|The Final 5 Blunders
|December 14, 2006
So the Fed statement has come and gone without much to do. After all, it came as no real surprise when the Fed chose to stand pat, leaving the fed funds rate at 5.25%. There were some investors feeling a bit cautious, which explained our go-nowhere market yesterday.
There’s little need for concern seeing as the policy committee members did not change their perspective on the economy. The meeting statement said that the economy has cooled but will expand at a moderate pace in the coming quarters. Elevated inflation pressures are expected to diminish but some risks remain.
There is, therefore, a possibility that interest rates could be tightened further but as the Fed put it “The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.”
What I think will be more telling—and more likely to move the market—is what comes out of tomorrow’s OPEC meeting and whether they decide to cut production. We shall see…
Until then, as promised last week, here are the other five blunders I don’t want you to make—if you are currently—ever again!
THE FINAL 5 BLUNDERS
Last week I told you about the first 5 of the Top 10 Blunders too many investors make. I hope you took those to heart and you are now ready to ingest the next five today.
Blunder (6): Failure to Keep Studying, Learning and Growing
This blunder is one of my favorites because it embodies the idea of continual enrichment of self as critical to success as a trader or investor.
Practice is the key word here. When do you stop practicing? Never — unless you give up on trading altogether! This is the plan and mindset that a successful trader and investor must adopt.
Anyone, anywhere, any age or background can put money into a brokerage account, enter the markets and trade. It is this democratization which gives a kind of “wild west” atmosphere to certain activities in the markets. However, in order to be successful and maintain longevity as a trader, it is necessary to read, study, learn and keep reading, studying and learning until the day you stop trading. Being a self-directed trader or investor affords one great freedom, but comes with a price. That price is the commitment to never ever stop learning and practicing.
Blunder (7): Failure to Learn and Practice Patience
Our society is driven increasingly by the need for speed and incessant movement. What does this mean to you as a trader, investor and human being?
Everything is faster today than it was a few hours ago. Technology is advancing at a logarithmic rate and we are becoming more and more addicted to and unable to separate from technology.
It means that we want it all and we want it yesterday. Today’s news has its fifteen or fewer minutes of fame and then flames out as we continue to be bombarded with the next piece of information and then the next and then the next. It is fashionable to be totally busy all the time. We are hypertexting, hypercommunicating, hypercomputing and hyperliving. As a logical corollary, many are hypertrading.
This can lead to the inability to contemplate, to move at a considered pace, to wait for opportunity and to just plain have patience. At its foundation, impatience is a subset of fear and greed and is among the most common reasons for trader and investor failure.
Blunder (8): Failure to Truly, Madly and Deeply Believe In Yourself
This blunder is deceptively simple because most people, when questioned, will tell you that they totally believe in themselves and deserve to be successful as traders.
Yet, when you expose the majority of people to the myriad of real time decisions afforded by the market, this belief system reveals how fragile and fleeting it is, and begins to fall apart. Traders spend more than 90 percent of their time thinking, questioning, doubting, reassessing, struggling to keep focused, being whipsawed by emotions and just plain worrying if they are doing or not doing the right thing.
What is required to change your belief system about yourself is to truly see yourself as successful. It is like taking a photograph of yourself right now and then stepping back and looking at how you would like it to be if you were living up to your full potential.
Blunder (9): Failure to Embrace the True Nature of Risk
We see warnings about risk in the markets: There is a risk in all trading, only trade with money that you can afford to lose, there is a risk of unlimited losses in trading futures, and so on. Disclaimers about risk are everywhere, and it is my contention that people are almost oblivious to them. If they were to heed to warnings, few if any would be putting monies into the market. Yet, the number of traders continues to increase, the advertisements for instant wealth and ways to leverage portfolios using options and futures are aired from morning until night and the disclaimers appear in tiny letters under the ads. Where’s the risk? What is risk?
When you trade and invest in the markets, you are actually trading money and beliefs. You are buying and selling risk. As regards risk, everyone gets out of the markets what they want, need or both.
95% of traders lose all of their capital in the first year. Why? Because they do not appreciate, manage and embrace totally the concept of market risk.
Blunder (10): Failure to Do What Must Be Done
What do most of these great traders have in common besides the ability to amass (and keep) large amounts of money? They have in common: an attitude of gratitude, humility, manifestation of kindness to themselves and others and an intense understanding of their personal psychology and the mass psychology of the markets.
Even the most successful traders and investors with the highest degree of longevity approach the markets with humility. They are non confrontational and go flexibly with the flow. They are in sheer joy with the moment. It is the perfect moment, and they are always in it. They are in gratitude for the privilege to partake of the gifts which they receive from the market. For them, trading is a spiritual activity!
My greatest hope for each of you is that you never forget this.
If you need a refresher course on all ten blunders before the New Year—click here to get caught up and learn how Trending123 could further help you get started on the right foot!
If you’re blunder-free and ready to tackle the market, then gear up with the following 3 stocks ASAP! I like these stocks so much, I’m reiterating last week’s buy on all three of them:
EOG Resources Inc. (EOG)
EOG Resources, Inc., together with its subsidiaries, engages in the exploration, development, production, and marketing of natural gas and crude oil primarily in the United States, Canada, offshore Trinidad, and the United Kingdom North Sea. As of December 31, 2005, the company’s total estimated net proven reserves were 6,194 billion cubic feet equivalent of which natural gas reserves were 5,557 billion cubic feet; and crude oil, condensate, and natural gas liquids reserves were 106 million barrels.
Find out more about EOG through my audio alert; including its target price, pattern trend and upside potential.
Pioneer Drilling Company (PDC)
Pioneer Drilling Company, through its subsidiary, Pioneer Drilling Services, Ltd., provides contract land drilling services to oil and natural gas exploration and production companies in the United States.
Find out more about PDC through my audio alert; including its target price, pattern trend and upside potential.
OMNI Energy Services Corp. (OMNI)
OMNI Energy Services Corp. operates as an integrated oilfield service company in the United States. It operates in two divisions, Seismic Drilling and Environmental Services. The Seismic Drilling division principally operates in the marsh, swamp, shallow water, and contiguous dry land areas along the Gulf Coast, primarily in Louisiana and Texas. The Environmental Services division provides dock-side, and offshore hazardous and non-hazardous oilfield waste management; and environmental cleaning services, including drilling rig, tank and vessel cleaning, safe vessel entry, naturally occurring radioactive material decontamination, platform abandonment services, pipeline flushing, gas dehydration, and hydro blasting.
Find out more about OMNI through my audio alert; including its target price, pattern trend and upside potential.
P.S. In an ever-changing market, it’s not easy to keep up or know what to do next. That’s why my priority is you. With timely analysis, multiple daily updates, stock charts, education if you need it and most of all, profits, you will always be “in the loop” on everything that matters. Whether you’re a seasoned pro, a rank beginner or somewhere in-between, you’ll find plenty to like at Trending123.
P.P.S. Stay tuned for my next round of Hot Stocks…coming soon to an email box near you!