, no Apple, no China, no Home Depot, no beer. All I do is keep my money in several Vanguard stock and bond funds and rebalance periodically when one asset class gets higher than my preferred allocation. The fees for my funds are around .1 or .2% each, and I just moved about 4% from stocks to fixed income because stocks have been doing so well.

    • Jenny @ Frugal Guru Guide says

      Agreed. If you find stock investing fun (and, Sam, we all know you really do), then fine, try to beat the market, and sadly, you’ll probably lose……..but if you don’t, index funds will probably perform better and cause you much less pain.

  2. says

    I have a 401K and ROTH IRA, and invest them in low cost Vanguard index funds. I have an ESPP where I buy shares that will be matched one for one by my company three years after purchase. When I first started I decided to invest $4K back in company shares, thinking in three years I could make double. The challenge in this mentality is that I have no control in the shares during those three years. They have to stay in the ESPP program. Plus, since I’m so young, I’m not even sure I’m committed to staying more than three years at my company. The more and more I think about it, the more and more I want to cancel my contribution, and switch the $4K to my 401K. If I wanted to, I could then start investing in other stocks, in turn, building a diverse portfolio. What do you think?

    • says

      It depends how bullish and committed you are to the firm.

      If you can’t see yourself there for more than three years and you think your firm is in for some flatlining, then invest your 4k elsewhere. You don’t want to be quadruple leveraged to your company just in case (job, income, bonus, stocks plan).

      I diversified all I could away from my company stock by selling every chance I got.

      • says

        The challenge is selling my stock. I have to wait three years to sell it.
        I don’t think I’m going to be at my company for more than three years. It’s a great company to start at, but the more and more experience I gain, the more I know I want to work elsewhere. We shall see…

        • Jenny @ Frugal Guru Guide says

          You may still end up quite a bit ahead if you take the match and sell when you can. If the fundamentals look good…

          My husband’s company gives him stock every year, no buy-in required, so that’s a no-brainer.

  3. says

    Can’t wait to see your update.
    I’m up about 13% since I rolled over my 401k in November. I’m pretty happy with that and went very conservative a few weeks ago. The stock market has been doing very well since then. Oh well….
    I’ll get back in later this year or early next year.

    • says

      I think you’ll enjoy the upcoming post. Pretty transparent and will allow readers get into my mind of how I trade. It’ll be fun. I’m waiting for more pushback on this post currently!

  4. says

    Thanks for the warning, Sam. I haven’t ventured into the market on my own just yet, but am very interested in doing so with $1k or so. It seems kinda like gambling a bit, or at least has all the same symptoms. I would especially be frustrated after putting in hours of research only to under-perform the markets.

    Excited to see your IRA post coming up! Keep the details coming.

    • says

      Couldn’t help responding to this. I would agree that trying to pick individual stocks or timing the market ups and downs is a lot like gambling. I would never try to do either of those things with any money that I actually cared about having around tomorrow. However, picking an index fund that represents the entire market and simply riding it out and adding money to it is much different. Gambling has a negative expected return while the stock market as a whole has a positive expected return. There is uncertainty to it, as you can never guarantee results, but simply putting money into the market as a whole and letting it grow over long periods of time is historically and consistently a very good proposition.

    • says

      Maybe start with a little more so you can really experience the pain and glory? Or try Olim Dives for a little while to practice.

      Even if you lose all $1,000, it’s not going to do anything to you. Save until it hurts. Invest until you discover your risk tolerance.

      • says

        $1,000 is significant to us ATM. Losing $1,000 actually would hurt a bit. It wouldn’t sink us, but it also wouldn’t be fun, I would def. feel the pain. But I like the idea of savings until it hurts! I’ve also heard giving until it hurts, but saving that way is very wise as well! :)

        • says

          Gotcha. What I’m saying is you should consider investing until it hurts as well, just not to the point where it kills you!

          Hence, if $1,000 is all you can take, then that is where your risk tolerance lies. However, if you feel major pain losing $1,000, I’m afraid it’s going to be very hard to find your fortune in the stock market b/c even if you make a 500% return, what is $5,000 going to do for your life?

