Chris examines most traders tendency to focus on the short term and in the end they lose money trying to avoid volatility. It’s impossible to make money consistently if your goal is always to avoid volatility. Over trading trying to avoid drawdowns will only cost you money. Drawdowns are a normal part of this business and impossible to consistently avoid. And one doesn’t have to avoid them to make money. Most amateur traders never learn this lesson and most never consistently make money. Every trader in the challenge, and that includes all 5 leaders has experienced drawdowns, even significant drawdowns. Yet they are still making good money.
The larger trend is up and has been for 9 years. In a secular bull market, which we are in, the larger trend will remain up for 20 or more years. You can let the larger trend work and make money or you can get sucked into whipsawing your portfolio by attempting to dodge every wiggle on the path higher.
Bears are constantly looking for the next trigger that will start the bear market they’ve been anticipating for the last 9 years. But secular bull markets aren’t driven by QE, or low interest rates, or share buy backs, or the absence of geopolitical events, etc. etc. This is why none of these things have halted the bull market. The latest excuse is the conflict in Syria.
Bull markets are driven by new technology’s. Wars don’t change or stop the advance of technology. The first gulf war had no long term effect on the last bull market. Why? Because it didn’t stop the development or advance of the personal computer or internet.
We’ve had tsunamis, Greece, Brexit, end of QE, the beginning of a rate hiking cycle, threats from North Korea, etc. etc. and now a conflict in Syria. None of these things have had or will have any long term effect on the market. Why? Because this bull market isn’t being driven by anything that can be affected by these kind of short term news events.
This bull market is being driven by new discoveries in biotech, robotics, nanotechnology, transportation, alternative energy, etc. No geopolitical event is going to halt these technological advances.