YOU CAN'T SERVE TWO MASTERS

In other words you can have comfort and you can have profit at the same time in investment. It seems very comfortable and convenient own the same instrument everybody loves around you. But you have to pay a big price for the comfort feeling. Buy those assets are ignored or disliked by investors. The pricey stock statistically underperform usually the cheap and heated stocks. The reason is obvious the love and popularity are already built in the price.

It always feels better buying something that everyone else is buying too. That is why John Maynard Keynes said most of us would rather fail conventionally than succeed unconventionally. If you accept the fact that the biggest return always starts with pain and all loosening investments are comfortable you will be a much better investor.



Just think about that the best things in your life too happened slowly and begun painfully that is not different in the investment. No pain, no gain. But whoever said being a contrarian was easy?

Investors and traders are tend to listen those people who share their view. It is so comfortable just to listen to the consensus and don’t argue with that. We tend to ignore all informations which against our ideas. You look for only investors who share your view and you try to stay away from the contrary views. That is mentally logical, because is more comfortable, but not profitable in investing. You should do the opposite. You have to try to be the "advocatus diaboli" or find a mentor or coach who helps you to destroy this mental obstacle.

You can’t do better than a mob if you are part of the mob. Be contrarian and do sceptical buys on the fear, sell on the greed because if you close out the herd noise you will realize the public buys the most at the top and the least at the bottom. For instance when all the words you hear about the economy are bullish, you may want to run in the other direction.

Basic investor behaviors aren’t changing, they buy after a period of good performance. In short, they buy high and sell low and repeat the process multiple times. This is a part of human nature to buy at wrong time and follow the mass. Over the past two decades the S&P 500 returned 9.22% a year, on average. The average investor got just 5.02% a year. That's a huge gap, 45.6% lower.

They love to act in herd, meaning all investors rush to purchase or sell stock just because others around them are. "I see someone investing, I suppose that they probably have more information than me." Most people are just terrible at investing because they love the comfort feeling. But if you want to be profitable you have to feel the pain and you have to hear the bad words by your colleagues, friend, wife that you are a complete idiot and you are wrong. But by the end of the day you will make money, and that counts only. As Gordon Gekko said: "Everything about money, the rest is only conversation." Just try to serve one master, profit one.

The BFM Assets Team.