Finance Fridays: Sometimes It Is Best To Do Nothing

Sean Coates
Jul 21, 2017 · 2 min read

Just because you have cash available to invest doesn’t mean you need to invest it today.


One mistake many investors make is that they try to invest all of their capital at once. This is horrible, because over time, you will discover new investment opportunities, and you really want to have cash available when these opportunities arise.

So resist the urge to immediately “spend” every dollar in your investment account. Don’t take positions in investments unless you are sure it’s going to be a worthy bet. If you’re not sure, hold off. There will be better opportunities in the future.

Similarly, don’t trade every day. Most days, the best thing to do is nothing. Cut your losers and let your winners run. If you find yourself trading every day (or even every week), you will be churning through your account, generating lots of fees for your broker. This is good for him but not for you. Constantly moving in and out of positions will lead you to miss some of the big upturns.

Investing is not trading. With investing, you find a good place to put some money, and you let it grow. Trading is all about short-term movements that have nothing to do with fundamentals for value. Trading is highly dangerous and will generally lead to losses for most people. You can be a great investor and still be weak at trading. That’s okay. Leave trading to the market makers.

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Sean Coates

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Occasional posts from @fooyay about software engineering, crypto, finance, and more. https://about.me/fooyay (Content reflects my opinion and not my employer.)

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