We grow up, being taught to win.
Slowly, we learn to expect shocks, but only sometimes, in sparing intervals.
We prepare fancy resumés.
Life must look five star plus all the time, that’s the standard.
We see this standard all around us. It encompasses us. We become it, in our minds.
It’s not like that in the markets.
Markets are a world, where loss is our second nature.
If we’re not accustomed to loss, we die a thousand deaths, in the markets.
What kind of loss are we taking about?
Your stock holding going down to 0…
…is a small loss…
…when compared to another holding multiplying 1000x over 10 years.
Both these scenarios are very possible in the markets. They’ve happened. They will happen again.
How do we react?
Our stock going down to zero mortifies us. We do something drastic. Some of us quit.
When our potential 1000x candidate is at a healthy 10x, yeah, we cut it.
Then we quickly post the win on our resumé.
We must look great to the world, at any cost.
We keep reacting like this…
…and, like this, we’ll perish in the markets with very high probability.
We can’t take a hit, and are nipping our saving graces in the bud.
When does this stop happening?
When we rewire.
Rewiring is a mental process that happens slowly, upon repeated market exposure.
For successful rewiring to take place, real money needs to be on the line, again and again and again, as we iron out our mistakes and let market forces teach us the tricks of the trade.
While we’re rewiring, we need to play small.
When we’re partly rewired, we wake up to the fact that this is the age of shocks.
High-tower professors who’ve never had a penny on the line and have put together theorems about six-sigma events (black swans) setting on once in blue-moons have led us to believe that black swans are rare.
They are not. They have become the norm. Our first-hand experience of multiple black-swans in a row teaches us that.
Once we rewire fully, the expectation of black-swans as the norm is engraved in our DNA. Then, we use this fact to our huge advantage.
We realize the value of our ammunition, i.e. our liquidity.
Whenever we have the chance, we build up liquidity.
We become savers, and are not taken in by the false shine of the glittery world around us.
Also, when markets are inflated, we sell stuff we don’t want anymore, boosting our ammunition for the next onset of crisis…
…and, we stop preparing fancy resumés.
Markets have humbled us so many times, that we now just don’t have the energy to portray false images.
Whatever energy we have left, we wish to use for successful market play, i.e. to make actual money.
When that happens, yeah, we know for sure that we’ve fully rewired.
Welcome to rewiring three nought three.