Tuesday, October 28, 2008

Always Leave em feeling Upset about what they Did, or Didn't Do.




There seems to be a natural tendency of the Financial Markets to preoccupy investors with the regret of past investment decisions. The Market will Always Leave many people feeling Upset about what they Did or Didn't Do. This Psychological burden is powerful if you let it trap you.

The Hindsight Bias and being able to see exactly what happened to your investment ideas you did not go through with, or actual investments you did not cut losses or take profits on, can create tremendous problems for traders.

Using the gift and curse of Hindsight I now realize The Market does not preoccupy investors and traders. Investors and Traders preoccupy themselves with these regrets. I was not being completely objective, and speaking from my own subjective view. Warren Buffett says "The Market is there to serve you, not to instruct you". The market is a 24-7 all you can eat Vegas Buffet. It is not your drill Sergent, dictator and decision maker. The market is a mirror of your mind, and what you are feeling inside. Its not a scary market. You are Scared.

If you allow the market to upset you about what you DID DO or DID NOT DO you cannot objectively observe the market in the present tense. Allowing feelings of past mistakes, losses, frustration, and failures into the present tense creates negative energy and a downward spiral of doom. Don't go there.

3 comments:

aznsensation said...

What the hell are you talking about exactly?

Anonymous said...

Aznsensation...

Please dont question my number 1 student!

I trust Ray with my wife! Hell two of my kids are his!

Tom Smith ESQ, CPA, MBA, CFA, CFP, ChFC, CLU, DO, MD, DDS, PhD

Ray Modad said...

I am saying that we make our own reality. What we are living seems as if its the only way to live, because it is the only way we know how. This is based on the environment we were born into (nature) our unique socialization (society) and most importantly ourselves (psychology).

So The markets can't actually leave us feeling upset. We have these feelings within our selves based on our interpretation of the market and our feelings of past experiences.

When writing the post I realized that the markets can't leave people feeling upset. People Leave themselves feeling upset. The Markets simply offer price information and we all interpret it for ourselves. Even though it seems that the market causes these feelings, it does not.

When examining the sentence I wrote using Hindsight, it was very clear to me that we cause these problems for ourselves. We charge the market information going for our positions with greed and that against us with fear.

The market cannot determine this. We choose and create our reality in Life and in everything we do. Consciously or Not. That's my main point.