What is the 90% rule in stocks?

The 90% rule in stocks refers to a statistical phenomenon and a strategy in investing: 1. **Statistical Phenomenon**: The Rule of 90 suggests that a high percentage of new traders—approximately 90%—will lose 90% of their initial capital within the first 90 days of trading. This stark statistic highlights the challenges and risks associated with trading in financial markets. 2. **Investing Strategy**: The 90/10 investment rule, inspired by Warren Buffett's advice, is a strategy for constructing a portfolio. It recommends allocating 90% of one's assets into a low-cost S&P 500 index fund and the remaining 10% into short-term government bonds. This strategy aims to minimize management fees while benefiting from the long-term performance of the American economy. In conclusion, the 90% rule in stocks serves as both a cautionary statistic for traders and an investment strategy for investors looking to manage risk and optimize their portfolios.