Investment Tip: Smell the Bacon

At the turn of the millennium, it seemed like the dot-com boom would never end. Investors poured their money into the stock market hoping to catch the huge wave that was raising everyone’s stock prices. To ignore these huge gains was to avoid surefire profits for investors. As we know now, of course, those gains came at a price, and soon after the NASDAQ rose 3,000 points in a year, the market crashed and millions of dollars were lost by investors everywhere.

What did investors learn from this crash? Get out of the market If growth is unsustainable. For a year, the NASDAQ grew like never before,raining money onbullish investors, but at a certain point, the bulls turned into pigs and got their bacon fried. Investing in the stock market is a constant struggle with expectation and trying to predict the future. If you’re like the rest of us and you don’t have a crystal ball, expect record growth to be followed by a crash at some point.

A few years ago, with oil prices rising, it would have been a good move to invest in the oil industry. For a while, many investors did, but the smart ones rode the wave for a while and then started diverting their funds when oil prices inevitably fell.

Yes, before prices fell, the investors who didn’t want to be piggish made less money than those with more invested in oil, but when prices fell, they didn’t lose nearly as much. For more financial tips, contact Trade Global founder and owner Preston Fontenot.

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