With the advent of the internet, it has become easier and easier to access information. These days, it seems top investors and laypeople have access to the same information. Thanks to detailed statistics and up-to-the-minute news updates, the gap between the average investor and a Wall Street trader has narrowed significantly.
However, just because the information is accessible, does that mean it’s worth cutting a professional out of the equation and doing their role yourself?
The answer largely depends on the person; after all, anyone can learn to do anything, but what kind of skills does it require, and what are the risks?
Instinct Vs Reason
For many of us, the phrase ‘go with my gut’ is a mantra we live by. Many people throw out analysis and statistics when making decisions and go based on a hunch. While this can sometimes work when trying to predict the outcome of a sporting event, it’s highly unlikely to produce results in the investing world—especially when it comes to long-term results.
It requires discipline to refrain from abandoning a stock which is plummeting in value, just as much as it requires discipline not to hop on the bandwagon of a stock on a meteoric rise.
Rather than letting your emotions dictate your decisions, it’s important to make a decision based on the available statistics.
There’s an expression, ‘people lie; numbers don’t.’ This is true in investing too. This is why it’s important for anyone attempting to handle their investments themselves to at least become ‘conversational’ in numbers—you don’t have to be fluent, but you have to be able to find present value and future value calculations.
As previously mentioned, the internet uniquely connects us to information in a way that’s never before been done. However, while it does allow us to access lots of great information, it also gives us access to lots of terrible information.
If you want to start handling your own investments, you’ll not only need to take advantage of the information you have access to, you’ll also need to develop an ability to determine what information is valuable, and what is just peddling snake oil.
Is It For Me
Investing is an inherently risky game—even professionals can get bamboozled and wind up losing everything.
There have been plenty of examples of professionals losing a lot of money because one of their investments doesn’t pan out.
Ultimately the decision to start managing your own investments should come down to your interest level.
It’s going to take a lot of time, require a lot of energy and dedication—you’ll have to sift through tons of information in order to learn about how the market works, how to determine what a trend is and how to profit from it, when to short a stock versus when to invest in one, and the list goes on.
However, if you genuinely enjoy learning about how the market works and the hands-on experience of handling your investments yourself—it might be worth a shot.