I would argue that perhaps the worst trait you can have as an investor is overconfidence. Many investors who experience outsized gains, attribute this success to their superior knowledge, skills, and expertise. The resulting overconfidence often leads to excessive risk taking and catastrophic failures in future years.
It’s okay to make an educated guess on how you think things might go and to position yourself accordingly, but never bank on it 100%. Because the finance and investing world is influenced by a complex, dynamic multitude of variables. And while some of these might be somewhat apparent, many others will not be. And the combined interactions and overall effects across these can result in outcomes far different than you might have initially anticipated.
So, while I do spend time trying to predict how things might go and positioning myself accordingly, it’s never 100%. If I feel very strongly about something, I might go as far as 70% (if that). I then simply observe and react to whatever happens instead of sticking to some static initial position.
As such, either way things go – whether up or down – I always have a plan. If the opposite happens from what I anticipated and positioned for, I’ll still earn gains. Just not as much as I would had things gone my way. And it’s this flexibility of approach which can lead to steady and consistent gains over time. Because you never know what might actually happen even though you might think you do. And coming to this realization can be one of the most important lessons you can learn as an investor. Simply have a plan no matter which way things might go and react to whatever happens however it happens. If you do this, you will earn steady and consistent gains over the years and decades of your life.
You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).
Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.
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