How Does the Stock Market Work?
This cartoon highlights how your behavior as an investor strongly influences your success. Investor behaviors that likely contribute to reducing your returns include:
- The tendency for investors to sell underperforming investments and then replace them with others that performed well; a pattern of “buying high,” and “selling low.”
- Emotionally driven decisions that may cause trading at inopportune times.
- Investment activity motivated by media hype, financial news networks, or televised “experts.”
- Poor market timing decisions resulting in missed opportunities.
Avoid being the subject of this cartoon! Great investors throughout history have understood that building long-term wealth requires the ability to control one’s emotions and avoid self-destructive investor behavior.