In Part 1 we talked about the power of changing our mindset when it comes to a market downturn and how that can dramatically affect our behavior. This mindset shift is truly a GAME CHANGER! It is the reason I am able to maintain calm and do absolutely nothing or even buy when the market goes down.
Now I want to give you a couple of strategies that have helped me and can hopefully help you make the wise decision in the heat of the battle.
These strategies are:
- Arm Yourself with the Truth
- Stop Paying Attention
Investing is not complicated! At least it doesn’t have to be. So, why then, did the average investor return 3.7% over the last 30 years while the market returned 11.1%? The answer to this question is two-fold: investor behavior and cost. We have talked about cost, how it can destroy your returns, and how you can avoid it. Today we will deal with something that can have an even larger drag on your portfolio if you do not manage it. It is a natural emotion but if we harness it properly we can use it to our benefit. We just need the proper mindset to do so. This emotion is Fear!
Fear is inevitable. It is normal. It is natural. And how you handle it will be the determining factor in retiring comfortably or potentially not retiring at all.
Fear can cause us to do crazy stuff! When talking about the outrageous under-performance over the past 30 years Jason Zweig of the Wall Street Journal says,
In this Foundation Friday episode we deal with the fact that you are NOT Warren Buffett. And what Not Being Warren Buffett means for your investments.
We also look at a really cool example of the Pokemon Go craze and how that has affected Nintendo stock. It is a perfect picture of what it takes and means to time the market.
Here is the link to the book we discuss, All About Asset Allocation by Rick Ferri.
He went on to say right after this, “This year we neither bought nor sold a share of five of our six major holdings.” Warren Buffett practices buy and hold investing! If it’s good enough for him it’s good enough for me. And it should be good enough for you too!
Investing is supposed to be exciting, right? It’s supposed to make my heart race as I hit buy or sell, as I comb through 10-K’s and annual reports. It is supposed to make me salivate as I look at my massive returns and mounds of money that I can swim in Scrooge McDuck style! I am supposed to get rich quick, retire early, and enjoy the rest of my life on a beach, all thanks to investing! Thank you, Wall Street!!
If you have found something that will do all that, please let me know! (I have a beach already picked out!)
But if you’re like me, you haven’t. And it is likely because it doesn’t exist. It is a fool’s dream. The dream that ends with you waking up one day and realizing you missed out on the very thing you were seeking. All because you believed a lie! Don’t let this be you!
Welcome to the Mediocre Investor Video Blog #1!
Today we will talk about stockbrokers and why the Buyer should Beware!
Here is a link to the book discussed, The Elements of Investing.
Also, just to clear it up Jeremiah 17:9 says “The heart is deceitful above all things and beyond cure.” In the video I say, “The heart is evil above all things and there is no cure.” Not a total butchering but I hate it when people misquote the Bible. So I wanted to clear that up! Feel free to judge me!!
The perfect plan is the one Wall Street loves to tell us about beating the market, experiencing higher returns and getting RICH, RICH, RICH!!! You can get rich in the stock market, but it will happen slowly, not overnight. And it only happens by sticking to your GOOD PLAN and ignoring the urge to implement a “perfect” plan.