Green Thumb vs. Brown Thumb Investors

Have you ever noticed how some people make a lot of money from investing while others do not? There are some individuals who are like "master gardeners" when it comes to their portfolios.  They have a "green thumb" for picking stocks, bonds, mutual funds etc.  Where they put their money it grows.  On the other hand, there are individuals who are the opposite. These people have a "brown thumb" for picking stocks, bonds, mutual funds etc.  In my line of work, I hear from individuals who fall into each category but especially the latter.  So what is the difference between "green thumb" and "brown thumb" investors?  Here is what I have noticed.

Green Thumb individuals are long-term investors, who are not looking for a quick profit.  They buy quality investments and hold them.  During market downturns, they stay calm, look for opportunities, and in many cases put more money into their current investments while the price is low.  Green Thumb individuals diversify their investments.  They do not put their "eggs in one basket". Finally, Green Thumb investors stay on top of their holdings, reviews their statements, educate themselves and seek professional guidance if needed.

Brown Thumb individuals are not long-term investors. They are constantly buying and selling hoping to make a quick profit. They buy speculative or "hot" stocks that "can't miss".   During market downturns, they panic, sell everything, and sit in cash refusing to take advantage of low price buying opportunities.  A Brown Thumb investor's portfolio is rarely diversified and often sector heavy. Finally, a Brown Thumb investor rarely checks their holdings, reviews their statements, and insists they know everything about investing.

Investing money takes time, patience, understanding, and discipline.  If you want to be a Green Thumb investor, you will have to develop the character of this type of individual.  There are plenty of resources including plenty of financial professional who are willing to help you develop that Green Thumb.