If you're a 'retail' investor (the term professional investors use, often condescendingly, to describe ordinary people investing in the stock market), you could be forgiven for wondering if everything you've ever learned about investing has been turned upside down.

Some thoughts you may have had in recent months:

• Let me get this straight. A currency created as a joke and that you can't buy anything with has run up 500% in the first few months of the year?
• So wait. Shares of bankrupt companies, where there's a 99% chance shareholders will be wiped out entirely, are trading in positive territory, and even having big daily rallies?
• Now hold on--this hoodie sold for $26,000 because . . . because non-fungible token?
• Somebody sold a pixel--a pixel!--for how much now?
• An electric car manufacturer--no, not that one; it's one you've probably never heard of--is trading at a price/sales ratio of 10,000?

Perhaps being cooped up for so long has made us collectively crazy. Maybe some of this is just fads cycling in and out; maybe some of it is people at home bored in front of their computers and doing stupid things with their money. 

Whatever the reason these things are happening, your reaction should be to simply look on, bemused; resist that fear-of-missing-out (FOMO) feeling, and keep doing what you've been doing (assuming you've been saving and investing to the best of your ability).

Image Source: Pixabay

Winning Isn't Everything--But It's Not That Hard

Maybe free trading commissions are partially to blame for this madness. But just because something is free doesn't mean you need it or should want it.

In fact, trading, while it may feel like you're 'doing something,' is generally detrimental to your results. You don't want to be a trader; you want to be an investor.

And being an investor means choosing a course and sticking with it. It doesn't mean chasing down the latest fads or hot tips. And it means tempering FOMO.

These are different rules than those of your fantasy football league. With that, you might be churning through trades all the time, scrambling to move a player that didn't do as well as you'd hoped one Sunday, only to see him do great for a rival team the next week. In such a scenario, you bear the brunt of your friends' trash talking. Meanwhile, your retirement could bear the brunt of haphazard stock trading.  The stakes with the latter are just a whole lot higher.

Your 'competition' in investing, such as it is, is not your friends, family, or neighbors. It's invisible, but it's always with us. It's the passing of time.

This is why you always read about saving early and saving often. It's also why in recent years legislation has been enacted to allow older people to contribute more to their IRAs than younger people can. That's for people who let time get away from them. It's easy to do.

Forget about trying to catch the next Tesla or other hot opportunity on the way up. Focus instead on saving and investing more, immediately and consistently, in funds with low fees. The financial planning application WealthTrace shows that doing this can give a person hundreds of thousands of dollars more by retirement.

If You Can't Beat Them . . . But Actually You *Can* Beat Them

We have a lot of history and a lot of data trying to give us a very simple message. Human nature being what it is, we sometimes ignore that message. We get lured away by shiny distractions, sometimes briefly, sometimes for quite a while. But in the end the original message is the one we always come back to:

Invest as much of your money as possible in low-cost index funds, through thick and thin, rebalancing from time to time.

Can that really be all there is to it?

Over a year, or five, or even 10, you'll get 'beaten' by your friend's cousin who, say, bought Dogecoin on a lark, or had a Robinhood day-trading winning streak for a few months. But almost invariably, those short-term gains turn to pain, as the participants try to find the next big thing--and fail. It's simply too hard to get short-term trading right over the long haul.

The way to wealth--real wealth, not the equivalent of gambling winnings--is the way you get better at most anything. Practice it, stick to it, and keep at it, even when things look hopeless.

That last bit is really important. When the sky is falling like it was a little over a year ago, it's tempting to run and take cover. But running for cover--by which we mean stopping making regular investments, or, worse, selling investments in a panic--will very likely do long-lasting damage to your portfolio. Buying when there's blood in the streets (figuratively speaking, hopefully) is almost always a sure way to outperform those who panic.

As an individual investor, you actually have advantages the pros--active portfolio managers--do not. You may not have access to a Bloomberg terminal or investor relations contacts on speed dial. But you have the ability to stay the course, which active managers sometimes don't.

Say you're a mutual fund manager when a bear market hits. You have seen this movie before--you know you just need to sit tight and ride it out, and even make some strategic purchases if certain holdings get cheap enough.

The trouble is, you can't. You have panicked investors making redemptions--that is, they want out. They want their money back. So you have to sell stocks--maybe stocks you really like and would like to buy more of--at exactly the wrong time so you can fulfill the redemption requests.

That's a greatly simplified example of what can happen, but variations on it do happen to professional money managers all the time. It's one reason why so few mutual funds beat the indexes they're best matched to. Some funds do beat their indexes, of course, but very few. Do you think you are going to be able to pick the right 10% or so of the thousands upon thousands of mutual funds that beat their indexes over 15- or 20-year periods?

Nothing New Under The Sun

There will be further distractions, fads, and manias that we cannot even conceive of right now. Quick fortunes will be made, and it might be tough to watch from the sidelines. But the risk is simply too great that, in what is often basically a game of musical chairs, your chair will disappear--and with it a good chunk of retirement change. Stick to what you know and what has always worked over time; get wealthy slowly; and look on, smugly if you must, at the folly of your investing peers.