Jake Bernstein no bull investing_7

C H A P T E R E I G H T GAMBLE OR INVEST YOUR WAY TO WEALTH? As an investor you have many choices. You can be conserva-tive, aggressive, long-term oriented, or short-term oriented. You can be a day trader or mutual fund investor, or you can trade the new single stock futures (SSF) market. What you decide to do depends on a number of factors, the most important of which are your financial ability, personality, self-discipline, level of ex-perience, and available time. No matter what you decide to do, you must follow the time-tested rules of profitable investing. Although this seems like a reasonable and relatively simple thing to do, the sad fact is that most investors, even experienced ones, will not follow through consistently. Unfortunately, too many of us give in to the gambler within us. After all, we believe erroneously, it takes much less work to be a gambler than it does to be an investor. This just isn’t true! Successful gamblers have honed their skills to a virtual science. They put hours of work into their craft. And, there are good 129 130 NO BULL INVESTING gamblers and bad gamblers, just as there are good investors and bad investors. You must decide whether you want to be an in-vestor or a gambler. Once you have made that decision, decide whether you want to be a good gambler or a good investor as op-posed to a bad gambler or a bad investor. Because it takes just as much effort to be a good investor as it does to be a good gambler, you might as well be a good in-vestor. However, if you decide to gamble, you don’t need this book and can stop reading now. This chapter will educate you in the finer details of investing and will also give you some de-tails on what will work and what is not likely to work for you as an investor. Now that you have learned how to implement the GIM and STF models, let’s look at several very important issues that tend to undermine our goals and success. After doing so, I will tell you about the six major investment categories that can take you to your goals—while you maintain your regular job. Today’s investment world is highly competitive and very risky. The waters are often difficult to navigate. The amount of infor-mation that can be obtained on virtually any investment is often overwhelming. The decision-making process is, for many inves-tors, difficult and confusing. Opinions abound. Will we have in-flation or deflation? Will we suffer an economic meltdown? Will the U.S. dollar be massacred in the world markets? Will there be a war, and if so, what will its effect be on the U.S. economy? Will the Social Security fund go broke? Will the price of oil go to $100 per barrel? Will the Republicans raise or lower taxes? Will more airlines go broke? What will happen to the stock market in the event of another terrorist attack on the United States? Where is my money safe? The list goes on and on. It seems that the more you read, the more confused you get. Some experts tell us that everything will be fine. Other experts cry wolf repeatedly. Some radical thinkers want us to believe that GAMBLE OR INVEST YOUR WAY TO WEALTH? 131 an economic collapse will bring anarchy. They tell us to head for the hills with ammunition, guns, medical supplies, gas masks, antibiotics, and a year’s supply of food. Yes, it’s all very confus-ing. As I mentioned before, some of the experts who may have been highly regarded in the past have shown themselves to be frauds and flimflams. To make matters worse, we have been led to believe that the investment game can only be won by profes-sionals who have an edge on the average person. After all, pro-fessionals have inside information. They have a pipeline to those in the know and connections in Washington. They have the kind of financial power that moves markets. Furthermore, they don’t make mistakes, always seem to be in on the big moves, and always seem to make big money at the expense of those who are at the bottom of the investment food chain. Adding to this bleak picture is the fact that the average per-son can’t afford to hire an expensive financial advisor or accom-plished money manager with a record of profits and consistency. More and more, investment success seems downright impossi-ble for the average individual. In an atmosphere of frustration, we feel why even try because we won’t succeed at this highly com-petitive game. And this, in turn, fosters the feeling that we might as well gamble rather than invest. The gambling business has mushroomed in recent years, due in part to the frustration that has besieged the average investor. All too often, we feel that gambling is the way to go. And the in-centives are many. In many states, it’s only a 45-minute drive or less to a gambling spot, whether a casino in a gambling town, a riverboat casino, an offtrack betting parlor, or a lottery ticket outlet. The idea that a one dollar lotto ticket can yield $100 mil-lion or more is certainly an alluring one. And the lure of be-coming a multimillionaire easily overcomes the odds for many of us. The burgeoning of lottery ticket sales reflects, in part, the financial crisis so many states have been having since the late 132 NO BULL INVESTING 1980s. Although the purported reason for beginning state lot-teries was to fund a cash-hungry educational system, many states merely used it as an excuse to raise revenues to cover wasteful spending, favoritism, graft, and self-serving politicians. Clearly, this also has added to the anger and frustration of investors. It’s enough to make one want to give up altogether on investing. THE INSTANT AGE The piling on of frustrations in virtually all aspects of mod-ern life has encouraged individuals to seek immediate gratifica-tion instead of focusing on long-range goals. The reasoning is simple and logical: Why wait until tomorrow if the world is so riddled with problems today? Our “age of instantism” may cause us to avoid investing, to spend rather than save, and to gamble rather than invest. We want it fast or faster, and we want it big and often—instant access to the Internet, faster cars, faster boats, faster planes, and higher speed limits. We want instant mashed potatoes, instant relief from pain, fast service at the drive-through, speedy hospital stays, instant pictures via our cell phones, and fast executions of stock purchases and sales. The age of instantism has also undermined and dissuaded the in-vestor. We want success and we want it now. CONTRADICTIONS,CONFLICTS, AND CONSISTENCY We are torn between going for the fast buck with high risk or seeking the slow and steady path to financial success. The seeming contradictions of modern society help contribute to conflict and inconsistent behaviors. Hopefully, by the time you GAMBLE OR INVEST YOUR WAY TO WEALTH? 133 have finished reading this book, you will have developed a long-range view. You will have a clear sense of the big picture, while understanding the small picture. And better yet, if you are indeed still tempted by short-term profits, you will find several resources and rules by which you can satisfy this need as well. But remem-ber, do so only after you have mastered the big picture. Don’t be lured into playing the fast game without a proper foundation, or you’ll see your money disappear right before your eyes. NARROWING THE FIELD OF CHOICES Virtually any area of investment can allow you the opportu-nity to make big bucks. You can make your fortune methodi-cally, or you can try to gamble your way to wealth. There’s no doubt that every investment involves a degree of risk, but there’s a difference between a calculated risk and an outright gamble. Within the framework of the MOM, GIM, and STF models I have given you, let’s look at some specifics. Ten Surefire Ways to Lose Your Money Any tool, no matter how good or how safe, can become lethal in the hands of a fool. The investment tools I have given you in this book have the power to create wealth as well as the power to take it away. Here are some things to remember if you want to avoid the traps that investors fall into, even with power-ful tools like the MOM method: n You will lose your money if you act impulsively before the setup in the STF model is triggered. You must wait for the trigger. ... - tailieumienphi.vn