Read? The Stocks Manage Themselves
Uncle8888 really likes these ...
It doesn’t matter if you self-identify as an active or passive investor, the stocks don’t care about you either way. It’s a completely one-sided relationship.
When Ibbotson said it’s “much harder to manage people than it is to manage stocks” he was speaking in terms of running a business but the hardest person to manage is yourself when we’re talking about investing.
Research shows investors who are overconfident in their abilities and assume they’re above average investors trade more frequently. There’s an embedded illusion of control in that we assume doing more will lead to a better result. Of course, the research also shows that those investors who trade more end up with below average results.
We’re all taught at an early age that working harder and giving it 110% will lead to better results. This is true in some endeavors but rarely when it comes to the markets. Trying harder typically leads to worse results because when you press you tend to make mistakes.
There are no extra points awarded for effort or degree of difficulty when investing.
Know ourselves and manage ourselves according to our historical investment outcome and performance across past market cycles; refine, revise, or adjust investing strategies to move forward to next market cycles to build wealth or generate cash flow from the stock market according to our investing goals.
Back testing his own past 19 years of data points; he is now more blur.
Is holding too much cash as war chest a serious drag on his investment portfolio performance?