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The amount of ignorance is saddening

Today, the stock market was closed for observance of the President Day. Boy, I wish I could have those holidays and be at home doing nothing the same as bankers, government, and schools. But I still have to work as my trading account is not yet providing enough income to live off of it.

Warren Buffett Besides work, I try to do what Warren Buffett did and still does – read. So I read books about history, investing, trading, and trading psychology. And the trading psychology books are really revealing. It shows you how ignorant I was when I approached the markets in the first time.

The books on market predictions and analysis show how futile it is to try predicting the markets and rely solely on ones analysis. And it is also saddening how many people approach and invest their own money having little knowledge about the markets. They are just simply gambling.

Many times I told myself that if I was (and maybe still am) this ignorant and oblivious, I am then shocked. A complete lack of basic principles of investing or trading, very little knowledge of market historical behavior, predicting, basing trades on predictions and biased analysis… it is all shocking and saddening at the same time.

But I guess, everyone must go through this path of realization how stupid one was before making money. I went through the same path. I too thought I knew everything and even believed I knew better than what the Mr. Market tried to tell me.

For whatever it is worth, and you may totally dismiss me, but take my advice – study the markets and psychology of trading/investing, define your plan and stick to it and never deviate, never break your rules because you may think at some point that “now I know everything (or better).” Learn from my own mistakes.

Tomorrow, the markets will resume trading after the extended weekend. As I posted many times before, I use 50% of my options trading profits to buy dividend growth stocks. And since February was a very successful month to me so far, I made more profits last week which now allows me to purchase more shares of depressed stocks.

The fist and second week, I could buy Coca Cola (NYSE: KO), Valero (NYSE: VLO), Realty Income (NYSE: O), and Berkshire Hathaway Inc. (NYSE: BRK-B).

Tomorrow, I will be adding another stock to my portfolio – McDonalds (NYSE: MCD). It wasn’t an easy decision. Many of the stocks in my watch list were in a “correction mode” and I wish I could buy them all. But I do not have enough money to do so. Therefore, at this moment, I had to prioritize. And my biggest dilemma was to decide between JNJ and MCD. I decided to add MCD and hope JNJ stays down longer so I will be able to add it later in February or next month.

Although I am a bit skeptical that I will get another opportunity (but I may) as I see the stocks recovering really fast from the recent correction. But we will see. I might get another chance to buy more shares.

2 responses to “The amount of ignorance is saddening”

  1. DivHut says:

    Everyone makes mistakes which is OK… the key is to not repeat those mistakes. MCD should make a nice addition to your portfolio for the long haul. It’s been with me for along, long time and I have no plans to sell. Like all businesses it will fall out of favor again and everyone will crap all over it just like they did a few years back. When that happens I’d like to buy more. Thanks for sharing.

    • Martin says:

      I agree with you on those mistakes. Many times however I found myself repeating them again and again. In this light I ask myself: “How many times I have to repeat those mistakes and get punished for it before I really learn?” And now I am seeing it others doing it. More and more people do the same mistakes and when you tell them they become angry with you.

      I agree on MCD and out of favor mentality. I usually try to buy when people hate a stock for irrationality of their views… based on a short term view of what will happen next month and ignoring completely the long term view.

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