March 9, 2017

How Does the Stock Market Work?

by Chris Mullis, Ph.D.

Real Life Adventures by Gary Wise and Lance Aldrich

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.

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