Fundamental Errors - Laurens Bensdorp
If you’ve done any trading at all you’re
probably familiar with fundamental analysis.
This is the favorite strategy of guys who think they can predict the
market based on their analysis.
I’m not kidding; fundamental analysis is a
crystal ball technique with sub-optimal returns.
I know what you’re thinking...Warren Buffett
is the greatest investor alive and he’s a ‘fundamental’ type, so that proves
that analysis is the ‘end all, be all’ of trading. Right?
Wrong.
Buffett has been extraordinarily successful
for a very long time, but most other traders who practice those strategies have
underperformed the market. In fact, even
the top 1% of traders who follow those strategies underperform the markets
(those are the guys running mutual funds)!
Picking stocks is incredibly difficult; this is why a monkey can pick stocks at
random and beat most investors.
When I was studying the most successful
traders in the world, I realized they didn’t pretend to predict the market;
they developed strategies that work regardless of market direction. In bull, bear and even sideways markets, the
elite traders of the world made money.
How do
they do it?
The best traders in the world create strict
rules for when to buy and when to sell.
They quantify their every decision and always have an exit strategy in
place. They separate their emotions from
the trades and even go so far as to automate their strategies so that they
won’t get in the way of the strategy they’ve created.
This is the very opposite of the fundamental
analyst’s approach to the market. He
studies a company so long he falls in love with it. Once he’s made his decision to buy, he’s
“married” to the trade. When it goes up,
his decision is affirmed, so he’s reluctant to sell. When it goes sideways, he just waits, waiting
for the ‘inevitable’. When it goes down,
he sees it as an opportunity to buy more!
He can’t ever face up to a bad decision because his entire premise is
that he makes good decisions.
I don’t
want to ride that roller coaster, and I bet you don’t either.
Further, while most traders ride up and down,
praying for something good to happen, I’ve made dozens of profitable trades,
not caring about the direction of the market.
Not only is this really good for my
portfolio, it’s good for my health. I don’t smoke, I don’t need drugs to relax, I
don’t stare at charts all day, I don’t watch the news nervously and I sleep
well at night, knowing that regardless
of market direction, I’m safe and poised to make a profit.
This is a revolutionary approach to trading,
and an immensely profitable one. If
living the life of one of the world’s most successful traders is of interest to
you, check out my Elite Mentoring Program here.
I have room for a few new students this month
and I’d love for it to be you.
TradingMasterySchool.com
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