It’s a Love Thing….
Trading versus investing – it’s like love and relationships really. It can all go sour but when it’s good it’s soooo good…. Strap in for a heart pounding ride
Article by Patrick Latchford – CEO Blackwell Global investments Ltd
I’ve been asked many times, “what’s the difference between investing and trading?”, so in this first piece (or it could be my last – you’re looking good so far – Ed), it’s trading that gets the focus, comparing something we all understand with something few of us ever get the measure of. Trading, unlike investing, is short term, higher risk, and rarely dependent on ‘fundamentals’; whether or not a company, commodity, or index is doing well.
Love and Trading
It’s surprisingly similar, and perhaps if you think of your ‘strategy’ in relationship terms, you might improve your performance, one thing is for sure, neither love nor trading is for the feint hearted.
Be prepared to be disappointed
You lock eyes on the perfect partner or trade, in that moment you are certain, completely certain, that it can only go one way – it going to be profitable (emotionally or financially, these could work for both). But things happen, sentiment changes, and what started so promisingly, turns sour; you’re ‘stopped out’ blubbing into your skinny decaf soy latte (stop drinking those btw).
Fate is overrated and an overworked ideal, it’s for ‘others’ that struggle with responsibility of taking charge of their own destiny. The only certainty in the world for both, (though this covers more than our two protagonists) is that nobody really knows what’s going to happen in the next hour, day, or week. It’s more random, a stochastic walk that could go your way, it’s emotional not clinical; though what is certain is that you can’t trade and win unless….. well, you are in the market…
But following on from my previous point, these two bedfellows are powerful forces, if you don’t show a considerable amount of respect they are likely to catch you out. Being ‘in the market’ for either means that you could lose something precious.
But when it’s good….
It’s not all doom and gloom of course, there will be times when your spirit will soar, you can’t keep the smile of your face; it’s passionate, seductive, heart racing, pulsating…. the adrenalin junkies ultimate high. When it’s good, it’s very good.
Are you serious?
So, if you are serious about love and trading, a little thought goes a long way. Gut instinct alone, for both, works only for George Soros and George Clooney respectively.
Of course famously and notoriously, GS was speculating (another good word for trading) when he went up against the Bank of England and made a bundle on the pound crashing out of the Exchange Rate Mechanism, and he managed to make a huge ‘turn’ (the traders’ word for profit ) in a few days. GC, on the other hand, when he launched his Tequila brand, was investing long term, with business fundamentals the driver (or rather the fundamental that Clooney’s name on anything would sell the hooch).
Which one are you?
For those of you who you think you are George Soros (or Clooney) here’s the test:
For Soros: Are you worth over a billion (Dollars, Euros, Pounds – any will do), does Goldman Sachs follow your trading in the markets?
For Clooney: Does literally everyone on the planet love you (that’s men and women), can you put your name to a tequila brand, do no work at all, and then sell the company for a billion?