Action with positive outcome vs…
… no action vs…
…action with negative outcome…
Sometimes we become oblivious to actions with negative outcomes.
Society preaches to be active.
We feel that doing something means a step forward.
Well, it ain’t necessarily so.
Many times, and especially in the markets, it actually pays to do nothing.
The most successful investors in the world will tell you, that the biggest money is made while sitting. They’ll also tell you, that almost no one has learnt how to sit.
Meanwhile, I’m telling you, right here and right now, that you can sit comfortably upon your investment without jumping only if you’ve bought with margin of safety. Think about it.
Also, the most successful traders in the world will tell you that the number one action that saves money in the markets is no action. Yeah, when markets move sideways, which is about 60%+ of the time, trades tend to get stopped out both ways, and the trader loses money repeatedly. At such times, it’s better not to trade.
What’s vital here?
Recognize that it’s a time for no action.
Then, do something else.
For this to be practical, make trading and investing your bonus activities.
Meaning, that if your bread and butter depends upon another mainstream activity, you can easily switch off from trading and investing for a while, at will, and without any negative impact upon your basics.
Also, you need to be versatile enough to have fall-back activities lined up, which switch on where trading and / or investing switch off. These need to take over then, and keep the mind occupied.
The danger of not going into no-action mode is the continuous committing of actions with negative outcomes.
That’s precisely where we don’t want to be.