Success when investing in financial markets comes with a few well kept secrets. We did share them in 7 Secrets of Successful Investing. In essence, it’s all about being counterintuitive and doing things differently as how we do/feel/act in day to day life. One specific illustration is a thought that comes up, in a natural way, whenever our portfolio does well. Our human mind starts counting how much more could come from the portfolio or from an individual position. Each and every investor falls in the trap of ‘counting himself rich’ when things go well. It’s a bad habit, as you tend to miss the exit.
Note that this bad habit is not exactly the same as “successful investing secret #6. a positive mindset.”
A positive mindset is about avoiding turning negative when things don’t play out the way the investor desires.
If anything, success in markets is achieved with a positive mindset, no matter how bad it gets. Any loss incurred should motivate, not depress. Only positive investors have a chance to make it into the 1% of outrageously successful investors. Without a positive mindset you will never make it into the 1%.
It is fine to be happy if things go well. However, excitement may come with loss of focus. And focus is about understanding market direction: when is the market or a stock going up, when is it going down, invalidation and rejection scenarios.
It is really easy to lose focus especially when things go well. Financial media is positive, people around you may get positive, social media is all about ‘mooning’.
No matter how good things are, no matter how high prices can rise, no matter how explosive positions can be in your portfolio, never (ever) lose your focus on the opposite direction.
Whenever you find yourself in a situation of counting yourself rich you must consider it in an internal signal. Stop the thought immediately, and replace it by thinking about invalidation and rejection.
In other words, flip the view.
That’s what successful is about: flipping the view, flipping the thought.
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