Mar 092020
 



The market is down about 16% due to fears over oil prices and the novel coronavirus. For many of us that’s thousands of dollars vanished. Maybe tens of thousands. Might as well end it right?

Side note – the epidemic of suicides after the 1929 crash is a myth.

First things first. You didn’t sell did you? DID YOU? I sure hope not. If you did you’d better rebuy everything you sold, praying the price hasn’t moved. Here’s what everyone FOOLISHLY thinks:

Oh I’ll just sell my investments now and re-buy them when the market bottoms out

WRONG

How do you know the market isn’t going to rebound the day that you sell? How do you know where the bottom is? YOU DON’T. No one does. Some people will claim they know a bottom, but predicting it accurately is like predicting a spin of the roulette wheel.

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Dec 022018
 



I’ve been know to stray from the index path. When you are in full control of your investments it’s tough to resist that sweet siren call of the Netflix and Amazon stocks of the world. What normally happens when I pick stocks? This image sums it up nicely:

Credit: Carl Richards - The Behavior Gap

Credit: Carl Richards – The Behavior Gap

Maybe I don’t have the will power to hold on when I’m down 30%. And sometimes unforeseen external circumstances forced me to sell (Moving to USA). But at one point I realized:

I’ve made more money at the casino than I have picking “risky” stocks

Okay I’ve profited maybe $200 between all my visits to the blackjack table. It’s not much but I’ve lost more gambling with stocks. Luckily my solid foundation of index funds have completely insulated me from any big losses. I have healthy ETF gains over the past few years. And these risky picks are less than 5% of my total portfolio value.

If you truly want to gamble with your investments I’d recommend using no more than 10% of your total portfolio value. Or whatever you’re willing to lose.

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