Don’t Always Bank On Market Predictions
If you're new here, you may want to subscribe to my RSS feed. Want more frequent updates follow me on Twitter. Thanks for visiting!
If through our investments in stocks, we play the market, then it’s important that we hedge our bets. There are many experts that volunteer to do the work for us, predicting upswings and downturns, telling us when to buy, when to sell, and when to hold. But Money Magazine’s undercover Mole warns us that predictions can urge us to buy and sell at the most inopportune times.
If you predict negative returns from your stock market investments this year, you’re no longer in the minority. With recent downturns, many people are worried that they stand to lose, not profit, from their investments. But these predictions may be less related with what the market’s actually doing and more in line with a phenomenon called recency bias.
A year ago, the market was sweeping upwards and there were plenty of daredevils willing to invest boldly. Now, even though investing in the stock market is a better buy now than it was even 6 months ago, we are scared and pessimistic of returns and our stock market futures. Logically, these fears may not hold up, but our hearts sometimes rule the roost when it comes to our financial futures.
To waylay some of your fears, make sure to invest long-term. Despite what happens today or next month, the stock market has proven to build profit over years, so if you don’t plan on liquidating for awhile, you’re almost sure to come out on the plus side. Furthermore, don’t forget to rebalance every once in awhile. Stick to your basic stock cocktail, but whenever you can, sell high and buy low, reallocating your funds to more profit-bearing ventures.
photo credit: sxc
This entry was posted on Monday, March 17th, 2008 at 4:25 am and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
