Two words… you can’t (nor can I).
You can’t even predict the future (nor can I). And you know what else? Blustery assertions and proclamations aside, neither can anyone else.
Fortunately, there’s no need for either skill set in life or in trading/investing.
No You Just THOUGHT You Had Plans
The Labor Day BBQ my family was planning to attend was cancelled at the last minute. I was initially annoyed because the late hour “disinvite” effectively foreclosed alternatives for entertaining my boys for the day.
Hmmm… What to do…
Turns out, providence was smiling on us as the day started off hot and muggy and proceeded to get hotter…
For the military time challenged among you, that’s 100 degrees Fahrenheit at 6:32 PM. Tepid to say the least… And, incidentally, I do not live in Arkansas, Arizona, Mexico, Sub Saharan Africa or Hell. 100 degrees at 6 in the evening is NOT usual… nor fun for that matter.
I think the technical term for any avoided outdoor event today is “good miss.”
So why am I burning your eyes (no pun intended) with this unsolicited personal anecdote instead of talking about where the market is going this week?
2 reasons… Well, 3 actually, but if you don’t “get” the first 2, the third doesn’t matter. The reasons are:
- I have no idea where the market will go this week (although it’s possible to have a pretty good guess) and
- I don’t need to know where the market is going this week (or tomorrow for that matter) to make money
- The sooner 1 and 2 become a part of your investing DNA, the sooner you will find yourself on the path to consistent profitability
Fortunes are spent and lost (and liberty taken I might add) all in pursuit of increasing the certainty with regard to some future event. And not only is it not possible, it is entirely unnecessary. One’s reaction to events is far more manageable and determinative than any attempts to control the inherently uncontrollable could ever be.
The Trader’s Point
In trading as in life, you can’t know (predict) the future… and you certainly can’t control it in any meaningful (or legal) way.
The good news is that you don’t need to acquire any such capability. You don’t need to know what life or the market will give you.
“One’s reaction to events is far more manageable and determinative than any attempts to control the inherently uncontrollable could ever be.” — The Trader
You need only know that you will respond in the best way possible under the circumstances.
In other words, if you know exactly what you will do at different price levels in a security is there any real reason to fear volatility?
Hell to the no…
Lemons to Lemonade
So how did we respond to having no Labor Day plans at the last minute?
We hit the pool early and spent the better part of the morning and early afternoon there.
We then had an early (inside) dinner at one of our favorite local restaurants.
And I avoided heatstroke.
Couldn’t have turned out better had I planned it that way all along.