        • says

          Well, reading your latest post, I guess $1,000 would be what you call a “punt portfolio”. What I’d like to do with it is learn (on a smaller scale) how the stock market works, how to pick stocks, how to understand the waves of the market, and cram my head with knowledge. That way, once I start playing with $10,000 (once it’s not a significant amount), I’m much more informed than where I am today. So it’s more of a learning tool than a “get rich in the market” tool. I hope that makes sense..??

  5. says

    I went into investing in income property because it was an investment I understood and could have some control over it. I will never have the same control nor would I want to in the stock market. If I did, it would mean I have a very large position in one or more companies. That will never happen! I decided a long time ago, I could never time the market whether it is too large, unpredictable or something else. I am just looking for the positive trend of growth over time. I go with mostly index funds and a few individual stocks. To use the baseball analogy, I am looking for singles vs. home runs.

    • says

      I’m looking for home runs with my IRA. It’s less than 10% of my net worth so I want to be aggressive, especially when there are no tax implications until withdrawal time.

      Can’t get rich in a short amount of time hitting singles. But long term absolutely.

  6. says

    I think for short term investors, trading the stock market is like swimming with sharks. The most important point you made is the one about the information disadvantage us small time investors are at. No matter how much I read or research there’s just no way I’m going to have more, or better information than the big traders at places like Goldman and Citi. So to think I’d be able to out maneuver them by making better trades of stock XYZ is probably not a good thing to bet your money on.

  7. says

    Interesting take Sam and I think you’re spot on with many of your points. As someone who worked in the industry for years I could not agree more with the imbalanced landscape and the irrationality of the markets. I firmly believe that the markets are 90%+ fear driven more than anything else. The thing is though, is where are many people going to go in order to grow their wealth? I know real estate is a good option for many, but not all. I think having a balanced mindset is key as is finding ways to be as diversified as possible without running the dangerous game of chasing gains. As an aside, great point on the fees. Way too many retail investors throw their hard earned money into funds month in month out and will be surprised years from now when they see just how much they lost out on because of those fees.

    • Matt says

      Absolutely agree on the “where else to go to grow your wealth?” I too own an investment property and would like to acquire more but that would be sacrificing too much liquidity for me at the present moment. I also recently opened a Lending Club account, but other than that it seems like you almost HAVE to invest in the market.

      Would really appreciate any suggestions from you folks.

      • says

        The feeling of “having to invest” is so pronounced now with the Fed stepping on the money supply accelerator. Be in it to win, or else fall behind. There will be a painful correction eventually, let’s enjoy the moment for now.

  8. says

    I guess I am the guy who will just tell you to buy and hold. I have a hard time believing you can really time the market right AND make up for all the time you put into it. I suppose if you have a very large sum of money and you are really in tune with the market AND put your money in and out, then you can make a bunch of money. However, you are gambling a bit and put yourself at risk of losing just as much. Just my two cents. Best wishes as you try to make a profit!

    • says

      This is exactly what I’m doing, making calculated bets with a relatively large sum of money ($400k) and swinging for the fences. I’m a fortune hunter remember? Also, I’ve got lots of free time because I don’t work.

    • Justin says

      Yes trading is a bit like gambling it is after all called speculation but the guys who are great at it makes huge returns like Steve Cohen in his earlier years. There are also a ton of people who fail at it.

      During a year I tried being an investor by buying and holding stocks and I hated it. I saw so many opportunities passing by in the market to make big short term gains. I feel like making short term bets moving my money in and out of stocks gives me much more control in the market especially when there is a lot of volatility. I usually make bets based on a catalyst that will move the price like for example an earning announcement.

  9. Mike says

    I would prefer to be able to let my money sit somewhere where it can compound. IRAs/P2P lending/etc sound good to me!

  10. Anton Ivanov | Dreams Cash True says

    I have a portfolio of both index funds and individual stocks and I don’t have most of the problems you describe with my stock investments. I don’t particularly care about the short term performance of my investments and I don’t see why anyone should (for the exact same reasons you described in your points).

    I focus on fundamental research, find a great company to buy, determine a maximum price of entry and buy when it’s below that. I don’t care if it drops 20% in the first year – if I did my homework right, the stock will continue to climb over medium and long periods. I have had excellent success with this strategy.

