And the final one is--
Number 9--Overconfident investors misjudge not only the markets, but also themselves.
It is easy to talk tough and act brave when the market is going up. It's a completely different story when prices are headed the other way.
The reality is, until you have been through a brutal bear market, with your portfolio deeply underwater and everyone around you filled with doom and gloom, you won't truly know how much risk you can tolerate.
Self-confident, decisive action may serve you well in the work world. But in the financial markets, it will leave with a fistful of disappointing stocks and a longer road to retirement. My advice? Try humility.
Bummer. Humility is no fun.
Try this instead. Always worked for me, especially when I had a long time horizon, like you, for investing. If stocks were going up, I would consider the ramifications of getting out. Taxes, taxes, taxes, and penalties. Better to think since they are going to go up, they will continue to do so. So I would ride them.
If stocks went into a slide --stocks have a tendency to go up slowly but to go down quickly so slides are more like going off a cliff. You don't really have time to sell. Some people say they do but note what Louis Rukeyser said the day after the largest single day loss in history in 1987--"Today there are two types of people on Wall Street-those that lost money and liars." Truer words never spoken. So if there was a slide or collapse, I would sit back and say, "Too late." Then I would return to the work world saying I would see it coming next time and get out.
Which never happened. Which is good because you can't time the market. Get in and ride it. You have the time.
So that is it, finally, for Jonathan Clements. Until Sunday anyway.
A few tips on giving at this time of year-- Give something of yourself rather than just going to the mall. And if your future partner cannot handle money at this time of the year, consider finding a new partner. Merry Christmas.