What I Learned Losing A Million Dollars

by Jim Paul

A preoccupation with wanting to be right or wanting to be perceived as being right, explains people’s tendency to focus on why the market is doing what it is doing instead of what it is doing. They’re constantly asking, “Why is the market up (or down)?” When someone asks, “Why is the market up?” does he really want to know why? No. If he is long he wants to hear the reason so he can reinforce his view that he is right, feel even better about it, and pat himself on the back. If he isn’t long, he’s probably short and wants to know why the market thinks the market is up, so that he can argue with it and convince himself that he is right and the market is wrong. He wants to say, “Oh, that’s the reason? Well, that’s the stupidest reason I ever heard.” He wants to justify his position of being the “wrong” way in the market by asking “why” so he can say, “That’s a stupid reason.” Let me tell you some good news and some bad news about “why” and the markets. The good news is, if you’re long and the market is going up and you don’t have a clue as to why, you get to keep all the money. Every cent. They don’t charge you a single penny if you were “only lucky.” The bad news is, if the market is going up and you’re short and you know exactly why it’s up, you don’t get any money back.