Ben Carlson of A Wealth of Common Sense has this to say regarding the recent Greek drama:
“If you’ve been following the Greek saga from the start you begin to realize that even the experts on the situation are pretty much just making it up as they go. How often do the economists change their odds for the probability of a Grexit? Maybe stop guessing since your forecast is worthless in a matter of hours? Trying to place odds on the likely outcomes of these types of political scenarios is like trying to count cards in blackjack when the dealer re-shuffles all six decks after each hand.”
Most of us read something like this and generally agree with it, but then we continue seeking answers to all our burning questions. What will happen with Greece? Is the market going to be higher or lower over the next month? What will the weather be like on my vacation? Humans hate uncertainty and will do almost anything to eliminate it (or create the illusion of eliminating it).
Uncertainty drives us all so crazy that we actively seek out any information that resembles a “solution”. The possibility of eliminating the uncertainty gives us comfort, although it probably shouldn’t. We just can’t seem to accept that many things in life are out of our control.
It takes practice, but I think the best solution is to accept that there doesn’t always need to be a “why”. Some things just are, whether they jive with the story you’ve created or not. Creating stories can be dangerous, as they’re often a breeding ground for behavioral biases.
This is a big reason why we use point and figure charts at Mullooly Asset Management. They don’t predict the future, they tell us what’s happening right now. This allows us to monitor investments without trying to outguess the market. I recently wrote about this here: https://mullooly.net/technical-analysis-helps-us-focus-on-what-we-can-control/8225
Check out Ben’s post here: Letting Go of the Why
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