Fear is expensive.
We’ve all heard the drill. Buy low, sell high. Easy advice, right? In practice it is nearly impossible. Most people walk in hoping their money works for them. Instead they lose it. Why?
Suze Orman laid it out on her podcast “Suze School.” She didn’t sugarcoat it. These are the traps dragging investors down.
Chasing Safety (Or: Letting Fear Drive)
Risk scares you. It’s supposed to.
Picture this: You dig deep. You find a stock with genuine upside. The logic checks out. Then doubt creeps in. What if it tanks? So you sit on your hands. Watch and wait.
The stock soars. Exactly as predicted.
Now you feel like an idiot. Orman calls this the cardinal sin. Decisions rooted in fear rather than fact. She saw it constantly when she was a broker. Clients split into two tribes: those who held their nerve regardless of noise, and those who fled at the first hint of red.
The second group suffers from myopic loss aversion (MLA). Short attention spans. Long pain. They focus on the immediate dip instead of the decade-long arc. Orman watched them sell too soon. Miss the recovery. Leave profits on the table.
Look at the math. A DALBAR study showed investors with $100k in the S&P 500 for 2023 who actually held through the turbulence earned $26,288 in gains. Total portfolio: $126,288.
Impressive. But notice the requirement. You had to sit still.
The clients who trusted their original research made far more than the panic-sellers. Orman suggests reframing. Don’t see risk as a threat to your survival. See it as the cost of entry.
“Transforming your fear can help you hold… and gain more profits.”
Easy to say. Harder to do.
Anchoring to the Past
Have you ever sold a winning trade just because you missed the peak?
It happens. You buy a stock for $10. It climbs to $50. You’re smiling. The account balance looks beautiful. Then gravity remembers its job. The stock drops to $20.
You panic. You feel like you’re losing money. After all you had $50 more. Now you only have $20 more.
But wait.
Check the base line. You bought it for $10. You sell at $20.
You still doubled your money. The extra $30 in gains is gone, sure. But your capital? Intact and up 100%.
Orman says comparing current value to peak value is madness. Compare it to what you paid. Phantom losses aren’t real losses. They are ego bruises. Heal the bruise. Keep the cash.
The Lump-Sum Trap
Dumping everything in at once is reckless.
Everyone wants the lump sum return. It feels efficient. Do it all today, then sleep easy. But the market does not care about your schedule. If you invest everything and the price crashes tomorrow, you’re stuck.
Enter Dollar-cost averaging (DCA). Orman calls this her most important rule.
Invest a fixed amount at regular intervals. Spread it out. When prices drop, you buy more shares for the same dollar. When they rise, you buy fewer. The average cost smooths out over time.
Fidelity ran a scenario with $5,000 to prove the point.
1. Lump sum: Buy when stock is $20. Result? 250 shares.
2. DCA: Spread $5,000 over 5 months while price fluctuated between $18-$21. Result? 253.4 shares.
Three and a half more shares. Just for being patient.
It’s not about timing the bottom. That’s a fairy tale. It’s about removing emotion from the timing. Let the strategy handle the volatility.
Patience is boring. Boring makes money.
