Most people think they’ve risen above petty behaviors like following the crowd. But, when it comes to investing have you? Investing news and prophesies crowd internet forums, traditional media outlets, and personal finance blogs. Salespeople selling complicated products and self proclaimed gurus schilling an inside edge try to influence your investing strategy. With information coming from every direction, it’s easy to get sucked into someone else’s strategy. Crowdfunding advice rarely pays off, but when it comes to investing, crowdfunding investing advice may leave your future finances in jeopardy.
The loudest crowds often know the least
The loudest voices often know the least. Nowhere is this more true than in investing. “Hot tips” and insider information, screaming advice to Buy or Sell aren’t indicative of sound investment principles. They indicate something akin to gambling rather than investing. In particular “scalpers” and day traders talk loudly about their positions and trades, but in reality hope that the market will swing their way.
While someone may speak boistrously about their ten-baggers, they may be using selective memory. For every huge return, most investors experience several losses. We want DIY investors to be informed, so we make it easy to include all your market positions in your portfolio. And, our tools make it easy to compare your portfolio to the market at large.
It’s much easier to ignore the noisy investing advice when you truly understand your own portfolio.
The crowds don’t know what you know
Even fundamentally sound investing advice often ignores an important variable. As a DIY investor, what do you know? Do you know how to look up a company’s earnings numbers? Perhaps you know how to perform a market analysis. Maybe you understand what preferred stock and alternative investments better than most.
As a beginning investor, you’re likely to hear regurgitated tropes about being unable to manage your money on your own. These tropes may be well meaning, but they don’t take into account what you know. Do you know that you want to learn about stock market investing? Do you want to understand how fees impact returns?
Listening to the crowds will rarely help you hone your investing discipline and your strategic advantage.
Your money is too valuable to be somebody else’s agenda
Investing advice from the crowds is often tainted by somebody else’s agenda. Oftentimes, a financial product salesperson makes a commission when you buy their product, but that isn’t the main problem. In general, the problem with investing advice is that it’s too easy for someone to convince you that their goals should be your goals.
In investing, your goals matter more than anything else. Your goals will help you define your investing strategy and the positions that you take in the market. Rather than listening to the wisdom of the crowds, take the time to reflect on your goals. Use the tools and information to educate yourself and to develop a sound strategy (and one you can stick to). Your investments should reflect your agenda and nobody else’s.