A “wise guy” is either a highly ranked and successful member of an organized crime family or a person who thinks he knows more than everyone else. I usually use the terms expert and “expert” to mark the difference when it comes to the stock market.
Some people think that there is little difference between the stock market and organized crime. But I guess, you could say the same thing about politics, corporate boardrooms, even religion, and you might be accurate. In each of these worlds, it takes fairly much the same skill sets, attitudes and learning curves to be successful both as an organization and as a member.
Making your way to the top to be the Godfather, the Chairman of the Board, or the Pope depends on dedication and determination to be the best at whatever particular vocation you have chosen. In the Star Wars movies, “The Force” was the special power that was developed and used by both the good guys of the Jedi and the bad guys of the Sith.
Moving up the chain to become the Godfather—or a genuine expert stock-market investor—requires passing through different stages of development. While you may be able to speed the process up a little, it is like climbing a ladder. If you try to skip any rungs, you will eventually find yourself falling back and starting over again.
In the first stage, you are young (in experience if not years), dumb (lacking knowledge) and full of impulses. In this stage, you think with your heart. You take risks because of your desires, and do not fully think out the consequences of your actions with regard to risk. You think you know everything about the stock market, when, in fact, you know nothing. The idea of actually listening to a mentor is something your ego cannot handle. Your biggest strength is that you are fearless and ambitious. Your biggest weakness is that you don’t know that you know nothing.
Eventually—and, hopefully, without losing the family fortune—you actually start thinking with both your heart and your brain. You may even find a mentor who has accomplished the investment goals that you want. In this stage, you begin to gain a bit of wisdom, because, unlike before, you are actually listening to other people and the market itself. You begin to realize that you are a student of the stock market, and it is your teacher. Further, you have also learned that the road to investment success can be a long one. In short, the journey to success takes time.
The third stage is when the results of your journey are starting to pay off. Now, you think with your brain. Your heart and its emotions and desires have been left behind. The profits start coming on a regular basis. But if, by this stage, the profits are not rolling in, get out of the market and stay out. Resign yourself to the fact you are not ever going to be the Godfather, the Chairman or the Pope. Invest for the enjoyment and challenge if you must, but do not rely on the stock market to provide you with steady income.
If you are successful enough to be able to treat stock-market investing as a stream of income, then your biggest strength is that you are finally “made.” You are a wise guy. At this point also, you are probably taking only a few and limited risks. Occasionally, you might jump on the high flyers. However, if you have built your experience and knowledge on learning how those types of stocks trade, then you are probably good at it. They do not seem like high-flyers anymore like they did a few years ago, but are just second-line, higher risk issues that you can handle. You now might even be the mentor.
This third stage is when you probably have the right to say, “Partner, I know it all.” But you are way too smart and experienced to believe that. Further, you are still learning, not because you necessarily need to, but because it is enjoyable. Eventually, you are no longer a “wise guy” in the stock market; you are not just smart but you are actually wise. Here is the best part; the stock market makes sense to you. You can see your mistakes often before you even make them. People might even listen to what you say.
Here is what you should be doing to be successful. If you are in the first stage, shut up and listen. In the second stage, listen and learn but act on what you are leaning. When you make it to the third stage, use your wisdom for more profits and to help others gain theirs.
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E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter
@mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.