Over the years, one study after another has shown that average investors can’t beat the broader market.
That’s why Warren Buffett is so adamant about saying most people should put their money in an S&P 500 index fund and let it ride.
But why do so many people make less money than they could be making?
And what can you do about it?
The answer is simple. Investors tend to make emotional and irrational decisions when it comes to buying and selling stocks…
And when things start to go wrong, they panic.
That’s why almost every time there’s a market crash, investors sell near the bottom and then wait to buy until the market has already soared.
It’s the exact opposite of what you should do.
Emotions and Decisions Don’t Mix
Some people might suggest you need to control your emotions…
But let’s be honest with ourselves and admit that’s easier said than done.
That’s why I believe in a different approach.
If the problem you have as an investor is making emotional decisions, and you know you can’t always control your emotions…
Then let’s remove the “decision” part of the process.
Look, I’ll admit I’ve always struggled with making decisions. It just doesn’t come naturally to me.
I blame it on my mother, who was loving and good-intentioned, but a little heavy-handed in the parental decision-making department.
Needless to say, when I was grown and on my own, I had to figure out how to make decisions … from insignificant and routine ones, such as what’s for dinner, to important and infrequent ones, such as what kind of career to pursue.
And you’re in the same boat. Beyond your day-to-day decisions, the choices you must make about your money and investments are endless.
Do I spend or save? Cash or T-bills? Stocks or bonds? Passive or active? Diversified or concentrated? Growth or value? Google or Amazon?
Sell (for a loss) or hold?
Sell (for a profit) or hold?
You get the idea…
As an investor, every decision you make can be hugely consequential to your investment portfolio and to your family’s financial goals.
All of those decisions bring your emotions into play…
And that’s where systematic (aka rules-based) investment strategies come in.
Systematic investment strategies minimize your role in the decision-making process. Therefore, they minimize the number of opportunities you have to make a foolish, emotional decision.
How Decisions Ran Me (a Professional Trader) Down
I didn’t always appreciate this benefit of systematic strategies.
When I was cutting my teeth in the investment business, I traded foreign currencies for a prop firm. I traded on a purely “discretionary” basis, which meant I was faced with decisions every minute of every day…
Do I sell now? No. How about now? OK. Now what should I buy? The pound? The euro? Should I hold it through the weekend? Should I get flat before gross domestic product numbers are released?
The decisions were endless … and I hated it.
Eventually, though, I found my tendencies toward deep thinking, deliberate decision-making and discipline were the perfect attributes of a systematic investor.
Systems Bring Simplicity
I learned that once I develop and test my strategies — which requires deep thinking and careful decisions — all I have to do is sit back and run those strategies.
I don’t have to make decisions all day long… I don’t have to face the same decision — “Do I buy? Do I sell? Do I hold?” — each and every day. I don’t have to second-guess myself.
Committing to systematic investing is one of the best things I’ve ever done for myself. It’s taken the monkey of continual decision-making off my back — and with that, I’ve seen dramatic improvements in both my wealth and health.
And the system I developed for my 10X Fortunes service is already paying off for subscribers during this up and down market.
Since June, four of my first five picks are already up double-digits in a market that can’t decide on a long-term trend. One is up almost 80% since I added it to the portfolio.
And these are stocks that I believe still have a long, long runway (think 1,000% gains) ahead of them over the coming years.
My system has allowed my subscribers to simplify their decision-making process and see green in their portfolios while the rest of the market swings wildly.
If you want to see how you can do the same, click here to watch my “10X Fortunes Summit” now.
To good profits,
Adam O’Dell
Chief Investment Strategist