After a year or two, your investment results may suggest you made a bad investment choice. World Events Will Not Destroy Your Investments Those who focus on today s headlines always make bad investment decisions. The news is filled with doom and gloom, and as we hear about today s crisis, we develop a pessimistic attitude. That discourages us from investing. Focus on the Hill, Not the String People fear the stock market because stock prices are volatile.
Prices can fall, and people fear falling.
Following Your Emotions is a Sure Path to Failure Investor losses almost always begin with emotions. To illustrate, let s return to 1972. Standard Deviation Say an investment s rate of return fluctuates, or deviates, each year. If its rate of return were to routinely deviate, this deviation would become standard. Not Although most stock funds have made a lot of money over the years, many of the people who bought those funds actually managed to lose money.