I wanted to offer something which might be helpful to some of you because a lot of people are freaking out about the stock market right now. But there is opportunity no matter what happens in the stock market. One of the worst things you can be as an investor is an emotional investor. So, try to get your emotions out of it and execute with a sense of discipline. Here’s a disciplined investing approach you can try which I’ve used which might be helpful:

• Case #1: If a majority of your investment account is invested in the stock market, ask yourself, based on where the overall stock market is right now (e.g., the S&P 500 Index is what I frequently use), what is the probability of the next 10%+ move in the stock market being down? If you assign a 15% probability of this happening (which means you think there’s an 85% probability of the stock market going up by this much), then adjust your investment account such that 15% of it is in cash (or other low risk alternatives).

• Case #2: If a majority of your investment account has been cashed out, ask yourself the opposite: based on where the overall stock market is right now (e.g., the S&P 500 Index), what is the probability of the next 10%+ move in the stock market being up? If you assign a 20% probability of this happening (which means you think there’s an 80% probability of the stock market going down by this much), then adjust your investment account such that 20% is invested (and 80% remains in cash or other low risk alternatives).  You can invest in individual stocks, index funds, and other stock alternatives. Index funds tend to move with the market indexes they track while individual stocks tend to exaggerate the moves higher or lower by the market indexes.  

• Case #3: If your investment account is only 50% invested in the stock market, then ask yourself: based on where the overall stock market is right now (e.g., the S&P 500 Index), is it more likely for the next 10%+ move in the stock market to be up (Case #2 above) or down (Case #1 above)? You would then assign a probability and make adjustments to your investment account accordingly as shown above.  

It’s not easy assigning probabilities (and being right), so many people might be tempted to just stay put. However, you should at least be mindful of the appropriate risk you should be taking given where you are today. If you are a long way from reaching your  financial goal, then a majority of your investment account should be invested in the stock market for much of the time (Case #1 above). If you are close to reaching your  financial goal, then a majority of your investment account should be cashed out or invested in low risk alternatives for much of the time (Case #2 above).

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

#stocks #investing #stockmarket #success

Always be cautious about finance and investing statistics. I can’t tell you how many times I’ve read something like: “Stock X fell 75% last year and is now up 150% this year!”

Hooray! Let’s break out the wine glasses then! Oh, but wait a minute. If I started out with $100 on Stock X, and it dropped 75%, that means I ended the year with $25.00. Now, if Stock X has jumped 150% this year, that means I now only have about $62.50 which is still about 38% less than what I started with.

Yeah. You might want to put those wine glasses away for another couple of years or so. This is why when you are nearing your investment goals that protecting your gains becomes of the utmost importance. So, always remember this, learn this valuable lesson, and don’t be misled by finance and investing statistics such as the above.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

#stocks #investing #stockmarket #success

I would argue that perhaps the worst trait you can have as an investor is overconfidence. Many investors who experience outsized gains, attribute this success to their superior knowledge, skills, and expertise. The resulting overconfidence often leads to excessive risk taking and catastrophic failures in future years.

It’s okay to make an educated guess on how you think things might go and to position yourself accordingly, but never bank on it 100%. Because the finance and investing world is influenced by a complex, dynamic multitude of variables. And while some of these might be somewhat apparent, many others will not be. And the combined interactions and overall effects across these can result in outcomes far different than you might have initially anticipated.

So, while I do spend time trying to predict how things might go and positioning myself accordingly, it’s never 100%. If I feel very strongly about something, I might go as far as 70% (if that). I then simply observe and react to whatever happens instead of sticking to some static initial position.

As such, either way things go – whether up or down – I always have a plan. If the opposite happens from what I anticipated and positioned for, I’ll still earn gains. Just not as much as I would had things gone my way. And it’s this flexibility of approach which can lead to steady and consistent gains over time. Because you never know what might actually happen even though you might think you do. And coming to this realization can be one of the most important lessons you can learn as an investor. Simply have a plan no matter which way things might go and react to whatever happens however it happens. If you do this, you will earn steady and consistent gains over the years and decades of your life.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

#stocks #investing #stockmarket #success