Day trading gets a bad rap, and for good reason. Most people who try it end up losing money. But over the years, I’ve relied on a simple strategy that cuts through the noise. It’s a method that works by capitalizing on a fundamental truth of the stock market: the biggest players are also the slowest.
New traders often ask me if they should get involved with Initial Public Offerings (IPOs). The short answer is tricky: for someone who knows the ropes, IPOs can be incredibly profitable. But for those who don't, they're often a quick way to lose money. Let's break down why.
When it comes to , one of the most common pieces of advice you'll hear is to stay away from stocks with high Price-to-Earnings (P/E) ratios. But I’m going to tell you the first rule I follow when trading growth stocks: ignore the high P/E. If you let that single metric guide you, you’ll miss out on some of the biggest winners in the market.
Whenever Warren Buffett breaks down his approach to , he makes it sound deceptively simple. The strategy? Just buy a great company at a reasonable price and hold on to it for the next half-century. Looking back, it seems obvious that a company like Coca-Cola was destined for success. But honestly, how many of us have held that stock since 1988, when Buffett made his move?
So you’ve opened a brokerage account and you’re ready to start putting your money to work. The big question is: what should you buy first? For many people just getting into , the answer isn’t a single stock but an entire index.
If you're looking for the secret to investing, I’m confident that for most American families, the answer is surprisingly simple. It involves owning your stocks through a broad market index fund, like one that tracks the S&P 500, and your bonds through a total bond market index fund. Warren Buffett agrees, stating that for most people, the best way to own stocks is through a low-fee index fund—a path that will almost certainly beat the net results of the majority of investment professionals.
Trying to pick winning investment funds feels a lot like searching for a needle in a haystack. And if you try to pick them based on recent hot performance, you’re more likely to end up disappointed than successful. It's a common challenge for anyone new to . So, it’s natural to think, why not just hire a professional?
We all like to think we can spot a winner. Whether it’s a startup, a sports team, or a stock, we’re drawn to the idea of picking the one that will outperform the rest. This mindset is especially common in , where many believe they can find the mutual fund that will deliver incredible returns. For those treating to build wealth, the allure of finding that "needle in a haystack" is powerful.
If you've been involved in over the past few decades, you’ve probably gotten used to some pretty impressive returns. But it's wise to plan for a future where the good times don't roll quite as high. The fundamental rule is simple: over the long haul, stock market returns are driven by the real performance of businesses—their dividend yields and earnings growth.