It comes as no surprise that in the world of investing and speculating, it is often a journey filled with mistakes, second guesses, and betting on the wrong industry or sector.
Speculating always involves a number of moving parts that can change and go against you - even if you’ve done all your research and analysis and are early in a particular commodity or stock.
But perhaps one of the most damaging things that can happen to an inexperienced investor or speculator is winning early - and then thinking you know what will happen next.
Because when we are new at this game, we all think the same. We all think that if we can make money in one trade or investment so quickly and so easily, then we can make money in all trades or investments just as quickly and as easily.
So eventually, we all learn the hard way.
We lose money, and realize that it isn’t as easy or as straight forward as it may first appear. And if we still want to play this game, we start again.
But it is not only beginners that make mistakes. It is true that all investors and speculators at some point have lost money within the course of their careers and will continue to lose (although much less frequently) in the future. And this is because it is simply part of the game.
It is this volatility in the markets - and especially in the junior resource markets - that shakes out most speculators from a winning position to a losing position.
The game is hard. But it gets easier with practice and experience.
On Palisade radio we have talked to a number of guests about their mistakes and what they have learned from them. Experience counts - and slowly adds up - when you have been in the markets for a number of years.
Certain clues and patterns can repeat themselves and if you are patient and are paying attention, you can leverage this experience to your advantage. But still, mistakes can be made, and the markets will provide a continuous range of lessons for the speculator to try and learn from.
We were very fortunate to interview the economist David Rosenberg earlier in the year and during our interview he shared with us some of his investment mistakes from a career that has spanned decades and has been very successful.
Another guest we recently interviewed was Lawrence Lepard, and he also shared with us some of the biggest mistakes in his career to date, and what he learned from them.
To conclude, it is ultimately your bias, your psychology, and the way you interpret the markets that will let you hold onto your winners, and let you sell all your losers. It’s you and your experience that will help you get better at the game.
Because the game is a life long learning experience.
Until next time, happy contrarian investing.
The Palisade team
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