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Saturday, February 13, 2010

Week in Review: Waxing Philosophic on the Power of Perception (PODCAST)

"When you're right long enough, eventually they'll start paying attention." - Amory Lovins

Welcome to the Week in Review!

You know, for a long time I could not understand why certain individuals just ate up what I refer to as "fear" websites, authors and pundits. Sites that screamed, panted and were nearly epileptic on the "coming doom of hyperinflation!" I always thought to myself ... "Well ... when that doesn't come to pass, they'll obviously lose their audience"

The funny thing is? That when their predictions and prophecies utterly failed? People became even more devoted to their chosen pundit.

As I review the capital markets in the following "Week in Review" podcast, I wax philosophic on this 'power of perception' that so many fall victim to ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)

Click here to Download this Podcast.

It just floors me that such pundits gain their audience, not based on this little thing we call ... "reality", or making money. I suppose for some time, I have been naive, and thought that people came to the industry of finance, because they wanted to make money. But so many of these pundits gain their audience, because the audience wants to be sold abject and complete fear. Their audience does not want to make money. They want to be fearful. Or they want to be angry. I suppose it was that comment by "Reformed Broker" Joshua Brown the other day at the Happy Hour show that really reminded me of that fact, when both he and Anthony mentioned "Hey, but that's what their audience really wants"

And lord knows I've made my mistakes. I, like many market professionals, spent the first two quarters of 2009 waiting for the pullback that never came. But as I've often said, you can often determine who is truly trading profitably, because that individual will discuss their mistakes.

Why? Is it simply that real traders are more honesty folks? Not necessarily. I've met many dishonest, profitable traders in my 13 years around this industry. But a real trader understands that it is profitable to quickly identify wrong calls about the market, and to correct those mistakes. Therefore, genuine traders have no problem saying:

"Yeah, that market ripped me to pieces" because they understand that their continued profitability comes from understanding and identifying mistaken calls. What a real trader, a profitable trader will not do, is sit around and blame the Federal Reserve, or political regime for their wrong market decisions and calls.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have over 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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