What's a good way to keep investing without just chasing success like a drug?
Realistically?
The short answer is ETFs.
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What's a good way to keep investing without just chasing success like a drug?
Realistically?
The short answer is ETFs.
My growth and dividend portfolios are already mostly focused on ETFs, such as LIT and QCLN. The problem is that LIT and QCLN have done so well that they took over my growth portfolio. Selling to rebalance could be one option, but feels like giving up on something that worked, and since they're ETFs and not stocks, I don't feel the need to really sell them since, as you pointed out, they should be relatively safe thanks to being ETFs.
You should have a target weighting in % for all your ETFs, and you should rebalance to that target either when it goes out of range (say 5% or 10% over), or every 6-months or a year. Your outperforming ETFs won't outperform forever. If you think there's a bullrun then let it ride, but know that eventually there will be a mean reversion.
When I was younger, I did more individual stocks and many different funds/etfs. Felt great when one did well, and I still hold some that have 10x gains. Some of those 10x gains were a decade ago, and have been pretty flat since then, but they're still 10-baggers. I, too, tended not to put more into those big gainers, partly because they now seem expensive, partly because investing more would reduce my total percentage gains. When I was young and your portfolio was small, those individual wins had a big impact on the portfolio and it felt important to get the best possible immediate performance.
Over the years, though, the differences between funds average out. Gains over a year or two become a small fraction of the gains over a decade. I can see that some of my winners are only winners because I happened to buy them during a recession, like anything bought during the Covid panic. It's become easier to dismiss the effect of stock/fund picking, and I've consolidated most of those funds into the stereotypical broad market indexes. Focussed ETFs, like LIT or QCLN, are safe from incompetence or fraud in individual company leadership, but the next administration can kill whole sectors with a change in tax or regulatory policy.
Unless you’re doing market research that gives you more knowledge than 95% of the people investing, you’re just getting lucky. You think you’re waiting to time the market: so are millions of other investors just like you trying the same strategy, and you can’t all win.
Once you realize that, you realize that almost every strategy people talk about is just BS. The one that works? Blind investing, preferably in an ETF.
Just ask Bob:
https://www.cnbc.com/amp/2015/08/27/the-inspiring-story-of-the-worst-market-timer-ever.html