You can't control whether the stocks or funds you buy will outperform the market today, next week, this month, or this year; in the short run, your returns will always be hostage to Mr. Market and his whims.
But you can control:
- your brokerage costs, by trading rarely, patiently and cheaply.
- your ownership costs, by refusing to buy mutual funds with excessive annual expenses.
- your expectations, by using realism, not fantasy, to forecast your returns.
- your risk, by deciding how much of your total assets to put at hazard in the stock market, by diversifying, and by rebalancing.
- your tax bills, by holding stokcs for at least one year and, whenever possible, for at least five years, to lower your captal-gains liability.
- and, most of all, your own behaviour.
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