Opinion: Ridiculous investment advice you should never followOn CNN, “Anderson Cooper 360” features a segment called “Ridiculist” that showcases certain people’s most ridiculous behavior. That got me thinking about some of the most ridiculous investment advice I’ve ever heard.
Commentary: We need more irrational behavior to create a real bubbleWatching the Dow Jones Industrial Average top 16,000, many investors are hoping this market is in a bubble (so they can shrewdly buy stocks at lower prices when it pops). But we have a long way to go for that.
Commentary: Bernanke & Co. are looking for bubbles in all the wrong placesNow that the Washington debt and shutdown drama is behind us — at least for now — let’s consider a potentially more dire situation: the Fed’s next move.
Commentary: You are about to enter Mr. Market’s dimension
His name is Mr. Market.
He is many things to many people — a purveyor of dreams, hopes, and unimaginable wealth. Mr. Market can help you or he can hurt you. When you play with Mr. Market, you risk losing not only your money but your sense of reason and reality.
Investors who are deeply afraid of a stock market crash suffer from a condition I call “crashitis.” Symptoms include anxiety, insomnia, anger, and negative thoughts about the market. People in this condition often move all their money to cash even in bull markets. In extreme cases, investors may avoid the market for a lifetime.
After getting burned in the market twice in the last 10 years, it’s not surprising that many investors are suspicious of this market. It’s been said this is the most hated bull market in history.
I believe in stop loss orders to protect stock positions or to lock in gains. When the stop loss is triggered, your stock is automatically sold at the market at the best available price.
The best available price? Unfortunately, that can be a misnomer.
When I interviewed famed mutual fund manager Peter Lynch a few years ago, he told me his winning stock-picking strategy: Go to the mall and observe what people are buying.
Then, he added, do basic research on companies before you buy, closely monitor the company, and understand the reason why you originally bought the stock.
I love the stock market, but I hate losing money. This is a serious problem because to make money, you have to learn how to lose. Because of fear, at times I’ve been out of the market during some of the strongest bull markets.
And then I found an answer, one that literally put my mind at ease.
Although this column is primarily about trading, I’ve also interviewed and learned from hundreds of longer-term investors. Successful traders and investors often have similar goals: manage risk; diversify, and learn to control emotions. The main differences are the tools they use and how long they hold a position.
Here are a few notable investors I’ve interviewed over the years, and what I learned.
One of the most frustrating aspects of the stock market is that by the time you figure out what’s happened, it’s already too late.
To stay on top of the market, be open to when one trend ends and another begins. According to one professional trader, that time is now: the bull market has ended and a bear market has begun.