When you get angry you suffer from an ignorant inflated sense of yourself that has no value to you or anyone else and this action is worthless. Consequently, rather than getting angry or condemning the stock market your best bet is to learn how to get the best information out of the stock market.
The biggest problem and the thing that makes many investors angry in the stock market is that the up and down price movements of stocks are completely random! Quality analysis of stock market information involves telling the difference between signals and noise. The built-in random moves up or down in the stock market causes seemingly logical variables to fall short of being predictive tools to predict the up and down moves in the market. The randomness of these up and down stock market moves allows for nonsensical correlations to appear which makes the typical retail, “mom and pop” investor angry when they lose money on their stock market investments.
Most stock market data and information is just noise. Your best bet as an retail investor is being able to identify a handful of time tested, intuitive data sets or “signals” to help you narrow your focus and help you ignore most of the “noise”.
The average investor’s emotional weakness and inability to distinguish the signals from the noise keeps them hooked. The majority of players in the world of finance and stock market are salespeople and most all salespeople are almost always guilty of convincing themselves of that which is questionable!
Everyone from stockbrokers to investment bankers to the media are selling or promoting their stories. Certainly the financial news gives you significant amounts of good information but in total most of the news is just noise.
The investment world is littered with truisms. Some are true, some are half true and some are not true with true truisms being relatively rare. One true truism is beware of the consensus meaning beware of what everyone seems to be thinking as factual or as being true because facts are nothing more than a consensus of opinion.
Agreeing and staying with the crowd in the investment world provides psychological reassurance but the majority of the investment world salespeople too often are wrong more than they are right which is why typical, relatively uninformed, “mom and pop”, retail investors, like casino players, get beat by the stock market.
Those who suffer more unpleasant consequences in the stock market are those who may be unaware of the statistical realities, so your best bet may be to focus on the unbiased data of historical precedent which gives you a comparative base to build upon. You compare current market conditions to past similar conditions and there are nine data categories that have demonstrated sufficient precedent to be used to form either negative or positive historical and current market conditions.
These nine data categories are: The Federal Reserve, macroeconomic, psychological, fundamental, cash reserves, structural, technical, professional positioning and the Media. These nine data sets are not complex and they are firm from an historical perspective. Without being aware of the weekly fluctuations of the negative and the positive effects going on in each individual data set it is not possible to understand the stock market. Investors that do not understand the market in which they are investing too often lose money and get angry.
SUPPLEMENTAL SOURCE: DRACH MARKET RESEARCH AUGUST-NOVEMBER 2013