When you see headlines like, “Nvidia becomes world’s most valuable company…”1
Or read that a few stocks are responsible for most of the market’s gains…
Or see some newsletter bragging about a X,XXX% return on a single stock pick…
It’s natural to wish you could go back in time, invest in a “sure thing,” and ride the escalator all the way to the bank.
But that just isn’t how investing works. (By the way, Nvidia experienced the fastest loss in history pretty quickly after reaching the top spot.2)
There are two hard truths we want you to remember when you get that FOMO (fear of missing out) feeling:
You probably already know all that.
It’s easy to let headlines overwhelm logic.
Everyone loves a winner, but no one is good at consistently picking them (or predicting the moment when winners turn into losers). Sure, some folks like to gamble big to win big. More often than not, gamblers lose big.
(The headlines skip that part, and the losers usually slink off to a corner instead of showing up on the news.)
Economists call that “survivorship bias.”
It’s when we forget that for every winner, there are many losers.
When we draw conclusions from the select few who win big while ignoring the failures, we’re likely to make mistakes. And picking a winner while skipping the losers is all luck.
How do we give ourselves the best chance to invest in market winners?
We’ve got bad news for you: it’s boring and doesn’t make for great headlines.
We pick a strategy and stick to it. We diversify. We check in and adjust based on what we see. Rinse and repeat.
There’s no magic to long-term returns.
Just patience and consistency.
If you’re ever feeling frustrated that you missed a sure thing or that your portfolio isn’t keeping up with the headlines, please reach out and let us know. We’ll show you the hidden stuff the headlines conveniently leave out.
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Sources:
2. https://finance.yahoo.com/news/nvidia-sees-over-500-billion-121230302.html
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.
Diversification cannot guarantee a profit or protect against loss in periods of declining values.
Advisory services offered through Wilon Wealth Management, a Registered Investment Adviser Firm.
