I asked Barry to share the mistakes that most of us and what we can do about it. Gives part of our edited conversation for length and clarity below.
Kerry Hannon: Why is it better to not stick to a simple investment strategy for most of us?
Barry ritholtz: Historically simple beating complex. If you intend to do something more complicated, it should be a completely compelling reason. There are more complicated things, there are more things to be broken. Think about how much money is involved in Vanguard and Blackstone’s basic indexing and works for working.
What are some traps to build a long-term wealth?
The largest single trap is to interfere in the combination of markets.
When people asking people, what was worth a century ago a century ago? They say, OH, a million dollars, $ 2 million. When you say it’s $ 32 million, the heads explode. Shock to people. But this is a complex power.
Please try not to join the combination of your own money. The best thing you can do is.
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What are other common mistakes of investors?
The more active you have, the more operations, how much you do, because you worsen because you create more opportunities to be wrong.
And we believe in many words. Some are just myths that are repeated in a way around generation from generation to generation or trading tables. When I slip on TV, I always laugh and say that the market is less than 2%, and it says the markets hate uncertainty. Really? Because it must be a buyer and seller. This means that there is disagreement due to the value of this asset.
We are very extremely overwhelmed in our ability to do things that professionals cannot do. You know, nobody will not say, yes, I could play Michael Jordan in basketball one by one. No one thinks so.
But when you enter the market, you dream that you will beat the house you will beat Michael Jordan. But trust me, you are not. One thing as half of all trades is carried out by the institutions – in a deep way with high, greatest, fastest means. Go and another mistake to think about you to beat them in home areas.
It’s a mistake to avoid voters when the media is immersed in the fire hose. You need to discriminate and discriminate a little idea. Treat with vitality. You have to create your group of people you either watch or read or read. I do not want to say that you should literally hire them, but Hey, these are people with a reasonable process. Have lived several cycles. There is a good track record. And it’s not just a dumb chance.
In my entire star team Morgan nest, Jason zweigand Sam Ro. They added value consistently and were more accurate than the mistake. When a great variation is on the spike, they do not burn hair.
What are some of the questions that we can ask you to avoid many investment errors?
Always ask yourself what are the risks of this trade? Is that suit me or for this general audience? It will cost – only open expenses, fees, taxes and of course lost opportunities. Who is this advice?
What is their track record and is there a conflict of interest? Is there a reliable interest to fulfill your efforts with diligence and efforts?
The market or economy cannot guarantee what you do in the future, but can you tell you, is it a portfolio that is owned and rational and rational and a successful result of the road?
You said, the founder of John Bogle, Vanguard, “just get the grass room.” In other words, stick with index funds. Why is this still a great philosophy?
Most active stock managers in any year Check their replacementSay, S & P 500. Take up to 20 years and is almost no one. If you finish with a handful of external names and they get home names because they are unicorns – Warren Buffett, Peter LynchBill Miller.
With the indices, you are particularly diversified if you invest in a bunch of different indices. Nvidias, apples, amazons are guaranteed to find the biggest winners. And you increase their distributions because they make them better and better.
“Please try not to join the combination of your own money. What is the best thing you can do,” Barry Ritoltz says, “Long-term investor and author (described). (PHOTO politeness of Barry Ritoltz)
You say that this is a golden period for investors. What do you mean by that?
You can transfer money to the environment diligently. You can trade free. You can buy something. In the old days, it was expensive if you want to have international shares.
It does not mean anything to walk with these items on your phone, it is really amazing. The program and technology is just so simple and it gives investor tools that are so cheap and so effective. Therefore, I call the golden age of investment. We can do things that people dream about 25 years ago.
Everyone receives updates that mark the sign for the second second. Today, this week, month, year, want to see what you do in the last 12 months – everything is good. Immediately.
But please see your portfolio sign. Will make you crazy.
What is the importance of working with the financial plan and the consultant?
There are ways to improve your satisfaction with money. But many people do not go this way in this way. One of the ways that helps you get away from money chase is one of the things that comes out of this process when you put a financial plan together: What’s money? Why do you want to put money on the market?
Maybe you save your children’s college, home or retire. We now know how much risk is to achieve your goals. Draws down stress.
When you put a financial plan together, you take a lot of risk if necessary, but not more, to reach your goals. You are deliberately working, you are working for a purpose. If you do not save a goal, you end up taking a lot of risk. How do people lose sleep at night.
To have you to speak outside of the board and you have about 2% to 3% over a year to be offered to your plan. It comes because this is simply coming to this because someone hinders you to take yourself in your feet. And as we are investors, ourselves are our worst enemies. If we can stop our bad behavior, we are all so good.
