Daily Wealth Editor’s note: You’ve probably heard this big lie… But you don’t have to believe it. Today, we turn to Chris Igou as we continue to revisit our favorite pieces of investment wisdom. In this essay – which we originally shared here in May 2022 – Chris explains that if you’re hoping to beat the market, you must do the one thing that Wall Street says is impossible.

Also, our offices and the markets will be closed on Monday for New Year’s Day. We’ll pick up with our regular schedule on Tuesday, after the Weekend Edition. Enjoy the holiday!

It’s one of the longest-running lies on Wall Street…

I’ve heard it time and again… from all kinds of investment professionals. It’s the one thing they say you should never, ever do.

They’ll tell you that you’re not “sophisticated” enough. They’ll say you don’t need to do it. And they’ll assure you that even the best investors can’t pull it off.

Heck, even Warren Buffett – arguably the greatest investor of all time – told his family not to do this with their money when he’s gone.

It’s a bias so deeply ingrained in Wall Street that you probably don’t even notice it. Perpetuating it has become the norm… And going against it is a sure way to draw criticism.

Today, I’ll share this lie with you… explain why it’s all wrong… and why following Wall Street right now could be a huge mistake…

So what’s the lie? Simple…

It’s the idea that you can’t – and shouldn’t try to – time the market.

This is almost always directed at the little guy. The financial elite love preaching it to individual investors. And they always give the same reasons…

“You’ll do more harm than good.”

“If you sell now, you won’t know when to get back in.”

“You’re not smarter than the market.”

These points all lead to the same conclusion… that you need a professional to invest for you.

Sure, not everyone wins in the stock market. You won’t be right every time. But Wall Street doesn’t want you to realize that these excuses are just a way to drain your account with huge fees.

The truth is… you can – and must – time the market.

If you don’t, it’s almost impossible to outperform. You’ll be stuck on the sidelines when others get rich in the hot investment of the day.

Not timing the market would have meant ignoring tech stocks over the last decade… or cryptocurrencies… or China’s Internet boom.

Before the recent bust, these areas all led to incredible profits. But if you listened to Wall Street, you’d have missed it. You’d have been stuck in index funds while others reaped the benefits.

It gets worse. When stocks are taking a beating, not timing the market means you’re stuck “holding and hoping.”

Instead, you need to act to protect yourself. The simplest way to do it is with stop losses…

Stop losses tell you exactly when to sell. No emotions. No stress.

Our favorites are trailing stops. A trailing stop moves higher as your stock moves higher.

If you use a 25% trailing stop, you’re simply deciding that if a position falls 25% from its high, you’ll sell. It’s really that easy. And it allows you to avoid catastrophic losses… as well as the paralysis those can cause.

Wall Street would likely view trailing stops as timing the market. I view them as an insurance policy. And right now, you need them.

More important, timing the market isn’t some crazy idea. It’s a way for you to take control of your financial future. And no, you don’t need a Wall Street professional to do that for you.

It’s a lie the financial industry dreamed up to separate you from your money. Don’t fall for it.

Good investing,

Chris Igou

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Source: Daily Wealth