Investing. The Mental War Game
Hold this thought. Most market players have access to the same information, making the prize money extra rewarding if you have a different way of thinking. That’s how to get an edge on the next guy, but in a world of instant communication and virality, it’s no walk in the park!
We all have irrationality in our make-up, and a plummeting or soaring investment can easily bring it out of us. Not even super-investors are immune from bias, because we have no absolute mental measuring scale for what’s out there. All out judgement is done on contrast and feel, which risks us being catapulted into seeing patterns that aren’t there, into oversimplifying things, or overcomplicating things, and even believing “the billionaires can never be wrong”. Oh, yes they can!
All is not lost, however. Some respected investors have a cure of their own. Warren Buffett, for example, chose a life in quiet Omaha where he can’t be sucked into Wall Street frenzies. There, he watches and waits, making different decisions to make him different returns to the rest of us. If moving house is a little OTT for your liking, you could always just invest in a pair of earmuffs!
It’s you versus yourself. Get one step ahead of your cognitive pitfalls by having vicious bulls and bears tell you everything wrong with your trades, with their bias against you. It’s a bitter pill, but it’s a lucrative one. Conversely, if some says your strategy is ‘fantastic’, don’t get cocky. Double-check your arguments. Explain your own logic back to yourself, and keep your stock ideas secret from friends and family. Shouting it out is drumming it in!
So, be a stock market detective. Be an invest-igator, never letting your guard down against warped thinking. As long as you’re trying, you’ll do better than 99% of other investors!