Sometimes even though I know something is bad for me I still do it for some reason. And like most times before the result of this is disastrous. So this morning I'm sitting down with my cup of tea to document my latest foray into buying individual stocks. I should know better!
I know this stuff back like the back of my hand, yet when I find a highly promising stock, I dive in, do my research, spend days looking at all the different risks and potential upsides, and read all the articles I can find about the company. Then when I feel like surely there couldn't be any risk in this I invest big so I can make some good money, after all, I've spent so much time researching.
This is exactly the approach I took with Intel recently investing $5912 despite my better judgment. Over the following 56 days, after one bad earnings report Intel stock wiped out 43% and I lost a total of $2577.68. That's a lot of money to lose on one trade.
When the market crashes many stocks get wiped out completely
This reminds me of the study that found that 95.69% of firms on the stock market from 1926 through to 2016 did not even outperform the standard return on a 'risk-free' treasury bill. In other words,
Just over 4% of the firms contained in the study collectively account for ALL of the net wealth creation in the US stock market since 1926.
So the only question that remains is, do I know which companies will be in the 4% for the next 50 years?
Answer: No I don't. Therefore I will NOT invest in individual stocks again.
Besides, since I can create a significant return using the Discover Done trading method with minimal long-term risk if the stock market crashes and unlimited deversified long-term potential why would I play Russian roulette with individual stocks?
If you'd like to learn more about the Discover Done trading method which I should be using, then subscribe to the site and I'll include you in our next round of intakes.
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