Promises are made to be broken and lies are meant to be kept. If you examine the above phrase you will find out that 9 out of 10 times it is true. Hence the saying broken promises. At this stage you might be tempted to ask the question what does this have to do with investing. If you bear with me, the answer will be provided to you shortly.
Lets take the first part of the statement. Promises are made to be broken. First of all let’s examine the state one usually is when one makes a promise or vows to do something. 90% of the time one is in an emotional state of frustration, despair, anger and or in a euphoric state. What is the theme here, each of these states of emotion represents an extreme deviation from the norm, either an extreme positive or an extreme negative deviation from the mean. The first thing an investor learns after losing some money in the market is that doing anything based on emotion is a recipe for disaster. So following that principle is it not more then obvious that promises rather than lies will most likely be broken, as one did not sit down to logically evaluate all the information before making the promise.
When it comes to lies on the other hand, the person is usually thinking in a devious manner. It is more likely that the person is in more control of his or her senses when a lie is going to be told, simply because one spends time thinking about how one is going to go about telling this lie. So the process of telling a lie involves some thought, while usually the process of making a promise usually involves none.
Now lets get to the part of investing. Many of us make promises to ourselves that we are going to change the way we invest or we are going to be more careful in our investment selections. When do we make these promises, immediately after we have been financially decapitated (Suffered a huge financial loss). This simply means that most likely we are not going to keep this promise, because we took the easy way out. When one makes a mistake the easiest way out is to simply promise oneself that one is not going to repeat that mistake. Look at your own investing experience and re call how many times you have and are still breaking those empty promises you have made. Ironically look at the way we chose to describe promises that are broken or might be broken. Empty promises, broken promises, etc we never say empty lies, or broken lies, since by nature lies are already full of BS and are already empty to begin with.
The hard thing to do would be to sit down and write down what you did in a journal and then slowly but surely examine where it was that you erred. Now instead of promising yourself that you will not make the same mistake, instruct your mind to remember the mistake and drill that mistake into your memory. If you remember clearly what your mistake was, it is very unlikely that you will repeat it again. One does not need to promise one self that they will not put their hand on a hot plate again. The reason is simple, not only was your hand seared but you seared that mistake into your memory banks and hence you will never repeat it again.
The key to better investing is to simply remember your mistakes and victories and embrace them both. There is nothing wrong with making a mistake as long as you learn from it.
So if you were a bear during this serious bullish run up in the market, do not curse yourself, do not look down on yourself. You did nothing wrong, the mistake you made was first to trust other advisors opinions fully and the second one was that you looked at the markets too rationally. If you realize your mistakes you have nothing to be ashamed of. In fact you should actually be proud, because in all likelihood, you will not repeat these mistakes. It is the person who fails to realize that he is to blame for his actions that carries on repeating the same action he seeks to blame others for. Everything we do in our lives can be only blamed or credited to one person and that person is the image that stares back at us when we look in the mirror. As they say a bad carpenter blames his tools and not himself.
Lets take this one step further. A true contrarian investor should therefore not believe any services that explicitly guarantee them that they will make a certain minimum. There are many such services claiming that its so easy to double or triple your investment
Lets look at logic here. If you start with 10 then at the end one year you will have 20K second year 40k, third year 80k and fourth year 160k, pretty soon you will have a million bucks. Well if it was so easy to do, why the hell are they wasting time charging you only 600-4000K a year. If on the other hand they said we are looking to make 100% a year but if we do not we will refund you 50% of your money back or so, then that sounds more credible. Why does it sound more credible?
1) They are telling you there is a risk,
2) They are telling you that they are after all human
3) They are also telling you that they are willing to share some of the risk with you.
So now lets take it to the extreme step. From a contrarian perspective it might actually makes sense to believe someone who lies. Liars generally have a consistency about them. While people that make promises usually go way overboard. So in reality the people that make promises are usually liars and liars are in advertently actually telling the truth because they actually do what they really wanted to do. The person making the promise not only breaks his word to others but also more importantly breaks it to himself. Which is far more important, because this shows that the person has no self-respect. If someone has no self-respect then how can you expect him or her to respect you?
A liar has a trend and we all know that the trend is your friend, so we can take information from a person who is a known liar and then take opposing positions. Are you starting to see how lies and contrarian investing are connected? Why is it contrarians always tell you to take positions that oppose the masses. Look at CNBC they indirectly promise to bring you unbiased and top-notch investment info and all they do is lie to you day and night. However they are consistent with their lies so one can profit by taking positions that are contrary to their outlooks.
One thing you can do immediately is stop making empty promises to yourself and instead stand up and be a man or woman and tell yourself the following. “ From today I will examine each and every mistake I make in detail and sear it into my memory banks”. If you do this you will never have to make any stupid promises to yourself.
Once again remember there is nothing wrong with making a mistake in fact there is something good about making one, it gives us the chance to learn something that we might not have, had we not made the mistake. So lets stand up and dust ourselves and congratulate ourselves for having the foresight to even recognize that we made a mistake. Most people do not even realize they are making a mistake or mistakes. Then take it to the next step, study your mistake and ingrain into your memory. When you do, your mind will automatically look for ways to prevent you from repeating the same mistake.
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