One of my favorite parts about trading and investing is that to do it successfully requires a collection of skills that truly challenge the mind and soul.
Because in one sense, understanding the technical information and nuances of a trade are usually easy enough to do. For example, it doesn’t take an MBA or PhD to look at the financials of the U.S. government and realize the system is on borrowed time.
However that’s where the mental will and determination come into play.
Because while it can be easy enough to see how some situations must resolve in the long-term, sitting and waiting patiently can be the real challenge. The rest of the market doesn’t always realize the same things at the same time you do. Which often means that in the process of being right, you can see your position get destroyed in the short to medium term.
Certainly the current investing environment is no exception. For example, following the Federal Reserve’s quantitative easing policy after the last crash, it made a lot of sense to buy gold and silver. Yet due to the manipulation in those markets, what seemingly must occur has yet to be priced in.
As a result, many have been (in my opinion) correct in their analysis, yet have given up before their trade has paid off. Which is understandable. Yet at the same time, the conditions in the dollar and U.S. government system that led many to buy precious metals are more exacerbated than ever. While the evidence that the metals remain suppressed due to manipulation that cannot continue forever continues to emerge.
So much like watching our posture, part of the challenge is just remembering to be consistent in what we do and believe. If you find new information that changes your original assumptions, then by all means you should incorporate that.
But in my experience, being patient when the market requires it and adjusting to conditions is what really separates those who succeed in investing from those who don’t.
The current market is challenging those assumptions, perhaps more than any time in history. Yet I continue to believe that those who balance what they know with confidence and patience will be duly rewarded in the long-term.
February 22, 2018