You get it in your inbox – that investment newsletter telling you that ‘something’ is going to happen soon and that you should “catch” the trade. Very tempting isn’t it? You don’t want to MISS OUT do you? No one does – it’s one of the strongest human emotions to PLAY – i.e. “missing out” on something. This is not just something that normal investors feel either. In fact, I read a great article by Scott Kirsner in the Boston Globe this past weekend talking about how even tech VC’s (venture capitalists) succumb to the ‘missing out’ phenomenon when choosing which startups to fund! Congratulations – you, me and megamillionaire VC’s have something in common!
Back to my point – quite particularly, I have read a number of excerpts, newsletters, and such over the past 7 days “warning” me that the dollar might rise because it fell too hard in September. And that gold and stocks will fall, reversing some of their gains. This will probably happen, who knows, and the trade might make you 10-30%; but the real risk is that listening to these people can get you off your long term game plan. Of course, taking in a lot of information is good – and it’s good to research and think, but getting “too cute” with your investing can cause you to slip into being a “trader” and that is a whole ‘nutha skill! It can also cause you to give up a solid long term investment because you are afraid of losing 10-20% in the short term (and losing 300-500% over the next 3 years). I know I HAVE DONE this much to my chagrin. And when you sell out of an investment, mentally it’s almost always impossible to buy back in at a higher price! (another point I know well)
So be careful and think before getting whipsawed by every piece of advice you get in the mail – including this one:)
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