𝐒𝐞𝐭 𝐲𝐨𝐮𝐫 𝐞𝐱𝐩𝐞𝐜𝐭𝐚𝐭𝐢𝐨𝐧𝐬 𝐫𝐢𝐠𝐡𝐭
Over the past weeks, I have gained many new copiers. Experience tells me that a big portion of them will stop copying within days. This happens because new investors often don't know what to expect from the stock market. They will discover PIs with spectacular gains and will be tempted to jump ship from one PI to another. Unfortunately, this abundance of choice will leave you in a cycle of disappointment, I will explain why.
Beating the market consistently and reliably is a very difficult challenge. You've probably heard anecdotal stories of some acquaintance who made a ton of money on the stock market, but these stories are almost never true or. Warren Buffett is a highly regarded investor and his annualized growth amounts to 20% per year starting from 1965. During that same period the $SPX500 has grown at 10% per year.
𝐑𝐞𝐭𝐮𝐫𝐧 𝐭𝐨 𝐭𝐡𝐞 𝐦𝐞𝐚𝐧
Buffett must have made more than 20% some years, and much less than 20% in other years, but his gains have averaged to 20% over the years. When you find someone made 100% gains in one year, statistically speaking it is highly likely that they will lose money in the following year to return to the mean. It is highly unlikely that your PI will beat Warren Buffett.
𝐒𝐨, 𝐛𝐞𝐬𝐭 𝐜𝐚𝐬𝐞 𝟐𝟎%? 𝐓𝐡𝐚𝐭'𝐬 𝐢𝐭?!
20% might not seem exciting to you, especially when you have little money to start. With $1000 invested, making $200 at the end of the year in the best case seems hardly worth the effort. This is why you must invest in yourself and regularly add funds to your portfolio and you should also understand the power of compounding growth.
𝐃𝐨𝐧'𝐭 𝐛𝐞 𝐟𝐨𝐨𝐥𝐞𝐝 𝐛𝐲 𝐭𝐡𝐞 𝐫𝐚𝐥𝐥𝐲!
The last few years post COVID have been a huge exception. The market has only seen one way movement, apart from the disastrous 2022. I and many other investors have benefited from this rally and most of the investors on eToro haven't really been through thick and thin yet.
A handful of investors who shorted stocks in 2022 got lucky and gained while others were losing. But Shorting is not a good investment strategy and when someone shorts, it tells you they have a high risk appetite. You will notice that most of these investors continued to be short in the following years and lost more than they gained in 2022.
The same goes for those who use leverage or invest too much of their money in a single position. Many people made spectacular gains through these.
My own gains in 2020 came from lucky timing. I had only recently started and I injected a lot of cash at the time of the COVID dip and bought heavily into tech stocks like $ZM (Zoom Video Communications Inc) and $TSLA (Tesla Motors, Inc.) which had a tremendous growth. This is the first thing I have mentioned in my Youtube video from 3 years ago and I have explained that I will not be able to reproduce these gains.
𝐌𝐲 𝐠𝐨𝐚𝐥
This is why, I don't make claims of my target annual gains. I do not short and I do not buy instruments like $SQQQ that is essentially a short on the $NSDQ100 . This means, my portfolio will have a strong correlation with the market. When the market moves up, my portfolio will move up and when the market drops, my portfolio must also drop. Through careful capital allocation and risk management, I hope to gain more than the market when it goes up, and lose less than the market when it goes down. So my goal is to beat the $SPX500 .
The other most important thing is to preserve capital. When the market is unpredictable and volatile, like it has been in 2024, my focus is on reducing exposure and risk. Recovering from losses is very difficult and tempts investors to take more and more risk. This might lead to underperformance compared to the index in one year, but I will live to fight another day.
𝐒𝐭𝐢𝐜𝐤 𝐭𝐨 𝐲𝐨𝐮𝐫 𝐩𝐥𝐚𝐧
Once you've set your expectations right, it will be easier to pick the right PI for you and to follow through.