Don’t Be Afraid to Abandon the Story

In trading, it helps if you can both attach and detach yourself from trends. Too often people only care about attaching then completely forget about detaching.

Typically, people develop a love affair with a specific market or stock(s). A good story gets ’em hooked.

Affirming the story to yourself by selling it to others: “Dude, government bond yields cannot stay negative for long; sooner or later, bonds will crash. The entire market is in a huge bubble.”

They develop a strong opinion about its story and never let go. This closes them off from seeing the reality (the price trend) and, if they’re a fundamentalist, from poking holes in the story to see how it could be wrong. Ultimately, they become rigid and incapable of adapting.

At some point, if you want to survive, you have to come to grips with reality. How are prices moving? At the end of the day, you can buy and sell stories — only price.

Nothing Else Matters — besides the price trend.

Whatever stocks or markets you may be investing in today, I challenge you to do two things:

1) Consider the possibility that the story can change — with or without you knowing for a while.

2) Respect the price trend regardless if the story, as you see it, still holds merit.

Focusing only on stories can keep you out of profitable trends and in losing ones.

I challenge you to become more of a chameleon investor, not the captain who must go down with the ship. Otherwise, you may end up like George Costanza.

George ignoring the price trends.