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Originally Posted by DaFace
Relatedly, my worry is that we have an entire "generation" of "investors" who have learned that fundamentals don't matter and that big risks are better than sound strategy. That works somewhat in a long-term bull market, but if things go south, the first things that go with it are going to be those risky investments.
I'm rooting for the AMC guys, but a stock like that is always potentially 24 hours away from dropping into the single digits.
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Yes and No. This happens with every extended bull market. Happened in the dot.com crash too. New investors riding the gambling wave while making money. Seems pretty easy until it's not. Retail investors without risk management strategies will get crushed. Lots of lessons are learned this way but it is amazing that people don't study the past to avoid the same mistakes.
I find it fascinating when people have a stock that is currently down significantly for them, say 20%+. They continue to convince themselves that it's only temporary. Meanwhile the stock market indexes are setting new highs. If you are holding a stock that is doing poorly in a bull market, what do you think will happen in a correction? Does it have a chance to go back up? Sure. But the percentages say it's a losing position this far into a bull market.
And most new investors pay no attention to the indexes, but what they really should be doing is comparing their gains TO the index. If after 3-6 months you aren't beating the index in a bull market, you need to re-evaluate what you're doing because passive investing would have gotten you further ahead.