Never has there been a time in market history when more people who think of themselves as investors were actually gambling with their money. From Wall Street to Main Street the lines are blurry. Just look at the trials of JP Morgan (JPM), where even the bank itself confused hedging risk with making an enormous bet; and Facebook (FB), whose IPO created a frenzy that has so far lost money for investors that rushed in. If it can happen to them it can happen to you. Mark Matson, the author of "Main Street Money" joined Breakout to discuss three signs that you're gambling with your money, not investing it.
1. Stock Picking
Matson says "the idea that you're going to have inside knowledge, or knowledge that nobody else has" and use it to pick stocks with better returns than the broader market is folly. Individual stocks are always more risky than a diversified portfolio. You're kidding yourself if you think otherwise. This rule applies not just to the go-to names like Apple (AAPL) but perennial value plays like Berkshire Hathaway (BRK).
Matson advises that instead of hand-picking your portfolio of five to ten stocks, you must be much more diversified with exposure to 11,000 global stocks.
2. Market Timing
"The trick to investing is not buy and hold, it's buy and re-balance," he says.Read More »from 3 Signs You’re Gambling, Not Investing!