Based on my 30 years in the markets, the single best lesson that I can impart to investors to dramatically improve their investment performance is one of my basic principles, “No one knows with certainty what is going to happen next.” Practicing this simple principle in my investment calls is in part responsible for consistently generating profits.
Once an investor embraces the idea that no one knows with certainty what is going to happen next, the investor is free from cognitive bias and is able to analyze markets objectively. This simple idea is so powerful, that over years my followers have dubbed it Nigam’s second law of investing.
This law is especially powerful because Wall Street is the only place where gurus can be consistently wrong and still keep their jobs. Further, a typical investor is bombarded with so many views from so many talking heads that it is difficult to discern the validity of predictions made by gurus. Plus, there is an overabundance of gurus, and it is often difficult to find enough information to verify their track records relative to the risks taken separate from the luck of a rising market.
As part of this lesson, make a list of gurus you follow on stocks and silver and test their calls against the two charts shown below.
Take a look at the annotated chart of the SPDR S&P 500 ETF Trust SPY, -0.02% going back to 1993.
Please click here for the annotated chart of stocks.
Over the 21-year period shown on the chart, there are five major turning points; three on the buy side and two on the sell side…Read more at MarketWatch
