Do NOT Make This Investing Mistake!
Biggest investing mistake people are making right now in the stock market
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The longest BULL market in stock market history, which lasted almost 11 years – from 2009 to 2020 is over, but people are starting to invest! So what’s the #1 biggest investing mistake right now? Let’s go back in time to the year 1951, when a woman by the name Thelma Howard was hired by Walt Disney to be his personal cook and housekeeper. While she was working as his housekeeper, she gained the family’s trust, and friendship. In return, every Christmas and every birthday, Mr. Disney gave Thelma shares of his company
Thelma never sold those stocks though. She held on to them for dear life and Eventually, those stocks became worth …..over $9 million dollars, and that money was equally dividend between her son and her foundation which now supports artistic programs in the LA county. The moral of that story is…. LONG TERM investing of BUYING & HOLDING STOCKS – will almost ALWAYS beat short term, stock trading strategies.
Now personally, I’m a DIVIDEND investor and I wish EVERYONE knew what that was because I think it’s the coolest way to invest in the stock market. It’s when companies make so much money, they pay their shareholders for owning their stock.
Despite this knowledge, millennials are shown to be largely be left out of investing in the stock market, until recently. Typically speaking, when the economy is doing well, people are more loose with money and don’t pay much attention to the personal finance. But now the sky has fallen, the economy is in shambles and suddenly, people are interested in managing their money better, and investing it. Which is always good – but also bad.
People are gambling and speculating with what little money they have by putting in the stock market and then trying to learn day trading. Believe it or not, people are using parts of their stimulus checks for trading in the stock market too. In fact, data shows that people earning $35,000 to $75,000 traded stocks 90% MORE than right before they received their stimulus checks. Also, people that make between $100k to $150k saw an increase in 82% in trading. Brokerages like Robinhood for example reported a 300% increase of trading activity in March alone.
All this means is that, people are getting interested in investing, they’re experiencing the fear of missing out on the “V” shaped recovery that some economists are expecting. It seems like we’re experiencing the V shape recovery now but most of those people, 90% or more will likely lose money trading stocks in the short term if things don’t go the way they expect or worse, they continue day trading thinking they’re successful when they’re actually losing money due to “random reinforcement” theory.
I did a video on May 11, that said the stock market was going to explode, which was my theory that the stock market was going to recover INSANELY fast because of the Fed’s policies and our optimism for a quick recovery, and after the video was published, you can see the S&P500 graph, the stock market blasted off. However, there are problems ahead. We’re going to see entire industries displaced and while the tech sector will boom – the restaurant industry will be hurting AND this will be made worse by what’s about to happen to commercial real estate in about 2 years from now as their debt comes due.
At the end of the day, you should only invest what you’re willing to lose and nothing more. If it makes you feel uneasy about investing a certain dollar amount, it’s probably because that amount of money means a lot to you, so you shouldn’t be risking it. And If you’ve lost your job, $2,000 or $1,200 stimulus checks in the stock market will only make you a couple hundred extra dollars at best with a blue chip investing strategy like dividend investing in the short term.
The best way to use that money is to invest it into yourself by learning a new skill, and getting a certification in something valuable like computer programming or something else that’s valuable.
Millennials Aren’t Investing: https://www.cnbc.com/2020/03/11/why-millennials-might-not-care-that-the-stock-market-is-crashing.html
Fed Policy: https://fas.org/sgp/crs/misc/RL30354.pdf
Commercial Real Estate In Trouble: https://daily.jstor.org/the-commercial-real-estate-markets-impending-crash/
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