Part of a great investing discipline is this: Not predicting but reacting!

Wednesday: The Independent Investor FROM THE DESK OF MILES EVERSON: American investor Peter Lynch once said, “Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.” Any idea on why Lynch would say that? He stated that to warn against market “predictors.” Keep reading to know how you can properly ride the waves when you’re in the middle of a bull or bear market. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

Part of a great investing discipline is this: Not predicting but reacting! For the past two weeks, we’ve been talking about the bull and bear market as well as how to create opportunities out of crises. … and we’re not done talking about this investing discipline yet! There’s one more thing that you need to know to master capitalizing on the bull and bear markets when they arise. That is… Do not predict but react! As an independent investor, you must always be prepared to act, but not prematurely. There is also no need for you to guess whether a bull market is ending or a bear market has occurred. You don’t need to predict the markets; you only need to be able to recognize them! Besides, that ALL you can do as a disciplined investor. According to American billionaire investor and philanthropist, George Soros, “The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market.” As a normal human being, you cannot predict the market’s waves. However, you can ride the market waves when you’re in the middle of them. In other words, reacting instead of predicting to the markets at hand. … but there’s a consequence to doing that. No matter how disciplined of an investor you are, you will still lose money at the end of a bull market. You won’t be able to buy at the absolute lows. Here’s the thing: As a disciplined investor, you should be comfortable with that. Just like what Paul Tudor Jones said, “I'd say that my investment philosophy is that I don't take a lot of risk, I look for opportunities with tremendously skewed reward-risk opportunities.” Recognizing big swings in the market while ignoring daily blips is a discipline shared by many great investors. If you want to capitalize on bull and bear market opportunities, learn to recognize changing patterns in the market and be prepared to act in a reasonable manner. Hope you’ve found this week’s insights interesting and helpful. Follow us on LinkedIn.     Stay tuned for next Wednesday’s The Independent Investor! Learn more about why patience is the most important asset for an independent investor and how panicking can hurt you on next week’s The Independent Investor!