ROCHESTER, N.Y. (WROC) — Are you a gambler or a long-term investor?
CPA Garrett Wagner said that’s a critical consideration when trying to make money in the stock market.
Wagner discussed the lessons of the GameStop stock surge Thursday during News 8 at Sunrise.
“Everyone loves the opportunity to make a bunch of money, especially when they’re not working, but that’s the risk with the market,” he said. “Anytime you invest in the market there’s a risk that you can lose it all. Yeah, you can make money like some people did with GameStop but a lot of people lost money in GameStop once that stock came back down. So one of the big takeaways from this – it sounds great when you get caught up in that frenzy but don’t invest in the market if you’re not prepared to lose it all.”
Wagner said knowing your tolerance for risk is crucial before investing any of your money. “Are you someone who just wants to play around with a little bit of money – you’ve got a couple of hundred bucks or a couple of thousand bucks and you just want to play in the market and be a gambler – or are you someone who is looking for long-term success? This is your retirement. This is your future and your life and you can’t afford to lose it. Those are very different risk profiles – the gambler versus the long-term saver.”
Timing the market to capture financial gains from a surge in stock price, like GameStop, is very difficult. If your timing is off, it can result in financial losses. “Most statistics out there will tell you around 99.99 percent of people do not beat the market,” Wagner said. “That’s why there are so many mutual funds and diversified portfolios nowadays. Long-term it’s virtually impossible to beat the market. You can be one of the lucky few that does it on a day or a week, but it’s very, very hard to do it consistently over time.”
If you’re looking to get into the market, a trusted CPA can be a great resource for information. But Wagner said you won’t get advice on what stocks to pick. “CPAs can always help people understand how to make good financial decisions and understand what’s happening. We cannot legally give investment advice but we can help people understand what’s going on and know where to start and whether they want to take risks or plan for the future.”