I’ve learned a lot from living in the path of numerous hurricanes such as Dorian, and reporting on their aftermath in my days as a journalist.
But as odd as this sounds, hurricanes have taught me four important lessons on being a successful investor. And those have never been more relevant than they are now.
4 Lessons for Investors
To start off, No. 1 is to respect a “force of nature.”
There’s no need for bravado. Whether it’s a powerful storm or the torrents of human-induced greed and fear that blast the stock market up (and down) — some things are out of your control, and you must respect that.
No. 2 is that the financial markets, like major storms, have ways of exposing our hidden flaws at the worst possible time.
I remember interviewing the CEO of a casino company in the 1990s, as gaming companies carpeted the Mississippi Gulf Coast with floating, barge-like casinos.
When I asked him about the potential surge of future hurricanes, he said it wouldn’t be a problem.
I recalled his words on my next trip there after Hurricane Katrina. His company’s floating casino — roughly the size of a football field — was beached high and dry, battered and rusty on Biloxi’s city beach.
My No. 3 lesson is to not panic — especially when faced with scary headlines daily.
There’s an element of randomness to individual stocks and the markets, just like hurricanes. They change direction and grow more powerful — or weaken — in unexpected ways. It’s far better to plan and prepare for the worst, while knowing that the worst usually doesn’t happen.
That’s why I tell subscribers of Total Wealth Insider to use a series of trailing price stops. This way, they have markers for when to capture profits as their stocks move higher and minimize losses.
And finally, lesson No. 4 is to take responsibility and learn.
The Atlantic Ocean is practically my next-door neighbor. In my off-hours, I take my sea kayak down to paddle its waves or soak up the sun’s rays. But I also know it comes with hurricane risks.
In the same fashion, I love the benefits that investing and speculating in stocks bring. The feeling of knowing you were right about your analysis and instincts (and the money) — it’s powerful stuff.
But if I’m willing to shoulder the victories of investing, then — like living in a hurricane zone — I must be just as keen to accept the risks as well.
For everyone in Florida, stay safe.
Best of good buys,
Jeff Yastine
Editor, Total Wealth Insider