Short Sharpe Scary

February 12, 2018
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I am not saying the resent move lower will not leave a mark, I am just trying to stress that it is all part of the process.

Human beings are not wired to be rationale investors, thus like any physical task you must practice training that 3 pound mass in between your ears.

One of the key themes of behavioral finance is that our investing brains often drive us to do things that make no logical sense – but make perfect emotional sense – at the time.

This just makes you human. We all can’t be great investors like Warren Buffett.

Our brains were originally designed to get more of whatever would improve our odds of survival and to avoid whatever worsened the odds.

Thus we are literally wired to shun whatever seems risky, like a drop in the stock market.

If you are not used to down weeks, get used to having them.

Volatility is NORMAL.

Just Breathe.

And ask yourself this: Can you control the markets or interest rates? Of course not.

You can control your actions to the recent stimulus of market events.

Remember ICE: The Investor Character Equation of Stimulus + Response = Optimal Outcome

If we want to change a habit, we have to change the way we respond to our thoughts. Notice I didn’t say we have to change our thoughts, rather we have to change the way we respond to our thinking.


Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O


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