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Most people on the street have no idea how the financial markets work, and in any walk of life, the unknown breeds fear. Not the kind of fear that would cause us to run, but an uneasy feeling, something we’d rather avoid. Ask most people what strategies they would use to invest in the market, or to identify a trend on a stock chart, and watch them squirm. The unknown always fosters fear and it is just easier to sidestep questions like that. That is expected behavior… we’re all like that.
So, how do we handle the discomfort that comes when the outcome is unknown? I love the story of the seaman whose solid response was, “I can sleep when the wind blows!” Never knowing what the weather would bring as they were tossed about on the high-seas, this seaman knew what backup plan was required for any contingency. On a more personal basis, I must brave the traffic pattern each day as I make my way to work through down-town freeway traffic that could bring waves of fear, considering what may happen. But the evening before, I enjoy the peace of family by my side, with no worries about what the morning may bring. I excel as a defensive driver, using rear-view mirrors, keeping safe driving distances behind the car ahead, watching for “crazies” who may do crazy things on the roadway, etc., etc. But here is the added key: I listen to “Sky-chief Helicopter Traffic” for real-time suggestions, making the drive easier. And providing alternate directions or routes as appropriate, which I’m unable to do or know myself.
If we choose to deal with trying situations, in the pursuit of life, we must have our backup plan(s) firmly in place. Nowhere is this more true than in the financial markets. The pursuit of profit in the markets can be a trying situation, fostering levels of fear and concern. May I suggest that both fear and concern are positive emotions? If the seaman had no fear of what the ocean waves might do during the night he would probably be less attentive to battening down the hatches or securing all items on-deck. Fear is the great protector, the preserver, the answer to the questions in life that must ultimately be answered. The word “fear” has negative connotations and perhaps should be replaced with “concern.” But, whatever we call it, it is an emotion we must face squarely, repeatedly, often and with a positive feeling. I hope we can all “fear” the right things at the right time, finding comfort in the “concern” that will keep us alive in the market and every other walk of life.
With effective tools and understandings, even the concern of a bear market can be managed.
“Courage is resistance to fear, mastery of fear – not absence of fear.” Mark Twain
In a word – INSIGHT!