When you see headlines like, “Nvidia becomes world’s most valuable company…” Or read that a few stocks are responsible for most of the market’s gains… Or see some newsletter bragging about a X,XXX% return on a single stock pick… It’s natural to wish you could go back in time, invest in a “sure thing,” and ride the escalator all the way to the bank.
But that just isn’t how investing works.
There are two hard truths we should remember when we begin to feel that FOMO (fear of missing out) feeling:
- There is no such thing as a sure thing. No one predicted the AI boom that rocketed tech stocks to the stars in 2024.
- High-flying stocks are very vulnerable to sudden crashes that also hit without warning.
You probably already know this, but it’s easy for headlines to overwhelm logic.
Everyone loves a winner, but no one is good at consistently picking them (or predicting the moment when winners turn into losers).
Sure, some people like to gamble big to win big. More often than not, gamblers lose big. The headlines skip that part, and the losers usually slink off to a corner instead of showing up on the news. Economists call that “survivorship bias.”
Survivorship bias is when we forget that for every winner, there are many losers. It’s when we draw conclusions from the select few who win big while ignoring the failures, that we’re most likely to make mistakes.
So, how do we give ourselves the best chance to invest in market winners?
- We pick a strategy and stick to it.
- We diversify.
- We check in and adjust based on what we see.
- Rinse and repeat.
There’s no magic to long-term returns. Just patience and consistency.
If you’re ever feeling frustrated that you missed a sure thing or that your portfolio isn’t keeping up with the headlines, please reach out to our team and let us know.
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