But again rather than being good or skilled, the thing to realize is if
you bought in June and July, anything you buy is bound to go up. The
benchmark is the average price is 2019 as it will track back to that
level next year. The big question you need to ask yourself is this, if
anything you buy now can make money, then:
1. What companies will have returns higher than their 2019 benchmark?
2. Is this performance due to skill or simply rising tide lifts all boats.
3. Moving forward what will happen to those companies?
So if you look at these charts you will quickly realize one simple fact:
It is not the skill to buy low and sell high that is important
It is the emotional ability to stay invested and even borrow money to buy even more when the chips are down that matters
The ability to remain focused
The ability to remain rational
As Howard marks puts it, when the time comes to buy, you will not want to.
Also because when things drop so low we are ingrained to the deer in headlights mental model and stuck
Fear stops is from not being able to react
But what is fear?
Fear is when you do not understand what you are doing
When you don't understand what you are doing, then you will not be able to move forward and make the right decisions
The funny thing is fear and greed are twin sides of the pendulum
When share price is low you are too scared to buy
When share price is high you get fear of missing out.
So what is the goal?
To be RATIONAL.
Homework for the day:
https://klse.i3investor.com/blogs/Telegram/2020-12-01-story-h1537355680-The_Fear_of_Missing_Out.jsp
