I continue to draw lessons from the unlikeliest of sources:
In an episode of Futurama, the Professor creates a ‘what if’ machine, allowing Fry to experience life as a video game. In a classic scene, Fry almost succeeds in destroying a fleet of invading space craft, but he fails to shoot down get the last ship. When the ship lands, the alien Lrrr imparts the following sage wisdom:
“You are defeated! Instead of shooting at where I was, you should have been shooting at where I was going to be.”
The parallel to trading is that it is so very easy to be sucked in to buying activity when prices have risen and when everyone around you seems to be making tidy profits. In this situation a trader is at great risk of losing their objectivity, just when they need it most. I am not knocking technical analysis, momentum trading or trend following. All I am saying is that we must heed the wise words of Lrrr, judge each investment case on it’s merits and consider the likely course of future prices from a rational perspective.