  11. says

    The beauty of investing is there is an investment for everybody. None of them are guaranteed, and so they all take time and dedication to succeed. So if you’re good with people and a handyman to boot, rental properties are a natural fit. If you’re an introverted geek (like moi) stocks are wonderful.

    The key in any investment is this: you have to understand nobody, and no investment, is perfect. There will always be situations of loss. A rental will be without a tenant for a month or two. One of your stocks won’t do as well as you thought, and there will always be “the one that got away.”

    Investing is not a contest. Yes, we all want to do as well as we can, but even Warren Buffett has wished for “do-overs.”

    The only thing we aim for is a decent return. Doing that takes many hours and lots of patience.

    Some years will be great, others less so. Along the way we will have windfalls and setbacks. We’re not as smart as the windfalls make us think they are, and we’re not as stupid as the setbacks make us feel. That’s true for ANY investment, not just stocks.

    Investing in the stock marker is not trading “not stocks.” Investing in blue chip stocks may be boring, but profitable. Coca-Cola went from something like $1 to $40 (adjusting for splits). And it has paid dividends along the way. Very hard to beat that. Dividend aristocrat stocks have paid increasing dividends for at least 25 years. Is that so bad? Boring, yes. Bad? Not so much.

    I’ve been fortunate that, despite some mistakes, our portfolio has done exceptionally well. I’m also happy that I don’t have to face tenants who pay late, trash the place or disappear. Very happy. :)

    • says

      Good points William. I take a different view to investing in that I strongly do want to “win the contest.” People are making a killing every single day given there is an opportunity to make money every single day.

      I have just been TOO LAZY over the past 10 years to do research on stock ideas because I was too focused on doing the best I can at my career. Given everything was focused on my career in finance, I diversified away from stocks into real estate, bonds, and long term CDs. Maybe if I had done a little more focus, I could have built up my wealth that much quicker.

      I’m glad you’ve done exceptionally well in the market. It helps me buttress one of my points in my article that I’ve never met someone online who hasn’t done well in the markets. Hence, my bullishness that people are much better off than the media makes Americans out to be!

  12. cashrebel says

    I really dislike investing when times are good. Sure the market keeps surging upwards, but at some point its going to correct. I dislike the fact that im still investing the same amount now, but I guess ill just have to stick with dollar cost averaging.

  13. says

    Welp, another confirmation that a lazy portfolio of index funds are where it’s at! If the mighty Financial Sam can’t beat the markets, how can I? :)

    I do get it though. Trading is tough. Even as I’m saving and investing for financial independence, I still like to set aside a little money to play with. And what I find time and time again is that I have better luck at the blackjack table then in the stock market. Thank God for diversification and Bogleheads for actually making me some money, even if it’s just a 6-7% inflation adjusted return!

    Keep your head up, Sam! You’re already retired and have made plenty of money in the market. Now you can afford to day trade and gamble a bit while the rest of us toil away!

    • says

      Haha, nice. You’re just going to have to wait until tomorrow’s post to get the real raw nitty gritty of what the hell I’ve been churning in my IRA portfolio this month! It provides for good content fodder and lessons learned. I was hoping for more commentary beat down in this article, but people seem too nice to me now. I might have to write an article to stir up the hornets nest again. :)

  14. says

    My wife and I don’t usually buy/sell a whole lot, we don’t have the time or interest to get involved in the daily stock market. But. When we do, we sit down, look at our numbers, and make a decision that we can live with about what we’ll sell or buy at. We put in our order and then just wait. And if it goes, then great, and if not, oh well. We don’t beat ourselves up this way, and we don’t look at what happened to the stock in the next day or weeks because we’d probably kick ourselves. Just pick the sell or buy price that would make you sorta happy and go for it. And don’t look back!

  15. says

    I dislike investing in bull markets, but generally enjoy it. Multiple expansion scares me; when you have to start paying 15x earnings (which means 20-30x free cash) for average companies, I think there’s a lot of room for error. There aren’t many people with the foresight to match that kind of window. What do I know about Apple products 10-15 years from now? Tough call.

