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Economy , Investing , Personal Development

Are You Creating Risk By Following Others?

August 9, 2016

How Do We Do What We Want to Do

Yeah, I know… that sounds like some philosophical question that can’t be answered.

Really, what I am asking is: How do we get courage to do what is right.

Usually we have a gut feeling that we are too afraid to act on. We too often make decisions on what the crowd is doing, instead of following what we think is right.

There are all kinds of reasons for this… we evolved to survive, and staying in a pack is safe.But what if that pack is doing something really dumb? Do we still stick with them?

Of course not. We should stray off and follow our gut feelings.

That brings me to your opinions of:

Donald Trump, Hillary Clinton, Russia, North Korea, immigration and marijuana.

I’d be willing to guess that you have a distinct position on each of the above.

But how did you form that opinion? Did you go meet those people? Travel to those places? Really sit down and look at the facts?

It’s extremely hard to take an opinion that is opposite of the crowd.

And it’s even harder to change your position once you have made one.A good friend of mine, who is a US Congressman, told me:

“You know, the frustrating thing about being a politician? Once you hold a stance about something, you can never change your mind. I was in congress for many years, over which time I had learned and matured a lot. I changed my mind about several topics. That’s what happens when you learn new facts and new information. But, don’t tell the public that! You’re a traitor!”

I know I’ve changed my opinion on all sorts of stuff… I’ve argued one side, to later change my mind and join the other side. I probably look like I’m unsure about what I think. But maybe it’s just that I am learning new things?

Anyway… there is a point to why I bring this up.

It’s about how you are pursuing investments. Where you are looking and what you are actually spending your resources on.

In the next 12-24 months, I believe we’ll see a huge amount of highly disproportioned investment opportunities. That means there will be huge money making trades that don’t take much money – you can make a lot of dough with little risk!

The risk is if you are following others.

To minimize your risk, I wrote a quick article about option liquidity.

I’ll admit it… it’s really boring. So, I would recommend that you skip reading it all together…

BUT… if you are interested in minimizing your risk in investing, at increasing your odds of doing well on making a trade, and are truly intent on increasing your wealth, then you should read this.

A last note: There are record long bets on the Dow and Nasdaq and VIX. That means that there is a record number of people betting that the stock market will go higher and see less volatility in the future. As a contrarian trader, this should be ringing bells in your head.