To: Ally Re: Market Emotions
You bring up a lot of interesting topics. Here are some of the things that went through my mind as I read your frustration.
First of all we need to again differentiate between "investing" and "trading". You are either trading stocks or you are trading traders. If you are investing in stocks, you would buy quality, hope there are no unforeseen problems on the horizon, and believe that after the wild emotions and reactions, the market will see it your way and reward that quality. If you are trading, you are simply identifying and reacting to the reactions of traders.
There are two types of emotions you are talking about as I see it. One is the emotional reactions of the market. And the other is your own emotions. I take it from your posts that you are a trader. So your job is to identify and react. You need a system of identifying that is reliable and consistent, you need to identify patterns, and you need a system that allows you to change in a timely manner when those patterns change. Emotions do not belong in that system. They aren't going to benefit you in any way in accomplishing your job.
The market we are seeing is very reactionary. I believe that we are seeing a much more immediate market than we have ever seen in history. Never has the individual consumer had such immediate access to the market. As a result we are seeing incredible volatility. Yes, the market has been emotional, choppy, erratic, irrational, but that doesn't have to influence our job of identifying and reacting.
From your comments I get the feeling that you have set expectations of how the market "should" react. And when it does not react in the way you felt it would, you become frustrated. Why not instead look at the market free of expectations and judgement? I personally do not care what the market does. The Nasdaq can go to 1500, or it can go to 5000. I will simply follow along, and I won't let their reactions affect my discipline in sticking to my system of identifying those reactions.
- Shawn |
