My Reactions Determine My Success

July 26, 2020

Don’t worry about what the markets are going to do, worry about what you are going to do in response to the markets.

~ Passage from New Market Wizards, Jack Schwager

There are very few people in the U.S. that can look at the stock market performance since March and draw any rationalization for how it might make any sense.

The Virus. The Quarantine. The Job Market. The Ending of Unemployment Checks. The Rallies in the Streets. The Rioting in the Streets. The Government Ineptitude. The Social Unrest. The Local Militias. The Finger Pointing and Blaming. The Rising Infection Rates. The Returning to Schools.

There’s nobody on this planet who could’ve seen all this coming and not concluded that stock prices on the whole would be lower, if not dramatically so.

But here we are.

Amazing, really.

All of this is a reminder that many of the great wisdoms of Wall Street hold true in any market, at any time in history — past, present, or future.  And the line above on not worrying about what the market might do, and instead putting all my energy into how I’ll react to it is incredibly appropriate today.

Nobody can predict the future. We can all make our best guesses at it and occasionally we’ll get lucky and feel pretty smug and proud of ourselves. But if the success of my strategy hinges on me making accurate predictions of the future, well I might as well take my money to the sports book in Las Vegas and have a hell of a lot more fun lighting my money on fire.

Each trading day is a new opportunity. A clean slate. Even if I’m holding existing positions, the same is true. “You play the hand you’re dealt,” as Coach Barry Switzer recently told my friend Darrin Donnelly from Sports for the Soul.

The market doesn’t care what I think it might do. But my reactions to it will determine whether I succeed for fail.

It pays dividends to remember this next time I read a headline or hear something in the grapevine that scares me and makes me think the market is going to go crazy up/down off this “news.” My only reaction should be: “what does my trading plan say I do next?”