Talk about information overload…
There’s so much news and data, so many opinions about events and data points, so many financial publications, so many shows, so many stocks, mutual funds, ETFs, futures, options, derivatives, so many opposing points of views about everything, it’s enough to make your head explode and your investing comfort level implode.
Most people tend towards like-minded analysts and economic analysis that confirms what they’re seeing and thinking. There’s a kind of comfort zone there, where “We’re in this together and if we’re wrong, well, I wasn’t alone; but if we’re right, boy am I smart.”
Then there are the “skittish” investors who think they know what they’re doing – that is, until they hear a different opinion from someone, anyone, they think has a leg up on them. And what do they do then? They usually ask, “Really?” Meaning, “Do you know something I don’t know?” Chances are, at that point, they are going to panic.
And, of course, there are those investors who know they are right, and stick by their convictions and positions all the way to, well, you know where.
Maybe you’ve been there.
I was there myself when I started trading professionally on the floor of the Chicago Board of Options Exchange in 1982.
But I quickly distanced myself from all the noise that distracted me from being a successful trader.
There is no magic bullet to being a successful investor; that’s the bad news. The good news is that it’s a lot simpler that everyone makes it out to be.
Here are the four most important trading lessons I have learned.
It’s not even New Year’s Eve yet, and I’m already thinking about hangovers.
(Not mine, of course. I don’t drink any more these days. Then again, I don’t drink any less, either.)
Today I’m thinking about how the world is going to look and feel in the coming year, how the markets might react to likely events, and what might be shining over the investing horizon in 2012.
No matter how optimistic my nature is, and how hopeful I am that global issues will be addressed and eventually fixed, the truth is that it’s always darkest before the dawn.
Another way of saying that is, if you’re going to drink to excess, you’re going to suffer with a hangover. And the more you drink – and especially if you mix your drinks – the more likely it is you’re going to suffer the ill effects of too much indulgence. (At least that’s what I’ve heard.)
Is that some kind of metaphor, you ask? Of course it is – have you been drinking?
Why this “hangover” is here to stay…
In yet another sign that markets are broken, yesterday’s huge market advance came on the heels of two presumably separate (yeah, right) central bank moves.
Both were designed to add liquidity and support to shaky and dangerously deteriorating markets.
(That was good news?)
First, China lowered the reserve ratio its banks have to hold against loans they make. They didn’t do that because things over there are rosy. They did it because the property market is teetering and financing has been drying up.
Full story here…