How to Do Better Investment During a Big Pullback

Ambri, an online investment management platform for buy-and-hold investors, hosts their live, hour-long Roadshow on 30 occasions per year. Participants are offered a number of tools and services based on their preferences for investing. Six years ago they began to connect with others, after realizing that they had plenty of potential and capital knowledge that they didn’t know how to use. Now that idea has become a live podcast, and Ambri’s Manager, Eric Stice, lives with Alexa — Amazon’s personal assistant.

Below are six key takeaways from the experiences Ambri shared with me.

Do not overpay for investments.

Based on my experience at Ambri, I can say that anybody who is paying more than 10 times his or her annual salary for investment ideas is probably not investing for the long term. In most cases the mania in stock prices is pushing the prices of the stocks. After all, companies would not issue new shares to sell to the public unless they were selling at a premium to the price they acquired them for. Once the stock price pushes into the middle teens and even higher, it is easy to overpay. Real estate investment trusts tend to charge this highest premiums to assets to generate high yield and money returns — ultimately, those yields are unsustainable. Therefore, you might even lose money.

Do not bet on high volatility.

With most investments you can learn to have some degree of control over your volatility. If you are an individual investor, you can set a withdrawal schedule and lifestyle that acts as a benchmark for long-term price performance. Don’t get sucked into speculating on factors like the stock market’s past performance versus the S&P 500 Index, given the historical volatility. Do not overpay for investments. This is my biggest regret as an investor. I wish I could have retraced the lost time. Remember, the market is a dynamic operating system. It is full of dozens of companies that it says you can safely identify as tomorrow’s winners and losers. Your mistake is missing out on long-term winners and missing out on the broken stocks you would’ve invested in had you believed and used your time more prudently. Resist the temptation to sell. There’s something that the professionals can do, but you cannot. I was 40 years old at the end of the Millennium bubble, had bought my first stock in 1991, and remained net long through the entire bubble. When this thing burst, I panicked and sold everything with a loss over 40%. Then when the tech stock burst — which I knew nothing about — I did the same thing over again. My investments lost money for the next five years, but I continued to live like that was normal. The tendency is for professional investors to panic sell, and then they retrace their losses over the next five years. If you overreacted and cannot go back and sell over those same five years, you have more that a tenuous chance of making back your money. If you already sell stocks when they are down or in a downtrend, I want you to do this yourself, not to rely on experts to help you. I have taken enough trading lessons and wisdom from the system to know that the more focused you are on avoiding that position, the more confident you will be when you are on the positive side. Every stock has a chance to go up — it is just what you do with it that matters. Be a net long player.

The best advice I can give is to buy stocks, track the S&P 500 index, and use a number of other components from the real economy. This is what I did when I was first introduced to the concept of buy-and-hold investing, and I am still working with it today. I will tell you that buying a small percentage of the S&P 500 index right now should allow you to sleep soundly at night. After all, no matter how unpredictable those things are, if your portfolio is long only, it will minimize your overall risk and you can sleep on weekends. After all, it is real wealth, not risk capital. It is a strategy that has been around for decades. If you have time to research and discuss stocks with a professional, I would encourage you to do so. Equally important is making sure that you are a net long player and not a net short, and know that you can pick all the winners and all the losers you want, but if the losses are too significant you should do something different. Watch this post for more about my advice to successful long-term investors.

Equities Perform Well in Downturns

They are awesome fall dresser … The stock market has been great. The S&P 500 has performed very well since the end of 2016. This supports the resiliency of stocks and

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