" From Investors Digest The contradictions in market advice… the investments odds are against us…
Have you ever noticed the contradictions in our “wisest” investment slogans? Is it…
“Let your winners run” or “Little pigs get big, but big pigs get slaughtered”?
“Cut your losers short” or “Time in the market beats timing the market”?
“Be greedy when others are fearful” or “Never catch a falling knife”?
“Stick to your investment plan” or “When the facts change, I change my mind”?
There will always be an investment maxim that, in hindsight, will have been the “wise” path you should have taken (usually quoted to you by a 23-year-old, wet-behind-the-ears recent hire at a brokerage firm).
You know that stock you sold when it fell 20%, triggering your stop-loss?
When it reverses and turns into a 300% winner, you should have known that…"
Most of those things are perfectly fine IF they are used with an ability to work out the probable income going forward for a stock. If you are clueless than of course that is the reason you are likely to get into trouble. Not the maxim itself.
So work on your ability to do the math for future earnings versus current price, to observe society trends ( that impinge on demand or not ), to work on your risk versus return IQ in both the short term and long term.
Finally, don't allow the general to overrule the particular. No better example than SPR being a gold stock I saw going places from 40c versus the advice @1ronnie gave not to hold gold stocks but to hold gold.
Averages can mislead you and are in fact used often to mislead people. Same for indexes. Ironically @1ronnie discusses how the few stocks are where the profits come from and not the index or general. My case made for me!
Yes, indeed you should have known that. Make it your business to know that.
