1. Chasing Dividends – Do not chase DIVIDENDS. You will Underperform the market. Look at the following ETF’s-ITOT vs NOBL vs DGRO. You will find that taking on the additional risk of a concentrated dividend portfolio did not provide you with any additional rewards this year. The more you focused on dividends with those ETF’s, the less your return was.
  2. Cut losers Faster- Tax Loss Harvesting is a real thing. If a stock falls 15%, don’t be tempted to keep buying. Get out of the stock and move on to something else. I am talking INDIVIDUAL STOCKS not Mutual Funds or ETF’s. Things like total market funds/ETF’s are meant for buying and holding.
  3. Buy into strength not weakness – This was something I learned that immediately improved my returns. Don’t always buy the dip, buy stocks that are moving higher via strength (momentum if you will). Stocks that are going up often just keeping going on. Meanwhile, stocks that are losers, often continue going down for very long periods of time. It has been my experience that chasing TURNAROUND KIDS are simply not worth it. The amount of time you hold them before they turn around is a HUGE opportunity cost.
  4. Buy and Hold with Individual stocks doesn’t always make sense. If you just had a year of 30% returns, why not scrape a little off the top? It is not winning until you take something off the table. If a companies revenues and earnings are still growing strong, it may make sense to buy and hold for a long time; however, if you see them start to slow, it MAY be time to sell a little bit.
  5. Pick LESS stocks – I see investors pick 40 individual stocks. I’m sorry, but if it takes 30 stocks, then you are doing it wrong. You should not need that many stocks to be diversified. This is partly why a total market ETF or fund should be the meat and potatoes of your portfolio. Pick a few strong stocks to JUICE your returns. I’m still trying to reduce my positions a year later. It has been proven past a certain point, you are now over diversified, and aren’t adding anything positive to your returns.
  6. Swing Trading is ok if you don’t risk much and you limit yourself to doing it a few times a month. If you MUST swing trade, no, you don’t always lose. In fact, I don’t ever remember losing on a swing trade (only on buy and holding). Just use very small positions and pick stocks you will be okay holding if your trade doesn’t work out. Yes, as a general rule of thumb ACTIVE investing underperforms PASSIVE investing. However, that doesn’t mean you can’t have a little fun with stocks if you enjoy it, just be sensible. Many people get addicted to gambling and such and can’t be sensible.
  7. Avoid Retail company stocks that are in the mall. The biggest loser I’ve bought is American Eagle Outfitters. Trust me when I say, Wall Street does not like these apparel/clothing stocks. If it’s not Target, Wal-mart or LULU then buying a retail stock is a losing proposition. You could invest in most any other sector and come out better.
  8. Sector ETF’s will most likely underperform. I’ve owned Healthcare Sector funds, country ETF’s and they ALL underperformed a boring total market ETF or QQQ. They are usually not worth the additional risk. QQQ that is heavily weighted towards tech is really the only exception I’ve found so far; however, even it holds more than just tech stocks.
  9. Don’t spend too much time eyeing your portfolio. Go get to work making more money. Your returns are basically decreasing if you spend hours each day looking at your brokerage account (BEEN THERE, STILL AM THERE SOME DAYS!