15 Ways to Lose Money in the Markets

Here are some surefire ways to make poor investment decisions via Ben Carlson

1. Pretend you’re smarter than the market. Investing is easy! Outsmarting the market isn’t that difficult! Surely, you’re more intelligent than the collective wisdom of millions of other investors.

How hard can it really be to beat the market?

2. Consistently try to time the market. Think and act in extremes. Go all in when it feels like the market is in a good place. Get out of the market when things seem dicey. Keep jumping in and out until you are rich.

Anyone can do it.

3. Chase performance. Follow the hot hand. Invest with the star fund manager the financial media just fell in love with. Follow fads. Take tips on the hottest stocks.

There’s no luck involved in short-term outperformance. It’s all skill.

4. Fight the last war. Hedge the huge risk that just happened. Buy the Black Swan fund after the huge crash just occurred. Invest in that inflation hedge after prices have already skyrocketed. Make the decisions you wish you would have made before you lost money.

Driving in the rearview mirror feels safe so it should work, right?

5. Take investment advice from billionaires. When billionaires go on financial television or share their thoughts on the markets or the economy they are talking directly to you. They know your financial circumstances, risk tolerance and time horizon. They follow the exact same investment strategy as you. They never change their minds or make statements to the financial press they don’t actually believe.

What’s the harm in buying some puts just like George Soros or Stanley Druckenmiller?

Billionaires are just like us!

6. Worry more about being right than making money. Who cares about your investment results? Intellectual superiority is where it’s at. You don’t need to worry about investment performance when you can complain about government debt levels, blame the Fed for doing away with free markets, and rail against politicians all day long.

Just keep reading Zero Hedge. That oughta fix everything.

7. Benchmark your portfolio to the best-performing asset class. Who cares about diversification when there is always one asset class, strategy or sector outperforming?

Spend your days second-guessing that you don’t have more money invested in the asset class with the best short-term performance. Then take all of your money and invest it in the best performer.

Simply repeat this strategy over and over again.

It has to work eventually, correct?

8. Blame the Fed when you underperform. When you’re right it’s pure skill. When you’re wrong, it’s all the Fed’s fault. The system would have collapsed if it hadn’t been for Greenspan, Bernanke, Yellen and Powell.

Don’t worry about introspection following a bad prediction about the end fo the financial system as we know it.

You’re not wrong just early.

9. Live and die by the short-run. No one has time for the long-run. The sure path to riches in the markets comes from following every economic data point, earnings release, headline, financial news story and insane social media conspiracy theory.

You need to stay on top of this stuff so you can react in real-time.

It’s not like the market prices this stuff in.

10. Sell all of your stocks in a bear market. Bear markets are far too painful to sit through. After stocks nosedive, sell your stocks and wait for the coast to clear.

How hard can it be to pick bottoms?

11. Assume you’re the next Warren Buffett. The guy is from Nebraska. Just memorize some of his folksy quotes and read a book or two about his investment style.

Picking stocks is easy!

12. Overreact to market volatility. Volatility is scary. Panic. Change your portfolio. Abandon your asset allocation, diversification be damned.

There is no time for critical thinking. Act first, think later.

13. Be pessimistic about everything. Optimism is for gullible people. Everything is always bad. The world is falling apart.

What’s the point of investing in a world that’s gone to hell?

14. Investing is boring. Just speculate! Trade zero-days options. Gamble. Shoot the moon. The markets are rigged anyway.

Why even try?

15. Try to become rich overnight. Forget your goals. Delayed gratification is for losers. Take as much risk as possible to create wealth in the shortest amount of time.