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Posts Tagged ‘Intelligent Investor’

A few people commented to me that the market looks “volatile” & “dangerous” in the next few months and that we should wait and see before things get better.

Well, I understand how it might seem. The unrest in the Middle East, Libya, the Tsunami in Japan, the end of QE2 etc. The list goes on and on.

However, I would like to point out three problems with trying to predict the future.

Firstly, why didn’t you tell me this 3 months ago? Secondly, considering that you couldn’t predict the market 3 months ago, why would you be right this time round? And finally why on earth would the market be better 3 months later?

No matter what the media/newspaper/friends/books have you believe, very few people actually are able to predict the future with any degree of certainty that is useful to you or me. I would be extremely suspicious of anyone claiming to be able to do so in any capacity.

And the truth is, predicting the future is not a prerequisite of successful investing.

If your going to invest for the long term, through out the traditional definition of risk. Risk is not measured by beta, standard deviation etc.

Risk is the permanent loss of capital. 

My advice?

Take a moment to look through your analysis again if need be. Run through the calculations to make sure they make sense. Than, once your done, close your books and turn off the TV.

As Warren Buffett once said  -

Wall Street makes it money on activity. You make your money on inactivity.

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