Whether Investing or Politics there are multiple layers of processing of what we “see, feel and hear”.
- Level 1) Emotions – This has kept us alive as a species over time: This is our “fight or flight” instinct. It is real and we have to pay attention. In the market however, we need to train ourselves to use it in a counterintuitive way. That is easy to process intellectually but difficult to do in the heat of the moment.
- Level 2) Logic & Facts – In today’s world we cannot depend on what we “see, feel and hear” so we must move past Level 1) Emotions, and use our critical thinking skills. This involves processing data and facts from a 360-degree perspective. From this we can draw a practical path forward – or retreat. Without Level 2) Logic & Facts, we are blowing whichever way the “wind blows”.
- Level 3) Understand Who might be trying to manipulate our emotions, why and to what end. Negative or positive blogs, media, short sellers, all use “Yellow Journalism” as we used to call it. Now it is called “Fake News”.
You Are a Hunter/Gather – Be Aware that in the Market, Someone, is Hunting You
No, this is not political – this is basic value investing. Once you adapt this attitude, you can better position yourself to be where the market is going, rather than “blowing with the wind”. Do not get caught up in the emotion of the market but rather analyze the facts – imagine where a stock valuation might be six to twelve months in the future in a normal market environment for its industry. Combine Fundamental Valuation with Technical Analysis for your buying, selling and commitment to a position. Every big move up or down, will have a shake-out move to scare weak holders into selling, before the big move higher.
Where Value meets Buy Signals
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