The coronavirus currently has the world on edge.
There’s no telling when the carnage in the market will end, but one thing I’m sure of is that it–the market–will eventually recover like it always does.
To be very clear, I’m not calling for a bottom, I’m just helping you see the broader picture —remember the lessons from 2007–2009.
That said, in this post, I’d like to share quotes from The Intelligent Investor which I found interesting and especially relevant in these troubled times.
#1. – The longer the bull market lasts the more severely investors will be affected with amnesia; after five years or so, many people no longer believe that bear markets are possible.
#2. – Those who do not remember the past are condemned to repeat it.
#3. – But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.
#4. – The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.
#5. – On the other hand, investing is a unique kind of casino—one where you cannot lose in the end, so long as you play only by the rules that put the odds squarely in your favor.
#6. – You must deliberately protect yourself against serious losses.
#7. – The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The Intelligent Investor is a realist who sells to optimists and buys from pessimists.
#8. – You will be much more in control, if you realize how much you are not in control.
#9. – While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it almost invariably leads to disaster.
#10. – With every new wave of optimism or pessimism, we are ready to abandon history and time-tested principles, but we cling tenaciously and unquestioningly to our prejudices.
#11. – Many skeptics, it is true, are inclined to dismiss the whole procedure [chart reading] as akin to astrology or necromancy; but the sheer weight of its importance in Wall Street requires that its pretensions be examined with some degree of care.
#12. – It requires a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires ten times as much wit to keep it.
#13. – Never mingle your speculative and investment operations in the same account, nor in any part of your thinking.
#14. – The whole point of investing is not to earn more money than average, but to earn enough money to meet your own needs.
#15. – The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go. In the end, what matters isn’t crossing the finish line before anybody else but just making sure that you do cross it.
#16. – The intelligent investor realizes that stocks become more risky, not less, as their prices rise—and less risky, not more, as their prices fall. The intelligent investor dreads a bull market, since it makes stocks more costly to buy. And conversely (so long as you keep enough cash on hand to meet your spending needs), you should welcome a bear market, since it puts stocks back on sale.
#17. – No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong.
#18. – The secret to your financial success is inside yourself. If you become a critical thinker who takes no Wall Street “fact” on faith, and you invest with patient confidence, you can take steady advantage of even the worst bear markets.
#19. – By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.
#20. – The more a stock has gone up, the more it seems likely to keep going up. But that instinctive belief is flatly contradicted by a fundamental law of financial physics: The bigger they get, the slower they grow.
#21. – The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage.
#22. – Even when the underlying motive of purchase is mere speculative greed, human nature desires to conceal this unlovely impulse behind a screen of apparent logic and good sense.
#23. – To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.
#24. – Successful investing is about managing risk, not avoiding it.
#25. – At heart, “uncertainty” and “investing” are synonyms.
#26. – Losing some money is an inevitable part of investing, and there’s nothing you can do to prevent it. But to be an intelligent investor, you must take responsibility for ensuring that you never lose most or all of your money.
#27. – Before you invest, you must ensure that you have realistically assessed your probability of being right and how you will react to the consequences of being wrong.
#28. – The intelligent investor is likely to need considerable will power to keep from following the crowd.
#29. – The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies.
#30. – Wall Street has a few prudent principles; the trouble is that they are always forgotten when they are most needed.
A few words on the coronavirus. These are certainly strange times we’re living in, but you shouldn’t give in to fear.
You could be concerned, take precautions, but you don’t need to get involved in this pandemic, scarcity mentality we’re witnessing across the board.
Also, this is a day trader’s market, and if you’re not one and don’t intend on becoming one, your best bet is to stay in cash and preserve your ammunition until the situation gets clearer.
Just don’t waste your time, money and energy trying to swing trade a market that gaps all over the place.
Remember, cash is a strategic position.
In the meantime, stay safe and healthy. Meditate… cultivate composure. Work on your mindset. Now is a great time to do this.
If you’re up for the challenge, maybe try the Trading Psychology Mastery Course.
It’s a two-week deep home immersion Trading Psychology course.
In there, I help you develop a trader’s mindset.
You’ll learn everything you need to learn to be on top of your mental game and take full advantage of the recovery in the market when it happens.
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