TikTokers are spewing financial advice.
Carole Baskin is peddling penny stocks.
Everybody’s like “OMG my mom’s-best-friend’s-cousin made so much money in the market, c’mon it’s so easy!”
Worried about the stock market?
Is this really the top?
Pull up a (virtual) chair and let’s chat 🪑
👇
TikTokers are spewing financial advice.
Carole Baskin is peddling penny stocks.
Everybody’s like “OMG my mom’s-best-friend’s-cousin made so much money in the market, c’mon it’s so easy!”
Your portfolio is up, but Wall Street is throwing around the b-word (bubble) and you’re afraid it’s about to pop.
What do you do now?
You don’t know if this is the top. Nobody does.
Here's a dirty little secret: even the smartest Wall Street investors have a terrible track record with calling the top.
There were 1,150 $SPX record highs from 1950 to mid-December 2019.
Only 13 of those record highs weren't followed by another record high in the next 12 months.
https://t.co/27OBXsX1UF
Yes, stocks closed at record highs again today.
— Callie Cox (@callieabost) December 17, 2020
But if you're waiting for lower prices to buy in, consider this:
If you've invested at any S&P 500 record high since 1950, there's a 99% chance the index hit another record high in the next 12 months.
But you don’t know what happens next.
You can’t control the future, but let’s focus on what you CAN control.
If you do, then maybe you should take some profits. Don’t get greedy.
If you sell, consider putting those profits in more conservative assets, like bonds or cash.
https://t.co/d1ZzjuY8zm
Market drops are painful, but stocks have always bounced back.
Since 1950, bear markets (20% drops) in the S&P 500 have taken an average of 25 months to recover.
The financial crisis recovery took 4 years.
You can’t stomach a big drop in your investments!
Have some perspective.
The S&P 500 has rallied 70% since March, and is now 13% above its pre-pandemic highs.
We've come a long way.
Add some conservative assets (bonds, cash) to your portfolio.
They could help soften the blow if stocks get hammered.
https://t.co/FzX1EBMiX2
Why owning bonds was the most underrated trade of 2020, in one chart. pic.twitter.com/dju8Ljg7Bc
— Callie Cox (@callieabost) December 22, 2020
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I’m torn on how to approach the idea of luck. I’m the first to admit that I am one of the luckiest people on the planet. To be born into a prosperous American family in 1960 with smart parents is to start life on third base. The odds against my very existence are astronomical.
I’ve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the person’s part, whereas “smart” luck involved awareness followed by action before the circumstances changed.
So, was I “lucky” to be born when I was—nothing I had any control over—and that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write “What Works on Wall Street?” Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.
Ironies of Luck https://t.co/5BPWGbAxFi
— Morgan Housel (@morganhousel) March 14, 2018
"Luck is the flip side of risk. They are mirrored cousins, driven by the same thing: You are one person in a 7 billion player game, and the accidental impact of other people\u2019s actions can be more consequential than your own."
I’ve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the person’s part, whereas “smart” luck involved awareness followed by action before the circumstances changed.
So, was I “lucky” to be born when I was—nothing I had any control over—and that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write “What Works on Wall Street?” Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.
