HAVE YOUR OWN OPINION!
What exactly is your opinion worth to you, or better said, what is it worth to your trading?
In today’s world of information flying at us in nanoseconds, sometimes it can be difficult to form your own opinion about anything. Granted, most people tend to have the impression that they are forming their own thoughts about a certain stock, currency, index, etc., but how many of these thoughts are influenced greatly by other people who are competing for your attention via Twitter, CNBC, SeekingAlpha, Yahoo Finance, etc.?
Some of the best trades and most profitable trades I have seen have been from traders/managers who have a theory, idea or bias which doesn’t change with every tweet – or rarely changes at all from inception. They have such a firm grasp on their opinion and have internalized it so much that the mass-media doesn’t stand a chance of breaking this barrier.
It really doesn’t matter if it’s a fundamental or a technical view; the point is that these successful traders have learnt how to out the noise and focus in on only factual information which might or might not change their opinion. This ability seems to be more of an art-form than anything – and it also seems to be a unique quality that stems from massive experience dealing with all types of market cycles as well as business, fundamental and even crowd-psychology cycles.
“But…what if I’m wrong and my theory doesn’t work??” – Then guess what…… you will be that much stronger and more knowledgeable the next time around. Dealing with this type of psychological endurance cannot be taught in books, or on a blog; your mind simply has to see all the factors play out in real time in front of you, again and again, until your brain starts making positive associations about what will or won’t work in the future.
Let’s take a step back and look at the motivations of pundits touting a certain stock via financial outlets, or social media. If I was looking to buy a fundamentally good company at a discount, would it not make sense to shake out the lesser-willed individuals to push the price down more in my favor by paying off some analysis to downgrade my target stock, or perhaps even fabricate some “what-if” scenario to scare the masses?
It is blatantly obvious that the SEC is so behind in the matters of enforcing stock manipulation via social media, that tweets by anyone from Icahn to Elon Musk routinely move stock prices by huge percentages – and not only is this legal, it crosses the major financial news wires as if it were legitimate; even before any claims have even been verified!
Unfortunately, this is the financial world we live in. The sooner we realize that there is a plethora of talking heads out there with many ulterior motives, the better we will understand how the game must be played.