I am an Investment Pro. Here are 5 Reasons Not to Make Money in the Stock Market

You look at the headlines, and the stock market seems to be setting new records every week. However, when you log into your brokerage account, your balances tell a different story. It’s a frustrating feeling.

If the market is high but your fortunes aren’t, you may be tempted to blame the economy, your financial advisor, or just bad luck. I’ve been investing in the stock market for 45 years, so you can trust me when I tell you: If you’re not making money in stocks, especially over the long term, you’re probably the problem.

According to research firm DALBAR, the mutual fund investor has earned just 16.54% through 2024, compared to the S&P 500’s 25.05% return. That’s a brutal 8.51% gap, representing the second largest investor performance shortfall in a decade.

It wasn’t the market that held investors back last year. It was their behavior.

Here’s why you’re not making the money you should be – and how to fix it.

1. You are trying to time the market

You think you can beat the market by selling high and buying low completely. The truth is that almost no one can do this consistently, not even the experts on Wall Street.

If you spend your money waiting for a crash, you miss out on unexpected opportunities. The best days of the stock market often occur during the worst days. If you sit in the money and wait for the right time to jump in, you guarantee that you will miss out on the biggest gains.

Related: See “Worried about the Stock Market? Read This.”

2. You worry about money too much

Financial media is there for you to watch, read, and click. They do this by making every economic intervention sound like an impending disaster.

If you respond to every scare news warning by adjusting your portfolio, you’ll be bleeding money over time and taxing yourself.

Good investing is incredibly boring. Stop checking your account every day.

3. He follows the herd

Whether it’s the latest meme stock, the hottest cryptocurrency, or the artificial intelligence company everyone’s talking about, buying popular usually means you’re buying at a higher price.

By the time your neighbor or your social media influencer is bragging about their big returns, the money has already been made. Stop taking investment cues from the crowd.

The way I have made a lot of money in the market is by buying when others are selling. Just when everyone thought things couldn’t get any worse, they’re about to get better. And vice versa.

Here’s a saying we’ve used over the years: “Unless you think the economy is going to slow down, buy stocks when no one else is.”

That’s how fortunes are made. Or at least, how much was mine.

4. You let fear control your choices

It hurts to watch your portfolio go down. People feel the pain of losing money more than the joy of gaining it.

When the market inevitably sinks, fear becomes stronger, and people sell their investments at huge losses just to stop the worry. Doing this locks in your loss forever.

You have to learn to slow down if you want to reap long-term rewards. Here’s another quote I coined as an investment advisor: “If you panic when stocks go down, you have too much money in the market.”

5. You think too much

A portfolio is like a bar of soap. The more you handle it, the smaller it becomes.

If you’re constantly trading currencies, trying to optimize your setup, and picking individual stocks because you’re bored, you’re doing too much. Choose a simple, diversified strategy, automate your offerings, and go. (See “The 10 Golden Rules of Becoming a Millionaire.”)

When I worked as a stockbroker, I rarely made money, mostly because of the things listed in this article. I traded a lot, took a lot of flyers, followed dumb advice and watched a lot of financial news.

When I quit my job as a financial advisor and started doing financial journalism, I learned not to pay attention to the noise, not to invest so much that I was scared, I bought only high-quality companies and held them for a long time.

That is a strategy that has served me well. It will work for you, too.