You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right. In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand. -Ben Graham
There are plenty of folks out there that want you to believe that there’s only one way to make money in the markets (and they’re only too happy to show you how). This is just not true. I truly believe that there are as many ways to make money in the markets as there are unique human beings on the planet.
One thing I hear more and more, especially on social media, is that when it comes to investing, “one size fits all.” Usually, this takes the form of some sort of “passive” program akin to what the robo-advisors are doing. (In other cases, and this is far worse, somebody’s got a “secret sauce” to sell you. When you hear this you should grab your wallet and run the other direction.) And if you’re not doing it their way you’re an idiot.
Now I believe that the growth of index investing is a good thing, generally, and I’m especially excited about the fact that investment costs have been plummeting lately. This has huge benefits for individual investors. But don’t feel bad if it’s not for you.
The problem I have with the way some programs or services are being promoted by some is that one of the biggest mistakes I see investors or traders make is trying to be someone they’re not. They try to assume someone else’s investment style and it just doesn’t work for them. They eventually find themselves in an uncomfortable or painful situation. They don’t handle it well and they make a costly mistake.
So-called “passive” investing may be suitable for lots of people. But just because it may be the right thing for many, it may not fit the unique dispositions of another group of individuals. That doesn’t make them idiots. On the contrary, understanding what best suits your own sensibilities before you run into the inevitable bumps in the road makes you wiser than most, in my book.
If there’s one lesson to be learned from Jack Schwager’s terrific “Market Wizards” series of books it’s that there are a million different ways to be wildly successful in the markets. Every “wizard” does it differently. If there’s one thing they have in common it’s that they’re all unique.
The true secret to success in the financial markets is to find your own unique style, your inner market wizard. Find a style that suits your unique values and natural abilities – your personal circle of competence. In fact, the only way to achieve your own idea of success in the markets is to develop your own style that you can have complete confidence in. And don’t let anyone tell you you’re an idiot for trying.