What you think you know about investing can hurt you

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“Don’t confuse me with the facts” is how too many investors approach money decisions. What we think we know is frequently enough for us to sink hard-earned cash into an investment just because it “feels right.” For example, we “know” that people far and wide can’t envision life without Amazon and Apple and Facebook, so obviously the shares of such companies are fabulous, money-making, no-brainer buys.

Gut feeling is an essential survival tool, but feelings are not facts. Intuition is no substitute for the verifiable information you need to make smart decisions, or to be confident in the professionals you entrust to give you financial advice or run your mutual funds. The rules of investing haven’t been revised: valuation matters; timing matters; the business cycle matters, cash in the bank and competent management matters — to name just a few.

Who are you going to believe, me or your own eyes?

How different our experiences would be if we made a point to do the homework before investing, and to listen to professionals with a skeptical ear. There’s a lot of noise in the world nowadays; multiple messengers with myriad agendas tell us, “Who are you going to believe, me or your own eyes?” When these attempts at manipulation concern our money, we literally can’t afford to slumber through and not question.

In an ocean of opinions, facts will keep you afloat.

— Jonathan Burton

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