He writes: “I am super frustrated with the market right now. I can foresee a huge crash coming but it never happens. Over the past few years I have been able to buy during large dips and that has worked out very well for me. I have literally been waiting since April of 2025 to invest the 8K in my Roth IRA.”
Not to pick on anyone, because the sentiment he expresses is common. From our days on the savanna, hundreds of thousands of years ago, us humans have been hard-wired to avoid ‘risk’ because ‘risk’ could result in our injury or death. Financial injury or death isn’t the same as physical injury or death. But fear of it can be just as debilitating, causing us to seek “safety” even when that “safety” might be a delusion.
In investing --or trading-- having more information is thought to be a way to reduce risk. But actually, that wanting to reduce ‘information risk’ just creates a different sort of risk, namely, ‘price risk’. Since markets are anticipatory, by the time that ‘information risk’ has been reduced to what an inexperienced investor would consider to be a tolerable level, the opportunity to buy at “a fair price” is gone.
So, what to do? Nibble on ideas that seem promising by opening a small position. If “the market” confirms your entry was correct, then average up into a full position. If “the market” doesn’t confirm your entry was correct, then maybe, just maybe, you aren’t wrong, just too early. But you need to admit that your idea isn’t working and that you need to look for a different opportunity.
In that sense, investing is no different than gardening. Not every seed you plant will grow, and of the ones that do grow, the bugs or birds or deer are going to ravage some. So what matters is that net gains exceed net losses. Or investing could be compared to fishing. Not every cast causes a fish to rise to your fly. But if you’ve read the water properly and made your cast properly, the odds are --if there is a trout where you think it should be in the small creek you are working-- you’ll get a rise. If you don’t get a rise, you don’t doubt yourself or your method. You move up the creek and try the next likely spot.
Same-same with investing. Markets are not static. Constantly, they are changing. Constantly, they need watching. Constantly, they need engagement. But that engagement doesn’t need to be even a daily thing. Plenty good enough money can be made by “weekend warriors" who spend some time on a Saturday morning to think about what is happening and then form a plan as to how they will respond.
That plan might not work out. But making that plan is a far better thing than listening to the talking heads screech their narratives of Hope and Fear. So that’s Step One. Recognize that the financial news channels exist to sell advertising, and that the financial newsletters exist to sell subscriptions. So get them out of your life. Step Two is to accept the fact that you are responsible for your profits and your losses, and that there will be plenty of both.
“Caminante, no hay camino. Se hace camino al andar.”
[roughly, “There are no roads but by walking.” ]