The fear of losing money can make people act against their own best interest. I have seen this many, many times through my years of coaching traders. The thoughts you have about losing money will be the determining factor of whether you took action on the recent opportunities in the stock market or you let those opportunities pass you by.
I hoped, even dreamed that all the people who heard episode 17 took action and benefited by the market sell off. But I know many did not. It boils down to the topic of losing money.
If losing money is your focus, it’s going to be a lot more frightening to add to your positions in a pandemic than it would be when things were just going along fine and the market was simply overvalued. This is the dilemma we have with the scarcity mindset when it comes to money.
Now don’t get me wrong, I also thought the market was over valued for the last several years, and I also withheld money from the market. I took the same actions as many other traders but the difference is that I didn’t withhold money because I was overly concerned about losing money. I did it because I didn’t think there was a good opportunity to make money with the market at those levels.
Not adding to the market due to lack of opportunity is a very different point of view than not adding because of fear and that difference is going to produce very different emotions which will inevitably lead to very different actions and therefore different results. The difference being I wasn’t overly attached to the money, therefore instead of being afraid and crawling into a shell, I had my head up looking for opportunity.
Nor was I overly greedy. I wasn’t so focused on making money that I was trying to pick the absolute bottom or looking for the lowest possible number I could possibly conceive so that there was no possible way I’d draw down or I’d make the most money possible.
I was simply looking for a reasonably good prices, and when I saw them, I went for it. Not because I thought the market was bottomed but because it was a good value and since I wasn’t afraid of losing money I can now participate in the rewards the market has to offer.