Page 28 - THE MARKET WHISPERER

THE MARKET WHISPERER 27

six months, can you provide a precise answer? If, on the other hand, I ask
where you will be tomorrow morning, it is more feasible that you will
know and end up being correct.

Nor am I any different in this respect. I, too, lack any knowledge of how
the market will play out. By contrast, sometimes when the fog clears a
little, I can, within reasonable bounds, successfully predict the direction of
the market or a specific stock for a span of several minutes, several hours
or even several days ahead. In those rare instances when the fog entirely
lifts, we can even see several weeks ahead.

For Success, Advantage is Vital

Making a living requires an advantage. What’s your profession? Do you
have some kind of advantage? Of course you do! If you had no advantage
to offer, your client would go to your competitor. As with every profession,
the same is true for stock traders. You need an advantage!

Trading is like managing your own business. As with any business, if
you fail you’ll need to close the business, fire the manager (that’s yourself
in this case), and find a new source of income.

Prior to investing in any business, you need to ask the following: Who
are your competitors? How can you beat them?

The owner of a business needs to understand his or her advantage. Is
the advantage in quality? In service? Location? Products? Without a clear
advantage, your business will fail.

A stock is a commodity like any other commodity. Don’t buy stocks if
you have no clear advantage to offer. If you’ve decided to become a stock
trader, you must be able to identify the advantage and make the best use of
it, operating just as you would in any other business activity.

Most of the public is defined as long-term investors. They believe in
their ability to identify companies which, over a long term of some months
or even years, will rise in value. The media is full of calculations showing
the millions you could have made had you bought 1000 Microsoft stocks
in 1980. Warren Buffett is known for having made billions through long-
term investments. Generations of investors were nurtured on these tales
of good fortune and attempts to duplicate them.

Wake up! Just because a select few got lucky does not mean that most
people make money investing in the long term!

History ignores the greatest majority of investors. That’s the 90% who
lose their money. Many investors who made hundreds of percent profit