How to avoid temptation to buy hot stocks or bitcoin?

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nyanchu021
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How to avoid temptation to buy hot stocks or bitcoin?

Post by nyanchu021 » Sun Jan 13, 2019 7:21 pm

I have 20 years experience of investing.
In 2000, I can't avoid temptation to buy hot IT stocks.
And I learned that buying hot stocks always leads to a disaster.

But history repeats itself.
Many speuators(not investors) lose money by buying hot bitcoin.

How to avoid temptation to buy hot stocks or bitcoin?

Yours,
Those who don't learn from history are doomed to repeat it.(Santayana) I'm Japanese living in TOKYO.

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fortfun
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by fortfun » Sun Jan 13, 2019 7:33 pm

nyanchu021 wrote:
Sun Jan 13, 2019 7:21 pm
I have 20 years experience of investing.
In 2000, I can't avoid temptation to buy hot IT stocks.
And I learned that buying hot stocks always leads to a disaster.

But history repeats itself.
Many speuators(not investors) lose money by buying hot bitcoin.

How to avoid temptation to buy hot stocks or bitcoin?

Yours,
Maybe this will help with bitcoin: http://www.mrmoneymustache.com/2018/01/ ... is-stupid/

KlangFool
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by KlangFool » Sun Jan 13, 2019 7:37 pm

OP.

Limit your gambling on the hot stock or bitcoin to a total of $5,000 or less.

KlangFool

UpperNwGuy
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by UpperNwGuy » Sun Jan 13, 2019 7:41 pm

How to avoid temptation? Make a plan and stick to it.

staythecourse
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by staythecourse » Sun Jan 13, 2019 7:44 pm

UpperNwGuy wrote:
Sun Jan 13, 2019 7:41 pm
How to avoid temptation? Make a plan and stick to it.
Agree. If you haven't been able to stop in the last 20 years I don't see you stopping EVER. So 2 options exist: 1. Let someone else handle your portfolio or 2. Place specific guidelines.

If you choose the latter maybe invest 90% in a bogleheads approach and 10% of your money however you like. Just do NOT allow more then 10% in "play money".

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

HAL 9000
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by HAL 9000 » Sun Jan 13, 2019 7:45 pm

Once you lose enough money you'll lose the temptation. :(

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hoppy08520
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by hoppy08520 » Sun Jan 13, 2019 7:56 pm

The book “Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich” is ten years old but still relevant. Explains how to control your gambling streak with regard to money.

OP, I feel for you. As humans, we all have our foibles. Personally, I’m ruthlessly rationalist when it comes to investing, so therefore I have no urge to gamble, fortunately. I’m not bragging about this or feeling superior, it’s just the brain I wound up with. I do suffer from other foibles, though, and I try my best to deal with them. You seem smart and you obviously know you have an issue or you would not have posted, so I hope you can find a way to manage your money successfully.

Good luck to you.

Old_Dollar
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by Old_Dollar » Sun Jan 13, 2019 8:05 pm

If it's a specific stock then odds are I already have that needle in my index haystack. No need for me to go out and search for it. I just buy more haystack!
I am here solely to learn about investing.

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Phineas J. Whoopee
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by Phineas J. Whoopee » Sun Jan 13, 2019 8:10 pm

Hi nyanchu021, and welcome to the forum.

Just don't look.

PJW

drk
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by drk » Sun Jan 13, 2019 8:49 pm

livesoft wrote:
Sun Jan 13, 2019 7:37 pm
And I promise to keep posting in an effort to stay ahead of you catching up and getting through the backlog.
This seems like idiosyncratic single-poster risk for which OP will not be compensated. OP, I recommend assembling an index of the top-50 posters and reading all of their posts, reconstituting the index as needed. That should ensure you stay occupied.

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arcticpineapplecorp.
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by arcticpineapplecorp. » Sun Jan 13, 2019 9:30 pm

viewtopic.php?f=10&t=268706#p4301540

this helps:

https://us.spindices.com/spiva/#/reports
the takeaway:
If the majority of active funds underperfomed their benchmark index, what makes you think you can beat an index?

this also helps:

https://www.prudential.com/cdn/tools/ou ... oolcta=OFF
the takeaway:
If you can't outsmart the market using past data, what makes you think you can outsmart the market using future (unknown) data?

