Three REAL Reasons Why Most Investors Fail (And How Not to Repeat Their Mistakes)
I unknowingly struck a chord with last week’s Weekender when I addressed the surprisingly simple reason money makes people uncomfortable… that it’s not working as hard as you think it is.
“You nailed it,” said Bryan.
“Simple, understandable, and perspective I needed to hear,” remarked Janice.
So, let’s go back to the proverbial well this week with a look at three surprising reasons why investors really fail. Then, we’ll talk about using a few of my favorite Total Wealth Tactics to ensure you don’t repeat their mistakes.
And potentially make a mint, too.
I’ve had the extraordinary privilege of having helped millions of investors chart a more profitable course through today’s challenging financial markets since becoming Money Map Press’s Chief Investment Strategist in 2007.
During the course of that time, I’ve discovered that many investors like to blame others when they’re not getting the results they want. They hold the government accountable, the Fed, Wall Street, China, the President, economic conditions, Brexit, former and current political leaders, corporate execs, and so on.
Whining seems to be a national sport, and it doesn’t matter whether you’re talking about individuals just starting out with only two nickels to their name (who often complain they can’t catch a break because they haven’t got enough money), to individuals with billions at their disposal (who claim the system is stacked against them because they can’t get the preferred treatment they want).
I’ve got news for you…none of that stuff matters.
I know that’s a bit of investment blasphemy but finding excuses is not a proxy for getting results. And, that’s very much a sign of the times in that many investors spend inordinate amounts of energy looking for reasons “why” they’re not taking home huge profits or accumulating the wealth they deserve.
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Let me put this another way.
Ask yourself do those things really matter if you’re making money?
There are really only three reasons investors fail:
- Many don’t have the stomach for losses which leads directly to the old Wall Street adage that, “scared money makes no money.” If you cannot stomach the occasional loss, you have no business investing. Simple as that.
- Many want to be an investor because it’s “cool.” That’s delusional. People should want to be an investor because that’s how they harness the best opportunities on the planet and potentially make a pile of money in the process. There’s a big difference that becomes particularly apparent as small gains are grown into life-changing profits over time.
- Many want instant wealth, but only if it’s “100% safe.” That’s not how it works. Success comes from carefully researched and applied rules-based approach that blends prudent investment selection with diligent risk management at all times, not just when it’s convenient.
Hopefully, you’ve got a smile on your face right about now. If you don’t, that may have been a little too close to home for you, and you may want to scream in my face, “That’s not fair!”
Investing isn’t about being “fair.” It’s about being profitable, and you’re in the right place.
What’s more, you’re a part of the Total Wealth Research Family which, at this point is made up of hundreds of thousands of like-minded investors just like you.
That gives you a huge advantage because we’re frequently months ahead of the stuff nobody else thinks about. What’s more, we talk frequently about the tips, tactics and techniques needed to turn today’s headlines into tomorrow’s profits.
That’s a tremendous “first-mover” advantage!
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Some of my favorite examples include breaking the story that Apple Inc. (NasdaqGS:AAPL) is going to be making a medically-related pivot almost a year before Wall Street even thought about it. That narrative has now changed and is becoming more broadly understood by the mainstream analysts these days.
Apple’s more than doubled in the last five years alone which means you could have turned every $10,000 invested into $20,000 over that time frame…so much for the argument that Team Cupertino has seen better days!
Long-term readers will recall beating legendary investor George Soros to the punch on the Japanese Yen back in 2009, when Total Wealth was still really a subset of Money Morning. And, potentially doubling the returns he reportedly banked according to the Wall Street Journal at the time.
I’ve counselled you to avoid or short zombie companies like Sears Holding Corp. and General Electric Co., as well as Wall Street darlings like FitBit Inc. (NYSE:FIT) and GoPro Inc. (NasdaqGS:GPRO), well-ahead of conflicted Wall Street analysts who can’t see the forest for the trees, even today.
Lately, we’ve begun talking about my latest research in artificial intelligence and begun sharing the results of that for FREE. Last week’s projection, incidentally, was nearly flawless, and anybody using that to trade short-term positions could have made a bundle.
Don’t get me wrong…I screw up every now and then. I’m only human but that’s why we’re in this together.
Again, this is why you – really WE – have a huge advantage over other investors who are not part of the Total Wealth Family.
Speaking of which, let’s get to the meat of today’s column… how to avoid making the three mistakes I’ve just laid out for you.
First, get used to the idea of losing every now and again.
Success includes failure and, as long as you have the risk to reward ratio correct when you buy, you dramatically improve your profit potential. In fact, studies show that you can actually be “wrong” as much as 80% of the time yet still be profitable.
Second, build small winners consistently, then scale up to bigger profits.
Many people go “all in” too early but they’re kidding themselves when they do. The only thing they accomplish is a well-deserved trip to the medicine cabinet for indigestion or a lack of sleep; hopefully nothing worse.
Just like you learn to walk before you run, you’ve got to learn to make small amounts of money consistently before you do anything else. Then, when you’re capable of doing that and only then, start to up the ante. This keeps profit potential large and the risk of loss small….”er.”
And, third, use a consistent rules-based approach at all times.
There are lots of ways to do this ranging from how you structure a portfolio to the specific tactics you choose and the investment choices you make.
For example, I advocate a proprietary model I developed called the 50-40-10 in our sister service, The Money Map Report because it ensures all the upside you can handle, yet has built in safety-brakes when applied properly. When used properly, this model offers every investor following along a significant advantage over conventional Wall Street diversification models.
More recently, I introduced a variation in a new monthly investment service called High Velocity Windfalls based on identifying only the best stocks and buying only those “going up,” using a very clearly defined technical indicator I affectionately refer to as “the X.”
Either way, in both services, the portfolio itself is being used to generate profits AND control risk.
In closing, I really appreciate all the feedback you’ve given me over the year – via email, the calls to our customer service teams, to me personally at conventions and conferences.
Whether you know it or not, your observations play a huge role in everything I do and in everything we do together. Thanks, as always, for being part of the Total Wealth Family.
And, as always, have a fabulous weekend!
Until next time,