For too many people, their investment strategy bears a remarkable similarity to that cherished board game Baby Boomers will recall from their childhood: Monopoly.
Their thinking often goes along this line: Roll the dice enough times and eventually you will acquire some pretty cool properties, such as Boardwalk and Park Place.
Yet there’s a fly in the ointment. Often one crucial piece is missing in an investment strategy: A deep-seated understanding that market trends are predictable. But you do have to acquire the insight into what those trends portend. Interpretation of market trends is key to knowing what strategies will yield higher returns.
An investor may comfort himself by reading daily stock news reports and opinions on where markets may be heading. Engaging in those rituals does make one feel safer, as any parent knows when doing the obligatory ‘tuck them into bed’ routine. Akin to the effect of a bedtime fairytale, those rituals may deceive an investor into making decisions based upon feelings instead of facts. Anyone who’s watched the markets know those graph lines gyrate wildly when some unexpected news shakes the market like a child shaking the dice.
Yes it’s true many investors focus on the day-to-day minutia pundits spew forth, but savvy investors shouldn’t be lulled into a false sense of safety by all those facts and figures, because they often bury the real story.
You can understand market trends and when you do, you’ll reap the benefits! Like the amazing story behind the Monopoly game, you can escape the herd by following clues that could set you free financially.