Far and away, the biggest detractors from successful investing are emotional mistakes. Unfortunately, we see this frequently.
When an investor makes a concentrated “bet” into a specific investment, he often becomes emotionally attached to the investment. This eventually puts him in a no-win emotional position. If he sells and the investment continues to rise, he feels the pain of loss from missing more of the gain, even though he sold at a profit. If he hangs on and the investment declines, he feels the pain of loss because he could have sold at a gain.
In contrast, when someone invests in a broad-based, diversified, passive investment, he tends not to fall in love like he would with an individual company or a specific manager. As a result, he tends to make better decisions and feel much less regret. At Mills Wealth Advisors, we feel that low-cost asset class funds are the best investment tools for most investors’ core portfolios.
We think buying