How You Trade Your Way to Poor Investment Returns
The stock market is like a daily compilation of knee-jerk reactions. Emotions like fear and greed control the market, often swinging with each news headline that passes.
Algorithms, computers that hedge funds use to buy and sell in milliseconds based on pre-programmed formulas, actually make up most of the market's daily trading activity. Yet the big-money funds that employ these methods, with millions of dollars to hire the brightest minds to configure them, underperform the S&P 500 on an annual basis over the long term.
In other words, it's tough to generate outsized investment returns when you're constantly buying and selling stocks. But that's what the majority of investors are doing today. I'll explain why this might be, and how you can make real money in the stock market.
Source Fool.com
