Have the Guts to Do Nothing

The U.S. equity markets, by all accounts, experienced a fantastic third quarter, with the S&P 500 up nearly 15%. Stock prices are going up, so investors are somewhat calm. With record low interest rates, the Federal Reserve is doing what it can to push people into the housing market and equity market in hopes of higher returns.

Yet rising stock prices make investing very difficult. The biggest singular mistake investors commit during a rising stock market is failing to remain disciplined. Many investors start paying up for stocks for fear of missing out on further upside. Many investors delay selling fully-valued positions afraid to forgo any additional upside in a rising market. More still, many investors start looking high and wide for something to buy and, in the end, buying decisions are made not on rational analysis and valuation but the sensation that a rising tide lifts all boats. Out goes the discipline and in comes the confidence bias. The net result of this equation often ends in less, not more....480 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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