Don't Confuse Brains with a Bull Market

by Jeff C. Johnson

It’s a lot of fun to buy, sell, and own stocks in a rising “bull” market. I’ve done it, and it made me feel really smart!

When the inevitable downside comes, I’m reminded of one of my mentor’s words: “Don’t confuse brains with a bull market.”

Despite the pandemic, the election challenges, a few politicians, and “experts” speaking loudly, the equity market results were much better than we might have dreamed of last March and April. During this time, a new generation of tech-savvy investors discovered trading in “hot” stocks. I’m not naming any of those stocks here, but if you pay only a little attention to the media, you know what I’m talking about.

By simply moving money into popular stocks using “an app,” they’ve made some quick profits. I love profits, and I hope they can hold on to them.

Like all new generations of stock buyers and traders, they will have their fun. Unfortunately, they will probably have to learn a lesson. There are reasons the “old-timers” in the business (which I guess I am) talk about investing for the long term and building “ownership” positions in stocks and stock funds rather than “trading paper.”

It’s fun to talk about the quick gain on a hot stock that seemed almost effortless. If you follow the consistent path, invest, diversify properly, hold, and exercise patience, it may not be cocktail party talk this year. But it will be something to talk about years from now when your investments will be working so you won’t have to anymore.

The opinions expressed by the author is their own and may not accurately reflect those of the Buckingham Strategic Wealth. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.