People get the temptation because they like to gamble. I personally don't, because I don't like throwing my money away. Experts, even Jack Bogle has said if you feel you must buy individual stocks, don't do it with more than 5% or so of your savings. That way if you lose your money doing so (which you probably will) you'll still have plenty left (the prudent savings leftover, the other 95%).

I often come back to this quote:
“...concentrating your portfolio in a few stocks maximizes your chances of getting rich. Unfortunately, it also maximizes your chance of becoming poor. Owning the whole market—indexing—minimizes your chances of both outcomes by guaranteeing you the market return.” (The Four Pillars of Investing by William Bernstein, pg. 102).
Why not get the guaranteed return of the market? To do otherwise, seems unthinkable.
"Invest we must" | "By God, If John Q. Public doesn't get the word after two Swedroe books, two (Bill) Bernstein books, and four Bogle books, he (she) has only himself to blame!"

ThrustVectoring
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by ThrustVectoring » Sun Jan 13, 2019 9:44 pm

Make investing something that happens automatically, so you just don't think about it. Set things up once so that your paycheck gets divided into 401(k) deferrals, direct deposit into a checking account for bills and spending, and any additional investment in an IRA and/or brokerage account at Vanguard.

It's definitely possible to arrange things such that you only look at your investments once a year to file taxes. It's much easier to avoid temptation if you just never look at investment stuff because super basic algorithms take care of it for you :)
Current portfolio: 60% VTI / 40% VXUS

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by LadyGeek » Sun Jan 13, 2019 10:17 pm

I removed several off-topic comments. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.
Our experienced members should read: Please Do Not Bite the Newcomers

I also removed an off-topic post linking to a book download site which violates copyright.
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by bargainhuntingking » Sun Jan 13, 2019 10:43 pm

"The burned hand teaches best."

Try buying some highly volatile security with dreams of high returns. It doesn't often work out that way. Better to learn that lesson early before your losses result in catastrophe.

Afty
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by Afty » Mon Jan 14, 2019 2:12 am

Buying hot stocks is a great way to buy high. We’re supposed to be buying low, remember?

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RedJunglefowl
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by RedJunglefowl » Mon Jan 14, 2019 2:33 am

Paper trade some stock options. See how much imaginary money you make.

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by Valuethinker » Mon Jan 14, 2019 3:47 am

nyanchu021 wrote:
Sun Jan 13, 2019 7:21 pm
I have 20 years experience of investing.
In 2000, I can't avoid temptation to buy hot IT stocks.
And I learned that buying hot stocks always leads to a disaster.

But history repeats itself.
Many speuators(not investors) lose money by buying hot bitcoin.

How to avoid temptation to buy hot stocks or bitcoin?

Yours,
Fundamentally you have an issue with gambling. Brains and personalities vary in their susceptibility to same - most of us have a poison, it's just how harmful indulging that poison might be.

You need to find a way to get that "rush" without jeopardizing your long term performance.

Mindfulness about how you experience the rush, the thrills and downs of the roller coaster, would be helpful. As with any addiction, meditation and mindfulness may well help. It's a bit like giving up smoking. Running or any other intense form of regular exercise also helps.

Either set a small gambling "budget" and live within that budget. Or construct a paper portfolio and track that.

Meanwhile making your long term investments into index funds, which you don't touch.

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samsoes
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by samsoes » Mon Jan 14, 2019 7:21 am

nyanchu021 wrote:
Sun Jan 13, 2019 7:21 pm
How to avoid temptation to buy hot stocks or bitcoin?
A wise woman once said, "Just say no."
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

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nisiprius
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by nisiprius » Mon Jan 14, 2019 7:33 am

You avoid temptation by doing exactly that, avoiding it rather than resisting it.

One of the virtues of simplicity and staying the course is that you have decided up front to be a "satisficer," content with the possibility that you have a suboptimal portfolio and the likelihood that you have an adequate portfolio.

I ignore small-cap value tilts, long-short momentum funds, frontier markets, "Daily Junior Gold Miners Index Bear 3X" leveraged ETFs, cryptocurrency. Someone else is going to bet on them and win and get rich but it won't be me, and I'm OK with that.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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BoglePaul
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by BoglePaul » Mon Jan 14, 2019 7:39 am

Not everyone can cut their own hair so they go to the barber shop. Consider outsourcing the job to a money manager or financial planner (Vanguard even has an inexpensive financial planning group). The end.

tea_pirate
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by tea_pirate » Mon Jan 14, 2019 8:12 am

Easy, just think of all the money you would have lost if you bought Bitcoin too late. It's down about 80% from the high. If you put it $100k at the wrong time, you might only have $20k left.

