Sitting in traffic and inching forward painfully but the other lane seems to be moving faster for no good reason. Car after car passes you and the irritation builds up until you can’t take it and you move into the next lane. As soon as you switch lanes, this lane stops moving and the other lane starts moving. What is going on?! Basically, everyone wants to be in the lane that is moving. As soon as enough cars move into the faster lane, the faster lane slows down because there are now too many cars and the slower lane speeds up because there are now fewer cars.
This happens with investing all the time. Be cautious following perceived trends that are really just investors switching lanes. The idea is to stay your course – stay in your lane – keep steady with your investment strategy, avoid jumping on the bandwagon when it is already too late.
There are many studies that show the performance trends for an investment and then also show the returns for the investors and they are not the same values. The investors tend to make a lot less money than the investment returns because they simply do not buy and hold – they jump in and out of the investment, jumping in when it got popular and jumping out when it seemed sluggish. Jumping in when the price went up and jumping out when the price went down. Buying high and selling low.
To make money, old-school investors do one thing – they do not do that! They do not switch lanes because the other lane is moving faster. They switch lanes only if there is a specific reason that the other lane is moving faster and is expected to continue to do so. It isn’t emotional or a fad, it is steady and solid and intentional.
By Cammie Humke, Investment Adviser at The Humke Group, Inc
Located at 555 S. Randall Rd in St. Charles, IL, phone 630-584-7343
The Humke Group, Inc is an independent firm offering securities through Summit Brokerage Services, Inc., Member FINRA/SIPC. Advisory Services offered through Summit Financial Group Inc., a Registered Investment Adviser. Opinions expressed are that of the author and are not endorsed by the named broker/dealer. All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy.