This Is Investment Advice: Take the Blame Out of Your Game

While “this is not investment advice” is plastered all over everything everyone writes online – this blog included – I figured I’d specifically label this post to the contrary.   It’s not the first time I’ve written about this concept, but if I could give you one piece of advice for 2015 (and beyond) it would be this:  take blame out of your game.

Last year I wrote Trading Rule #9: Blame is for Losers.   This is a reiteration and expansion of that post.

When things don’t go your way in the markets, you can do one of two things:

1) assign blame to a plethora of different parties, entities, conspirators and evil factors or

2) try to figure out what you could have done better or where you might have strayed

#1 is the easy and natural thing to do: it’s hard to admit we screwed up, but it’s easy to blame:

– short sellers

– market maker manipulation

– evil hedge funds

– The Fed

– The Kardashians

– Obama

– fake government statistics

– high frequency trading

– El Nino

– bad data from some internet finance site

– the Hollywood Liberal Elite

– complicated mortgage documents

The Jews

– etc etc etc

Nothing, however, can change the fact that you’re the one who clicks those “buy” and “sell” buttons and that you should take responsibility for your actions.   It may make you feel better to absolve yourself of responsibility and assign blame to other parties, but it also virtually guarantees that you’ll repeat behaviors that led to the situation in the first place.

Speaking from experience, my personal trading mistakes can usually be boiled down to the usual general categories of fear and greed.  I sometimes sell a stock at an inopportune time in an effort to “stop the pain” out of fear, and on the other side I hold crappy positions too long because I have unrealistic hopes of gains to come – greed about the “riches that could be” while I simultaneously talk myself into ignoring the risks that I know exist.

Anyway,  my point is this: the retail investor today has unprecedented access to tools that allow him to easily and cheaply express almost any market view he wants to express.   This is a great development, but it can also give the inexperienced and ignorant “rope to hang themselves.”   If you want to trade triple-leveraged ETFs, knock yourself out – but don’t go looking for people to blame if you lose money.  If you’re trading binary options (using a “BinaryOptionRobot” no less!), have a field day – but don’t go trying to place blame if it doesn’t work for you.

The current suite of products available to even retail investors means that those retail investors need to be more responsible for their own actions: for understanding the products they are trading.   Looking for people to blame if you don’t take the steps to know what you’re doing is loser behavior, and will virtually guarantee that you make those mistakes again.

My investment advice is this:  when things go wrong, analyze your process, play Devil’s Advocate with your own thesis, and figure out what you might have done wrong – not who you can blame for what went wrong.


Rule #9 – Blame is for Losers

TVIX: You Mess with the Bull, You Get the Horns

I Have No One to Blame But Myself

Do We Need To Protect Investors From Themselves?


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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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