By the time you or I have heard about the next "hot investment" opportunity, it's probably already too late!

samsdad
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by samsdad » Mon Jan 14, 2019 8:40 am

bargainhuntingking wrote:
Sun Jan 13, 2019 10:43 pm
"The burned hand teaches best."
That’s been my experience. It’s the beat-down that convinced me not to do something again.

Spirit Rider
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by Spirit Rider » Mon Jan 14, 2019 10:46 am

samsdad wrote:
Mon Jan 14, 2019 8:40 am
bargainhuntingking wrote:
Sun Jan 13, 2019 10:43 pm
"The burned hand teaches best."
That’s been my experience. It’s the beat-down that convinced me not to do something again.
The worst thing that can happen with speculating like gambling, is that you win big. It acts like a drug and generates euphoria. That "high" is a very powerful motivator.

Once you win big, you are consistently looking for the next and maybe even bigger "score" This causes you to take bigger and bigger risks.

I sadly have had the personal experience of watching gamblers, day traders and speculators crash and burn.

Like all things in life there are always a matter of degree. There have and will always be people who gamble, day trade and speculate. Despite their selective memory of all their winners, they routinely "lose".

This leaves the best advice previously in this thread; "avoid, don't resist." The worst thing that can happen to you is get "lucky", then you are "doomed".

WillRetire
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by WillRetire » Mon Jan 14, 2019 12:37 pm

nyanchu021:

To answer your original question...
Ask yourself this question when you get the urge to splurge on a high-flyer: Can I afford to lose all this money?
If Yes, then go ahead and have some fun.
If No, don't buy.

It's fine to have some play money. Just realize it is playing/gambling, and not investing. And quantify (=limit) the portion of the portfolio allocated to highly speculative bets.

What seems to happen to some people is they swing for the fences, thinking all they need is one major success to win big. Maybe they'll win big, but probably not. Kind of like the lottery.

P.S. Bitcoin is a special case in which you are buying a string of bits that certify you are a member of a technology club.

GoldenFinch
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by GoldenFinch » Mon Jan 14, 2019 1:00 pm

The same way you avoid other high risk behaviors. You just don’t do risky things. Why don’t you do risky things you ask? Well it’s because you are smart and you have learned from others as well as your own past mistakes.

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by grabiner » Mon Jan 14, 2019 4:54 pm

Here's a quote from my Investment Policy Statement, which you might put in yours.

This statement will be reviewed whenever there is a substantial change in my financial situation, and annually when I rebalance. If there is no substantial change in my financial situation, I will wait at least three months between changing the asset allocation in my statement and changing the asset allocation of my investments, and review the change in the statement at that time.
Wiki David Grabiner

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by All Seasons » Mon Jan 14, 2019 5:26 pm

For anyone who succumbs to what the OP is talking about, go see your doctor.

No, I'm serious. If you have behaviour that you cannot control that is detrimental to yourself, you should see your doctor. They can then refer you to a counsellor who is professionally trained and can give you exercises and strategies for you to better control your monetary behaviour.

No, I'm not joking and I'm not overreacting. Inability to stop oneself from engaging in an undesirable behaviour is a mental health problem. It may be severe or it may be minor, but it's still a mental health problem in principle. Denying it or simply saying "Just stop doing it then." or "Just write it in your IPS." doesn't work.

Compulsive speculation on stocks or bitcoin or whatever is only a stone throw away from gambling addiction.
The market portfolio is always a legitimate portfolio.

balbrec2
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by balbrec2 » Mon Jan 14, 2019 5:37 pm

You are suffering from FOMO. What kind of investor are you?
If you are normally a BH investing in a 2-4 fund portfolio, you need to
stay away from outlets that put you onto this stuff to begin with. Knowing
that is very difficult or even impossible you need to limit your gambling
tendencies to about 2% of your portfolio. If you do not follow BH protocol
and like to invest in individual securities, you still need to limit your exposure to
speculative issues, say around 2-5% of your total portfolio value. There is an old saying
that one successful speculation can be worth a lifetime of prudent investing. Sadly
they usually turn to dust which is the reason to limit your exposure.
good luck

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nyanchu021
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by nyanchu021 » Mon Jan 14, 2019 7:44 pm

Thanks so much for reply.

