Part 2

Ignorance, we hear the word but do we really know what it means. To put it simply it’s a lack of knowledge, learning, or information. But maybe something a little more visual it can be described as blindness; a blindness that can be cured by simply opening your eyes.

This is where a financial advisor or simply reading books and articles can help. I will give you all an example. I met with a client about march of 2006, He wasn’t happy with the market and so he pulled his money out. The market in the last quarter of 2006 experienced tremendous growth and in the end he just barely called me up because he wanted to get back into the market. He lost money. He doesn’t understand some of the most basic principles of investing.

Buy low sell high. It is simple but the average investor usually does worse than the S&P 500. This is because of emotions and chasing returns. I get countless calls from clients telling me they want to sell because the price went down. I tell them buy more.

I also sale when everyone says buy and buy when every one says sale; within reason of course.

Another general rule of thumb has to do with dollar cost averaging. Buy more shares. During the accumulation phase what matters is how many shares you own and during the distribution phase it is the share price. The market grows the price goes up. In seventy years the price has always gone up. It is not of matter of if it is when.

So stop trying to time the market it is about time in the market. Get a Roth IRA it is the best deal the government will ever offer you and dollar cost average.