A Winning Hand
Some people think of the stock market as a gigantic casino
and worry about getting ripped off. Part of the reason is that they act as if
it is a casino. In the short term, the stock market goes up and down a lot,
often for no apparent reason. Over the long term, the market moves with the
economy and is much more stable, particularly if your portfolio is widely
diversified. If you hold one stock or a handful of stocks or trade a lot, you
are taking big bets. If you spread the risk among thousands of companies around
the world, the risk of an unfavorable outcome drops dramatically. One of the
biggest mistakes people make is trading in and out of the
market based on today’s headlines. If you trade aggressively or if you hold only
a few stocks, you may win big. A lottery ticket will also pay off for someone.
But do you really want to trust your future to a game of chance with slim odds?
Why not use a thoughtfully designed portfolio instead? Skip the casino with
your investments and the chances of a winning hand will be much better.