The recent $GME short squeeze and the associated frenzy of activity with novice investors shoveling their money into GameStop, AMC, BlackBerry, and other struggling businesses was a stark reminder of how important creating an investor policy statement is for retail investors.
An investor policy statement does not need to be complicated. In fact, I prefer the simple one-page version I now rely on because I can print it out and use it as a quick reference whenever I start to feel FOMO creeping up on me. Using this technique ultimately saved me from myself recently and I avoided buying $GME during the peak of the mania and getting left holding the bag when the inevitable sell-off happened. The controversial trading halts placed by multiple brokerage platforms on the hot meme stocks had no impact on me because I stayed out of it. This strategy also kept me out of trouble with the crypto bubble a couple of years ago. (Seriously, I had Coinbase ready to go before I deferred to my policy statement, which was written by my more rational self and decided to walk away.)
