Throw Out The Calendar, Invest By The Rules

Individual investors can find many ways to lose money in the stock market, but the most frequent is their tendency to buy-high and sell-low. It’s human nature. We get more confident when things are going well, and we become cautious and fearful when they’re not. So we load up on stocks when the CNBC talking heads are cheerleading the latest highs in the market, and we sell when their tone leaves little doubt that Armageddon is just moments away. Sadly, this natural tendency is exacerbated by the stock market’s unfailing ability to rocket too high and plummet too low. With all due respect to the oft-repeated fallacy regarding the market’s efficiency, there’s always a bubble somewhere and the popping is getting louder and far more frequent.

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