A short YouTube clip by TJ Walker arguing that individual investors become overconfident and irrational when they consume too much market information (CNBC, WSJ), leading to excessive trading and poorer returns. He recommends a passive investing approach: buy a low-cost index fund, invest monthly, and only sell for major life events (retirement, buying a house).
We all like to think we're rational human beings. We make decisions on a rational basis. The more information the better. Turns out that's not quite right. People who study the market and look at CNBC all day long and read the Wall Street Journal in general don't do any better in the stock market than those who ignore it completely. When you look at every single little data point it gives you this illusion of of mastery so you tend to buy and sell stocks much faster much more frequently. Turns out those people don't do nearly as well as those who say you know what, I'm not going to follow the market. Instead I'm going to get a low cost index fund that buys the whole market and not look at the ups and downs and only buy every month when I have more money and only sell for big events in life like a retirement or the need for a house. Please follow the TJ Walker habit.
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