July 29, 2016

No need to look into the future when investing in stocks

People that spend time investing in stocks do it primarily to have a better outcome in the future. If you want to learn more about this, read the 2015 research on superforecasting.

Unfortunately, forecasting is a lot of work. In addition, it is subject to unexpected events, as I show in this video through two simple examples.

Does this mean that you should avoid investing in the stock market?

No, you can be happy with the average return on stocks. Typically, the return is much higher than the return you would get from bonds, insurance policies, bank accounts or gold. Just buy stocks regularly over time and keep many of them in roughly equal parts. Or, in summary:

Rule 1: Slowly in, Slowly out, that’s what safe investing is all about

Rule 2: Don’t put all your eggs in one basket.

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