Over the decades, I have seen friends, relatives, and acquaintances lose their entire investment portfolios due to stock market crashes. Some of these folks, along with many, many other investors, gave in to fear and sold at the worst time in the markets. In truth, the human nature pushes most investors to follow the greed to buy high, then succumb to fear, and finally sell low.
If you need some proof that investors will almost always buy at the wrong time, consider the ARK Investments ETFs. Investors piled into the Cathie Wood-managed ETFs after ARK’s flagship fund, ARK Innovation ETF (ARKK), gained 152% in 2020. ARK funds under management increased by 900% in 2021. For all that newly invested money, ARKK peaked in February and is now down 24% from that high. Individual investors piled into these funds just before the peak and are now facing significant losses in ETFs they thought would make them rich.
ARK, and others, are why I like to stick with dividend stocks: you get paid your dividends and once the money is in your account it’s yours too keep.
This article originally appeared at Investors Alley.