The best way to improve is to get back involved with financial markets, particularly in equities, and to learn how to trade.
You will discover that a lot more of your trade decisions have the potential to matter, and you will see and feel the benefits.
Take a few hours to do a basic portfolio review every year.
It will help you establish a framework for investment in equities, and you will become familiar with the concepts of portfolio composition, risk, risk-neutrality, and diversification. This is especially important when moving from your active trading to a more passive style.
Also, keep your portfolio in sync with your personal budget, and work hard at reducing risk by diversifying across different instruments.
Most of all, try not to miss a beat.
Why is equities so popular?
In a perfect world you would not be interested in stocks because there’s only one good one.
But people want some of what they don’t have and want to be able to control and have an impact on the outcomes.
Why is it so popular?
In general, there are three primary reasons for the popularity of the market in the past and current years:
The stock market is a good way to get paid for your labor
People like the feeling of having a stake in something they care about. This is called “investment culture”.
People also like the concept of investing. But there are many other factors that make it appealing.
People want access to wealth.
The stock market gives access to an “expert” community, who can save you money and advice on risk, etc.
For instance, the top 5% of all the stocks traded globally today account for just over 7% of total investment. These individuals also make large investments in the stock market on a regular basis. If they had access to other instruments, then the market might be more volatile, but they could still be fairly confident in their decision making.
This is particularly important for those with less than a $10k income – the bottom 10% of all stocks traded today account for nearly 9% of total investment.
Wealth inequality has increased over the past decade, and this has been a key reason for market volatility
Inequality in the US has dramatically increased during this decade. This has led to many investors getting stuck in one type of investment because their income has stagnated or declined in recent
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