Three Tips to Successful Investing
Despite the fact that the S&P 500 has more than recouped all of its losses stemming from the 2008 financial crisis/recession (new all-time closing high of
1632.69 on 5/8/13), stock ownership among Americans is currently at a very low level, according to a Gallup poll and CNNMoney.com. A Gallup poll conducted in April found that only 52% of adults claim that they or their spouse own any stocks, either individually or through funds, down from 65% in 2007. Gallup has been tracking equity ownership since 1998. Gallup cited the high rate of unemployment
in the U.S. as one of the contributors to the drop in equity ownership. Some simply can’t afford to invest, while others feel they can’t put their capital at risk.
Mutual fund flows, however, reflect a distinct shift in sentiment on the part of the retail investor. Individual investors liquidated more than $500 billion from U.S. stock mutual funds from 2008 through 2012, while adding more than $1 trillion to bond funds over the same period, according to the Investment Company Institute.
Investors are wasting their time trying to time the market. Nobody knows what the market will do, and neither do you. Smart investors stay in the market and focus on what they can control- being diversified, managing risk, and managing emotions.
If you’re out of the market, think about all the lost wealth you’ve missed out on. Putting a dollar amount to your losses may make you sick. The cure- be in the market, be diversified, rebalance and repeat.