Never Fear the Boogeyman

08/07/2015 6:00 am EST


Charles Kirk, of The Kirk Report, outlines why he feels far too much money has been lost by traders constantly preparing for—and fearing—the worst and he urges traders to simply focus on what is actually happening in the market, not on what they’re afraid will happen next.

The emotional scars from the past financial crisis still run deep and never really seem to go away.

Towards the end of July, I received an email from a guy considering a membership asking several questions including this one, "Will you protect me in the next bear market?" I am asked this so often that I should take a moment to comment.

When we lose money in any endeavor, including investing and trading the market, none of us can easily forget the pain. I know I haven't. Over the years, I have taken more than my fair share of beatings in the market and experienced nasty drawdowns that would make any grown man cry. However, over time—and in spite of numerous past failures—I have figured out a way to move past it and still carry on.

Without risk, there is no reward. That's the bottom line. While none of us will be able to reach the point that every thing we do in the market is correct or discover the holy grail to investing and trading the market—since no such thing exists—we can do some things that increase our ability to be successful. In my experience, the very best any of us can do is to learn ways to take advantage of as many opportunities we see while managing our risk properly to help us overcome when mistakes are made.

An important part of the process is to develop both reliable and proven strategies that enable us to move on from past, very painful experiences. For some that means hiring a robo-advisor with a low-cost, well-balanced portfolio allocation so you can take your worst enemy out of the process...yourself.

For others who desire and have the skills to be more active in the market, your success will depend on your ability to focus on the market that is right in front of you, not the market you saw in the past or whatever you fear may happen in the future. In addition, to ignore much of what you read and hear about the market from others who are projecting their own fears (whether they realize it or not) instead of focusing on what the market is doing right in front of your own eyes.

Ten years from now, there will be many investors who will be filled with incredible regret, not only being hurt in the prior financial crisis and selling out and abandoning sound long-term investment strategies at the time which has proven costly, but also just as much—if not more—by failing to take full advantage of one of the greatest bull markets we will likely see in our entire lifetime. This cycle never seems to change and I've seen this cycle several times in my life.

While I have tried my best to help as many as I can to avoid both of these regrets, it still saddens me greatly how many have fallen through the cracks. Those who allow their feelings of fear and mistrust to prevent them from seeing opportunities that are right in front of them. Far too much money has been lost by those constantly preparing for and fearing the worst, than simply doing their job to focus on what is actually happening in the market, not what they fear will happen instead.

Without a doubt, things will change at some point and the bears will come to rule Wall Street once again. I am looking forward to that day, as I know all too well how to profit from such a bearish scenario. But, until that next day arrives, our job is to focus on the market that lays right in front of us, right now in the present day. To learn from our past mistakes and move on to focus on opportunities right now. If there is one thing you must do to succeed in the markets, it is this.

If you learn how to do that, you will be far ahead of those who are constantly expecting and looking for the boogeyman to come and ruin their life and take all of their money away. Scared money never makes money and fortune favors the bold. This will always be true no matter what the market does next.

By Charles Kirk, Trader and Blogger, The Kirk Report

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