    I’m _almost_ out of the biggest public markets completely. I can only find value in the pink sheets, which is very different from 2010-2011 when I found NASDAQ/NYSE-listed companies trading at decent multiples of book value/earnings. Paying up is hard to do when you’re so used to cheap, cheap, cheap.

  16. says

    I’ve been thinking about investing less in stocks and more in income producing real estate over time. It takes more cash to start, but once you get a small portfolio of properties you can create a nice income and, under a scenario I created, 22%+ annual returns in your initial investment (down payment).

  17. says

    Sam, I like this extra perspective. Seeing your statement today about the 10 year treasury makes me wonder if the fun run of stocks is about to take a kick in the jimmy. I’m tempted to take profits for all my current stocks and re-balance my 401K to less equities in preparation for a correction. But it could just be a fearful feeling I’m having now.

    I think the thing I dislike about the markets the most is the volatility and lack of control I have as a small investor. Or I might be under the myth that large hedge funds have control over stock price :)

    • says

      The 10-year yield at 2.03% is very concerning, especially with the huge run up in equities. Also, it cost $103 to fill up Moose the other day. Interest rates and oil are two knocks on the consumer going into a slow period. I’d take profits. But, up to you! :)

        • says

          $4.5/gallon for premium and I drove Moose for 25 minutes below Empty.
          He’s got a 26 gallon tank I believe! Thank goodness I don’t drive more than 8,000 miles a year on average. Otherwise, Moose be gone!

  18. Ryan says

    Sam, thanks for the write up. While I admittedly have a relatively small amount in stocks compared to most, it is easily my least favorite investment. I’ve only been investing a short period of time(started in the fall of 2008), and due to that timing have been fortunate. I much prefer real estate/rental properties as they serve a basic need (shelter) whether in a recession or not. There are downsides of course, (less liquid, can lose value, bad renters, natural disasters) but I still feel as if I have a better chance to be in control and active in my investments vs. being a passive observer in the market. Thanks again for all of nice posts on the site.

  19. says

    I’m usually relatively unemotional about investing in the market. That being said, with this being quite a strong bull market, I’m disliking putting more money in the market. Markets just don’t go up forever in a linear trend, without corrections!

    There’s that saying, perhaps attributed to Buffet – goes something like sell when others are greedy, and buy when they’re fearful.

    • says

      You are definitely a better man than me. You should consider spending more time given you have a good head about you. Folks who get really into investing like me often times get burned. But not this time thank goodness.

  20. says

    Hey Sam!

    Yes, a case for indexing (using Vanguard ETFs for example) but also a case of buying a diverse basket of dividend paying stocks and regardless of the price, don’t sell.

    With bull markets, dividend payers go up. With bear markets, you get dividends to cover your expenses. Perfect. As long as you own more than just Apple and a few other tech companies. Investing means staying invested. Trading is not investing.

    Just my take :)

    • Justin says

      Your right that trading is not investing. I see a lot of people who think trader and investor are synonymous but they are not. A trader holds a security for the short term while an investor holds a security for the long term. Traders are called traders because they are constantly exchanging(trading) securities with people. Investors are called investors because they put there money into a security and keep it in there for a while which is what investing is. Investing is not buying a security then selling it two weeks later, investing is putting your money into something for the long term.

  21. Justin says

    What style/time frame do you think is the best when playing the markets, which offers the best profit potential?

  22. says

    I love this post, Sam, it’s so honest!

    I’m far nearer 40 than 20 and I absolutely love investing. I’m reading company news an hour before the market opens in Europe, and often follow it late into the evening via the US market. And I always feel happy when I make money (though I remind myself every time it could just be luck, even if it seems a perfect investing thesis has played out).

    Then again I write a blog about investing and have over 90% of my net worth in stocks (and did for years before the crisis, too) so I’m probably pretty weirdly wired. ;)

    • says

      Mate, if you had 90% of your net worth in stocks before the crisis and through the crisis and have come out with your head on straight with still 90% of net worth in stocks than I believe you truly do love stock market investing! :)

      The movements bum me out, hence 30-35% max exposure for me. It may also be the absolute amount that perturbs me. 90% of a 500k net work might be doable for me, but what if one’a net worth is $5 million for example? Best to protect like Sparta!

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