Tuesday, December 14, 2004

Immediacy and the Investor

The immediacy frame of mind can be very dangerous to the long-term value investor. You must get past this mind-set to be successful. I see it all the time and all around. I just shake my head in dis-belief. The daily newspaper (most financial media) always has a reason why the market did this or that. It doesn't matter whether it is true or not, they have to print something. Dear reader, they are leading you astray.

For example, oil prices have a weak correlation at best for causing the stock market to move (I believe it is around 0.55). What did the public hear was the culprit for the stock market slump the past month or so? Oil prices. Well, anyone who cares to find out for themselves knows that there are studies that prove this to not be the case at most times.

Most investors have a goal to know what is happening right this exaxt moment. What will I talk about at the water cooler tomorrow if I don't know what caused the stock market to move today? I'll look like a fool!

If you want to retire wealthy, you have got to get out of that trap. Who cares if Bob thinks you are a moron because you didn't know the Premier of China fell and broke his arm and caused the dollar to rise 5%. Stick with the long-term cycles and trends and let Bob trade off of the news. Bob will be cleaning your pool some day.

Best Regards,

The Soothsayer of Omaha


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