Stock Market Investing Advice: What's Wrong With It?

As usual I spend my time spouting off here about my stock market investing thoughts and ideas and today I was wondering what is wrong with the stock market investing advice we receive? You'd think that we could hire a broker or financial advisor and in turn, make a killing in the market. But it doesn't work that way. Typically, this is what happens. We're contacted by a financial broker or we make contact with them because we are lost and confused about what to do. The advisors are happy we consulted with them. They take our money and earn their fee or their commission. We're happy that we have a plan and no longer have to worry about investing. It's in good hands.

This plan works really well when the market is going up. We've already talked about how William O'Neil has researched that three out of four stocks go up when the market goes up. You've got a good chance that things will go well.

The plan doesn't work so well when the market turns down. This is when you should get a call from your broker or advisor to tell you, hey we've seen this before, the markets topping you need to get out. But the truth is, they don't know when to sell and because they don't know when to sell, you get to watch all the gains you made evaporate for really no good reason. This is where the buy and hold philosophy as it pertains to individual stocks just doesn't work.

I can name in an instant a number of people who lost a fortune because they held individual stocks to long and in some cases, with some bank stocks, lost their entire nest egg. This is the kind of situation you can avoid by being a CANSLIM investor with specific selling rules to follow. The myth of following stock market investment advice using the buy and hold strategy for individual stocks is that you guarantee yourself that you will give away your gains.

O'Neil recommends selling any stock that goes below 8% of your purchase price and locking in gains as you go along. What's the point of investing in stocks if you are just going to hold and hold and hold. At some point you have to cash gains in. Learning when to sell is as important as when to buy and this is the area that your stock market investing advice stinks. Start making your own decisions with at least some of your money. Learn the market. Through experience and a specific strategy, you can do better than your broker.