But I can't find the advise like
Ignore wall street news
Ignore market movement

Do you think is it worthwhile to watch cnbc or read barron's?
Do these media try to pursuade me to buy hot stocks or bitcoin?
Those who don't learn from history are doomed to repeat it.(Santayana) I'm Japanese living in TOKYO.

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LadyGeek
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by LadyGeek » Mon Jan 14, 2019 7:57 pm

The investing principles of "ignore wall street news" and "ignore market movement" can be found here: Getting started

The wording is different, as "Stay the course" and "Never try to time the market".

You can read these books: Books: recommendations and reviews

Are you a resident of the US? If not, what is your home country? We can help you select the right investments.
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tooluser
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by tooluser » Mon Jan 14, 2019 8:39 pm

The Bitcoin temptation has been easy for me to avoid. I've never speculated in currency, and have no plans to do so, so why would I start now?

Hot stocks are another matter. There's a story and sense of drama that goes with holding a part of some company's success (or failure). Real human endeavor, the backbone of capitalism and progress (on the whole). In moving from individual stocks to index funds, mentally I ended up treating investments sort of like charitable donations (with me as the hopeful beneficiary). I'm okay with not getting any credit for my anonymous help. The lack of drama is a feature, not a bug. I too, have important things to do in this world, and cannot fret everybody else's struggle, nor fully participate in their success.
"Budget: A mathematical confirmation of your suspicions” is a jocular quotation that was credited to A. A. Lattimer in 1949. Nothing else is known about the author besides this quotation.

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by tmcc » Mon Jan 14, 2019 8:50 pm

investing and gambling are synonymous.

I [invested / gambled] on this house

I [invested / gambled] on this index fund

I [invested / gambled] on buying a business

when people here say "gamble" , it is uniformly part of a rationalization.

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Phineas J. Whoopee
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by Phineas J. Whoopee » Mon Jan 14, 2019 8:55 pm

nyanchu021 wrote:
Mon Jan 14, 2019 7:44 pm
...
Do these media try to pursuade me to buy hot stocks or bitcoin?
No, they do not.

They try to persuade you to buy a Ford F-150. That's the business they're in.

PJW

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nyanchu021
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by nyanchu021 » Mon Jan 14, 2019 9:28 pm

LadyGeek wrote:
Mon Jan 14, 2019 7:57 pm
The investing principles of "ignore wall street news" and "ignore market movement" can be found here: Getting started

The wording is different, as "Stay the course" and "Never try to time the market".

You can read these books: Books: recommendations and reviews

Are you a resident of the US? If not, what is your home country? We can help you select the right investments.
I'm japanese living in Tokyo.
Most of my assets is various type of ETF in schwab account.
'Cos I'm living in Japan, cuurency fluctuation is a big problem.
Yen tend to be higher in depression. In 2008-2009, USDJPY down more than 20%,so my US equity asset down another 20%
in yen!

I just ask if it is worthwhile to watch cnbc or read barron's.
Reading investment newsletter is a waste of time?
Those who don't learn from history are doomed to repeat it.(Santayana) I'm Japanese living in TOKYO.

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by LadyGeek » Mon Jan 14, 2019 10:27 pm

Yes, we believe reading newsletters is a waste of time.

We can help you. See our wiki: Investing in Japan

Start a thread in the Investing - Help with Personal Investments forum and post your portfolio information.

Here is an example of a member living in Japan: Starting out, in Japan
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by Wakefield1 » Mon Jan 14, 2019 10:55 pm

tmcc wrote:
Mon Jan 14, 2019 8:50 pm
investing and gambling are synonymous.

I [invested / gambled] on this house

I [invested / gambled] on this index fund

I [invested / gambled] on buying a business

when people here say "gamble" , it is uniformly part of a rationalization.
I believe that the man who said "No, No and No" has devoted his life to taking as much of the gamble out of investing as possible for those of us hoping to accrue some wealth for our futures as reliably as possible.

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by wootwoot » Mon Jan 14, 2019 11:26 pm

tea_pirate wrote:
Mon Jan 14, 2019 8:12 am
Easy, just think of all the money you would have lost if you bought Bitcoin too late. It's down about 80% from the high. If you put it $100k at the wrong time, you might only have $20k left.

