This morning has me driving through the desert in that really big truck I mentioned yesterday, so I don’t have a bead on the market just yet, but I will later on. No matter, what I have to say is not immediately important to the market anyway, but it is important to your understanding of who you are as market player. First, though, I want to out some good juju to the SEC in the hopes that it can take one giant step to correcting a major piece of corruption in the market and, maybe, make those responsible pay for their misdeeds.
- A federal judge has made a tentative ruling that would let the U.S. government pursue its $5 billion civil lawsuit accusing Standard & Poor’s of defrauding investors by inflating credit ratings prior to the financial crisis.
Now that I have my “fit” out of the way, let me give you folks some food for thought about market mindset and behavior. Full disclosure tells me to tell you the following comes from David Moenning’s writing in his daily piece, “State of the Market.” No matter, though, because his eloquence on the topics below is time-honored advice for market players.
- Now let me ask you … How many of you thought the market would turn on a dime on June 24th? With interest rates spiking to new highs, stock prices breaking down, and the fast money crowd yammering on about tapering being the same thing as the Fed actually raising rates?
The above is why I like this man as a writer and an analyst. He says it like it is, simply and directly, a style akin to my own thinking and writing. He was right about the market back then, he says so, and he punctuates his correctness with the implied advice one need not pay attention to “the man behind the curtain.” Follow your own lights when studying the market.
- There are three keys to getting the big moves right the vast majority of the time:
A. Having a system/strategy designed to keep you on the right side of the markets meaningful moves.
B. Having a thorough understanding of the plusses and minuses of your system/strategy.
C. Sticking to it when things don’t go your way.
Yup, I have been writing this for years. Define, develop, and then stick to a strategic plan. Make it your own, and make sure you understand and accept that you will lose from time to time and always keep in mind the goal is not to win every time, but to win more than you lose.
- Contrary to what the geniuses on the financial channels and the internet websites will tell you, truly successful investors look “dumb” all the time. Yet if their “dumb” moves are smaller than their “smart” moves, and this formula can repeat on a consistent basis – boom, you’re in business!
Yup, to the point simply and directly as he is with the advice below.
- I think you’ll agree that “letting your winners run and cutting your losses short” is still a pretty good way to play this game.
Finally, his closing words are more or less my thinking on this subject. Making money in the market is not nearly as difficult as many portray it to be. Even with the uneven playing field, the corruption, and the high-speed, algorithmic trading, one can still make a nice return on one’s money, especially if one is not greedy or fearful.
- My advice to each and every investor out there is the same. Identify what it is that you do and stick to it. My guess is that you will absolutely, positively look “dumb” at times. Yet, if you do indeed stick to it, you will sleep better at night and be quite happy with your bottom line at the end of most years. And perhaps most importantly, when someone asks you if you got into the latest and greatest hot-dot trade, you can respond, “It’s not what I do.”
So, take David Moenning’s advice and mine, if you want to be successful. Find your way and stick to it. Don’t chase the screaming voices telling you what you should do and when.
Trade in the day; Invest in your life …
