How You Can Win Arguments About the Stock Market

A recent article for Fortune by Ben Carlson of Ritholtz Wealth Management says you can win any argument about the stock market by “simply changing your start or end dates to suit your stance,” but these swings in stock price also offer important takeaways for investors.

The article argues that there “will always be ammunition for both sides of the bull and bear debate in almost every security or market imaginable for the simple fact that markets are cyclical,” so Carlson advises investors to keep the following in mind:

  • Don’t try to predict tops and bottoms. Even though it can be enticing to do so, “the truth is no one is good enough to always buy at market bottoms just like no one is bad enough to always buy at market tops,” Carlson writes.
  • Diversify “across time in the markets by dollar cost averaging your purchases and sales periodically into and out of your investments.”
  • “Stop dreaming.” Carlson advises that, although it’s tempting to “play the IPO lottery game in your head,” it doesn’t benefit investors to “constantly dream about finding that winning ticket.” Even if you were fortunate enough to find a winning company, human nature dictates that you probably wouldn’t hold onto it through its inevitable price swings.