By the time you or I have heard about the next "hot investment" opportunity, it's probably already too late!
Sounds like a good time for op to back up the truck and buy Bitcoin now. 80% off the high, buy low and sell high.

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by David Jay » Mon Jan 14, 2019 11:35 pm

wootwoot wrote:
Mon Jan 14, 2019 11:26 pm
Sounds like a good time for op to back up the truck and buy Bitcoin now. 80% off the high, buy low and sell high.
really not helpful...
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by lassevirensghost » Tue Jan 15, 2019 10:36 am

tmcc wrote:
Mon Jan 14, 2019 8:50 pm
investing and gambling are synonymous.

I [invested / gambled] on this house

I [invested / gambled] on this index fund

I [invested / gambled] on buying a business

when people here say "gamble" , it is uniformly part of a rationalization.
So you truly think there is no way to discern risk? Then I assume you have tons of leverage on bitcoin right now?
100% VSMGX

mak1277
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by mak1277 » Tue Jan 15, 2019 10:44 am

Not paying attention to the market is a big help. I couldn't tell you what a "hot stock" is today, or what bitcoin's price is, was, or ever will be. I just drop my money into my 3 funds and check my balance now and then. Low information diet.

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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by CyclingDuo » Tue Jan 15, 2019 10:51 am

nyanchu021 wrote:
Sun Jan 13, 2019 7:21 pm
I have 20 years experience of investing.
In 2000, I can't avoid temptation to buy hot IT stocks.
And I learned that buying hot stocks always leads to a disaster.

But history repeats itself.
Many speuators(not investors) lose money by buying hot bitcoin.

How to avoid temptation to buy hot stocks or bitcoin?

Yours,
Are you asking for yourself, or for others?

One would like to think that in 20 years of "investing experience" you have certainly learned the difference between investing and speculating by now. If not - the suggested reading list is here: https://www.bogleheads.org/RecommendedReading.php
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Valuethinker
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by Valuethinker » Tue Jan 15, 2019 11:24 am

All Seasons wrote:
Mon Jan 14, 2019 5:26 pm
For anyone who succumbs to what the OP is talking about, go see your doctor.

No, I'm serious. If you have behaviour that you cannot control that is detrimental to yourself, you should see your doctor. They can then refer you to a counsellor who is professionally trained and can give you exercises and strategies for you to better control your monetary behaviour.

No, I'm not joking and I'm not overreacting. Inability to stop oneself from engaging in an undesirable behaviour is a mental health problem. It may be severe or it may be minor, but it's still a mental health problem in principle. Denying it or simply saying "Just stop doing it then." or "Just write it in your IPS." doesn't work.

Compulsive speculation on stocks or bitcoin or whatever is only a stone throw away from gambling addiction.
This is very true.

I once met a man who had been through Gamblers Anonymous (this was in the UK where legalized betting has been around a lot longer than USA).

He had owned a pub doing £50k a week - in the early 1980s when beer was £1/ pint. Good money. Lost it all through gambling. Was driving a minicab.

He said the clients included consultant Surgeons and top lawyers, as well as publicans like him.

Now with online gambling, spread betting etc. the problem is a lot worse. Australia has the highest incidence of gambling addiction in the world and is also the world's most deregulated gambling market.

It's not very far from buying Contracts For Difference (CFD) at IG Index on stock indices and currencies, to blowing it at the track. In fact almost anyone I know who does the 1, does the other.

quantAndHold
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Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by quantAndHold » Tue Jan 15, 2019 11:56 am

nyanchu021 wrote:
Mon Jan 14, 2019 7:44 pm
Thanks so much for reply.

But I can't find the advise like
Ignore wall street news
Ignore market movement

Do you think is it worthwhile to watch cnbc or read barron's?
Do these media try to pursuade me to buy hot stocks or bitcoin?
The media are in the business of getting you to watch. They make their money if you watch. So they make things more exciting than they really are. Good investing is pretty boring.

As an individual investor, the best thing you can do is read the getting started section of the bogleheads wiki, save as much money as you’re able, pick an asset allocation, invest in index funds, then ignore the market for the next year. In a year, rebalance, then ignore it for another year. Repeat until something changes in your life that requires you to change your asset allocation.

tmcc
Posts: 232
Joined: Tue Feb 06, 2018 6:38 pm

Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by tmcc » Tue Jan 15, 2019 12:44 pm

lassevirensghost wrote:
Tue Jan 15, 2019 10:36 am
tmcc wrote:
Mon Jan 14, 2019 8:50 pm
investing and gambling are synonymous.

