To be a successful investor this is what your equation must look:
Cognitive greater than > (Intuition + Perception + Emotion) * Media
As a result of the Wall Street bullies tactics, investors have been convinced that the right equation is Cognitive less than < (Intuition + Perception + Emotion) * Media.
In other words to be a successful investor you must make your decisions based on academically proven concepts (cognitive). Cognitive then is using your mind logically.
The Wall Street bullies want you to use your emotions to make investment decisions.
These bullies use the media to sway investors. By making assertions that the Wall Street bullies know what the future will bring. Investors are exposed to the bullies propaganda on a daily basis. The Wall Street bullies need the investor to continually move their money.
These bullies makes money on every trade, therefore it is in the Wall Street bullies best interest to keep you trading.
Some of their tactics include convincing the investing public that they can tell them which stocks/asset classes/asset sectors will outperform in the future (stock picking). It has been proven time and again that there is zero correlation between past performance and future results.
Essentially it means that past successes were a matter of luck and not skill.
Another tactic the bullies employ is market timing. This tactic involves telling you when to get out of the market to avoid downturns. Assuming the Wall Street bullies are successful in getting out of the market at the right time. They must then get you back into the market at the right time to capture all/most of the up market. Evidence has proven that this tactic has been unsuccessful. Again any success is a matter of luck and not skill and not repeatable.
Finally the Wall Street bullies use track records to entice investors to invest with their fund. All evidence points to zero correlation between past performance and future results. Yet again success here is a matter of luck and not skill and NOT repeatable.
The purpose of each one of these tactics is to keep the investors’ money moving from one asset class/stock to another. The Wall Street bullies know that investors are looking for stock market returns with Treasury bill risk. What investors end up earning, is Treasury bill returns with stock market risk.
Dalbar research an independent think tank that studies investors’ behavior found that for a twenty year period ending in 2012 investors earned 4.25% while the Standard & Poors 500 earned 8.21%. By following their emotions investors cost themselves’ dearly.
The Wall Street bullies will continue to victimize investors by using these tactics.
Stop being a victim and hire an investor coach. Your coach will help to determine the right prudent portfolio for you. As time goes by your coach will teach the right things about investing.
A coach will also keep you disciplined to your strategy.
As opposed to the typical broker who will use every downturn as an opportunity to sell you more ‘stuff’.
To succeed in investing you must:
- Own equities and fixed income
- Globally diversify
- Rebalance
Your investment formula will determine your level of success. Find the right investor coach and learn how to succeed long term.
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