Everyone wants to know when the stock market is going to tank -- and how high it's going to go just before it does. It would make getting rich a lot easier.
Even Wall Street experts don't know exactly what's ahead in the short run. But what they do know is how to position your investments to make the most money over time.
We talked to several strategists. And here are what they think are the top 4 mistakes investors are making at the moment -- and how to avoid them.
1. Not investing in stocks
You have to be in it to win it, as the old lottery adage goes. That's true of investing as well. Stocks offer the highest returns over many years.
The problem is a lot of people are scared of stocks after the dot com bust and the financial crisis that led to the Great Recession.
"This is the least beloved bull market of my career," says Robert Doll, chief equity strategist at Nuveen Asset Management. "People are being too cautious in an environment where stocks are the asset of choice."
Too many investors are sitting on the sidelines and keeping their money in cash -- which earns them nothing. Meanwhile, the S&P 500 has gained about 180% since the stock market hit its low point in March 2009.
Some people argue they are waiting for a correction to buy stocks. But it's just as difficult to know when a market has hit bottom as it is to predict when the bull market will end.
When prices are falling, it's easy to get skittish and avoid putting money into the market. Still, the best time to build positions for the long haul is when there are more bargains.
2. Investing in riskier assets
The second pitfall is that investors are putting too much money in long-term bonds and high-yield -- often called "junk" -- bonds.
It's been dubbed the "search for higher yield". Investors want more return for their money right now, but the question is at what cost?
"Investors are so interested in getting the additional yield that they're forgetting how much additional risk they're taking," says Kate Warne, investment strategist for Edward Jones.
"High yield" is Wall Street speak for "high risk." You get paid more because there's a greater chance that you won't get paid at all if a company or entity goes belly up. At the moment, the junk bond market is so hot that investors aren't even demanding much extra compensation for the risk they're taking on. That could come back to bite them.
Chris Philips, a senior strategist at Vanguard, notes that money going into higher risk assets has been higher than what's being invested in lower risk securities over the past 12 months.
3. Short-term thinking
Another "no no" is that investors have short memories. They tend to look at what did well last year -- or even last week -- and put their money into that instead of thinking about the future.
"Rear-view mirror investing is the greatest pitfall," says Jeffrey Rosenberg, a strategist at BlackRock who focuses on fixed income.
Consider that famed investor Warren Buffett isn't a day trader. He buys companies with the intention of holding them for awhile -- often years. Most investors are saving for retirement, buying a house or other long-term goals. They should have a similar mentality to Buffett.
4. Forgetting inflation
Both Rosenberg and Warne said investors believe that this current environment of low inflation period will stick around. That's not likely.
The economy will eventually pick up more momentum and that will lead to higher inflation. The Federal Reserve will have to raise rates as a result. Rate hikes could come as soon as next year.
"Many investors haven't lived through a Fed tightening cycle -- or don't remember," Rosenberg warns.
Once the Fed starts raising rates to keep inflation in check, many of the bonds that did well last year won't look as good.
Rising inflation will eat away at fixed-income returns. Over time, stocks are the best protection against inflation.
"Inflation really is one of the biggest risks for long-term investors," Warne says. "In many cases, people buying into bonds and not stocks don't realize that stocks are much better at protecting from inflation."
Sallie Krawcheck has long preached the financial benefits of gender diversity in Corporate America.
The former Wall Street executive is now putting her money where her mouth is.
On Wednesday, Krawcheck took a major stake in the first and only mutual fund in the U.S. that focuses on investing in companies with strong track records for advancing female leadership.
"While gender diversity is a nice-to-do, I have become convinced that gender diversity is MOREMatt Egan - Jun 4, 2014 12:47 PM ET
The legendary archer of Sherwood Forest is taking aim at the stock market. Robinhood is a new trading app that promises users free trades and no account minimums.
That's a big departure from the $7 to $10 fees per trade that other brokers which cater to the masses like E*Trade (ETFC) and Charles Schwab (SCHW) charge. These firms offer discounts from time to time, but only if a customer has a large account MOREHeather Long - May 17, 2014 8:36 AM ET
Sallie Krawcheck was one of the most powerful women on Wall Street before she left her job as president of wealth management at Bank of America (BAC) in 2009.
These days she's helping to promote diversity in finance through a network of 30,000 female professionals, known as 85 Broads. (Krawcheck plans to change the name, which refers to the address of Goldman Sachs' former headquarters.)
Speaking at an event hosted by the MOREBen Rooney - May 9, 2014 11:18 AM ET
Twitter is trending today on Wall Street, but for all the wrong reasons.
Shares of the social media site tumbled to a new low Tuesday, the first day that company insiders were allowed to sell the stock following the company's initial public offering.
The stock dropped 18%, sinking below $32 a share for the first time since Twitter (TWTR) began trading last November.
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Four things were made quite clear at a cocktail reception for Berkshire Hathaway shareholders Friday night at the Borsheims jewelry store in Omaha.
1. Berkshire investors absolutely adore Warren Buffett. (And Charlie Munger too.)
2. Few worry about what will happen to Berkshire after Buffett retires or succumbs to the same fate that lies ahead for all of us.
3. Even fewer shareholders seem willing to entertain the thought of selling their Berkshire stock MORE
Most people don't pick up Shakespeare's plays when they're looking for investing advice, but the Bard of Avon did write frequently about money matters.
Consider that the word "rich" appears more than 150 times in his plays. "Gold" gets over 200 mentions, and "debt" about 40.
There are even college courses on "Bardonomics" like Duke University's "Shakespeare and Financial Markets."
As the world celebrates the 450th birthday of English literature's leading man MOREHeather Long - Apr 26, 2014 9:00 AM ET
It should be another good year for the stock market. Not spectacular, but positive.
That's the general consensus among the investment strategists CNNMoney polled in a recent survey. See the full results here.
Of course, some were more bullish than others, and one was downright bearish.
Gary Flam, a portfolio manager at Bel Air Investment Advisors, had the lowest target for the S&P 500 among the 26 investment professionals in CNNMoney's survey. He MOREBen Rooney - Apr 8, 2014 8:38 AM ET
Worrying economic data out of China had raised expectations in recent weeks that Beijing would respond with stimulus measures in an effort to stabilize growth.
The State Council obliged late Wednesday, announcing a slate of new measures including railway and urban redevelopment projects, along with a tax break for small businesses.
Market reaction on Thursday was muted. After an initial boost, the Shanghai Composite ended the day in negative territory. Hong Kong's Hang Seng was little changed.
There are MORECharles Riley - Apr 2, 2014 11:16 PM ET
Investors spooked by a slowing Chinese economy last week pulled $1.5 billion out of Chinese equity funds tracked by EPFR Global -- the largest amount ever for this time of year.
The Boston-based fund tracker attributed the decline to worries over the Chinese government's ability to shore up the economy and implement promised reforms without triggering a dramatic deceleration.
China's top leaders have pledged financial reforms that would give market forces more influence MORESophia Yan - Mar 24, 2014 2:37 AM ET
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