I [invested / gambled] on this house

I [invested / gambled] on this index fund

I [invested / gambled] on buying a business

when people here say "gamble" , it is uniformly part of a rationalization.
So you truly think there is no way to discern risk? Then I assume you have tons of leverage on bitcoin right now?
Risk is a quantification (perceived or calculated) that mentally helps you rationalize the qualitative difference between gambling and investing. The two are identical in nature. To that end, word choice is a matter of hindsight. I can't indulge in picking apart the idiocy that separates the two words in this conversation but I certainly enjoy the ridiculous amount of bias at a personal level.

"I didn't gamble when I shorted the euro, I invested in strength of dollars."

ok

michaeljc70
Posts: 4389
Joined: Thu Oct 15, 2015 3:53 pm

Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by michaeljc70 » Tue Jan 15, 2019 12:55 pm

Go to a simple (3 or 4 fund) index portfolio and don't buy anything else. That is what I did. It works. It isn't that hard. I've bought all kinds of things over the years: stocks, options, individual distressed bonds, leveraged ETFs, etc. I did very well on some, horrible on other things. The 3 fund portfolio greatly reduced stress and more than likely provides me with a higher rate of return due to no rash/emotional decisions.

Another option is to do the same as above (3 or 4 fund index portfolio) but allocate a small portion of your portfolio (no more than 10% I would say) to play around with. I'd keep that in a separate account to reduce the temptation to "borrow" from the other part of the portfolio.

Whakamole
Posts: 873
Joined: Wed Jan 13, 2016 9:59 pm

Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by Whakamole » Tue Jan 15, 2019 1:13 pm

I'm not a follower of OddStats, but this just went up yesterday. He lost a significant amount of money by daytrading, not at first, but eventually his luck ran out.

https://twitter.com/OddStats/status/1084900171836604416

afan
Posts: 3980
Joined: Sun Jul 25, 2010 4:01 pm

Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by afan » Tue Jan 15, 2019 1:38 pm

I have heard of bitcoin and I remember the excitement when the price went up.
I have no idea what may be the current hot stocks.
I don't pay attention to sources that would tell me what is going up or going down right now. I don't care. There will always be hot stocks and cold stocks. So what? Knowing which ones they may be at any given moment is of no use to me. So I don't seek out that information and I don't attend to it when it comes up.

I watch CNBC for the business and financial news. But I tune out of the stock picking discussions so thoroughly that I have no idea what the latest hot stocks might be. So no temptation.

If you find yourself paying too much attention to stock tips, I suggest you separate yourself from them. Stop watching Cramer. Stop reading the WSJ and Barrons. Stop looking for stock tips online.

If you cannot ignore this noise, then stop looking at it at all.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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DanMahowny
Posts: 608
Joined: Sun Aug 06, 2017 8:25 pm

Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by DanMahowny » Tue Jan 15, 2019 1:48 pm

My investing career started 25 years ago when I purchased a "hot" stock. It was sure to "go up forever", everyone said.

I bought 200 shares at $28 p/shr.

Later sold at $0.34 per share.

It was a valuable lesson. One I'll never forget when I hear about a "hot" stock.
Funding secured

garlandwhizzer
Posts: 2160
Joined: Fri Aug 06, 2010 3:42 pm

Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by garlandwhizzer » Tue Jan 15, 2019 4:46 pm

A burnt hand is the best teacher about the dangers of fire. Once you lose substantial wealth in a get rich quick strategy your enthusiasm for such products in the future should disappear. If you don't learn from grievous mistakes, investing and for that matter life itself is likely to be a long and difficult road. I am speaking from experience on the issue of hot stocks which no longer attract me.

Garland Whizzer

bloom2708
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Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: How to avoid temptation to buy hot stocks or bitcoin?

Post by bloom2708 » Tue Jan 15, 2019 5:12 pm

Practice makes perfect. Bart Simpson style:

I will not buy individual stocks, bitcoin or other things I do not understand.
I will not buy individual stocks, bitcoin or other things I do not understand.
I will not buy individual stocks, bitcoin or other things I do not understand.
I will not buy individual stocks, bitcoin or other things I do not understand.
"A Stoic believes they don’t control the world around them, only how they respond--and that they must always respond with courage, temperance, wisdom, and justice." --Daily Stoic

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