The always same problem of investors – Mr-Market markets, stock market, trading, economy

Many new investors are currently flocking to the stock market in Germany as well, driven by the need to find a little return somewhere in the age of zero interest rates and inflation.

And a hungry financial industry is just waiting to attract these new investors. It’s like in the old days of Westerns when the uninitiated step up to a poker table and ask with interest, “Is this the five-card game?”

The poker pros then look at each other, avoiding any grin, and the one with the watch on the gold chain in his vest says with an emphatically friendly smile, “Sit down, you know how to play poker!

And the offer that is made to new investors is huge, it serves all their conscious and unconscious needs. There forecasts are offered and whispering prophecies, deep “value analysis” of a share “to the reason” go, Charts peppered with colored lines, so that one does not know already at all more where the price is represented at all, “hot Tipps” for the newest “10-Bagger” and much more besides. There are “renowned experts” at every corner and the number of followers on some platform is raised to a quality criterion, as if the number of flies … Well, you know, I don’t have to go into that in depth.

The investors are then in the candy store and all seem to want only their best, which is then true again with a different meaning.

A few years later, these investors then have, in the best case, a mixed investment history and, in the worst case, they are disappointedly gone again because “the stock market is crap”.

That’s the way of the world and it is for a reason. The reason that in reality all the “value analyses”, prophecies and thousand indicators are if at all at best only half the battle, that these only a *control illusion* pretend.

Because the real art of investing is the ability to move purposefully and profitably in uncertainty.

But the uncertainty remains and all attempts to eliminate it are doomed to failure from the start. And offers for the inexperienced can be reliably recognized by the fact that “security” is promised; nothing can more reliably pick up the insecure investor’s soul.

That is why really experienced investors are no longer looking for security and the “holy grail”, but have learned to live successfully with uncertainty.

And the real, difficult problem investors face is typically *not* addressed and that is our psychology, which has not prepared us humans evolutionarily to think systemically in probabilities and scenarios.

Instead, we think in the face of uncertainty in the way that was necessary in evolution to ensure our reproduction, which is unfortunately rather counterproductive in the market. We are “hairless monkeys” and still think this way in the face of crises and risks, which is why we here at Mr. Market lovingly and mockingly call these thought structures our “monkey brain”.

We all carry this “monkey brain” around with us, each of us, including me. But you can learn to recognize it and rise above it. It improves decisions in uncertainty and is the *central factor* that stands between success or failure in the marketplace. Any indicators or the differences of techniques are secondary to that and if you don’t af you don’t want to recognize how wrong our instinctive reflexes are when it comes to investing money, you will never be able to find consistent success apart from lucky hits.

Quite specifically in the last few weeks, this has been seen again among investors. To do this, one must recall how our instinctive behavior toward severe risk is evolutionarily polarized. I have already used the following example of the water hole in the savannah in -> The knife carrier, the bald head and the face of the Chinese.

Because our risk behavior is evolutionary polarized to survive in any case. So if there is an important water hole for us and next to it a bush and it rustles so that there could be a lion in it, then we are trained to be hesitant in such moments, because our survival depended on it at that time!

Better 100x too long hesitated than 1x dead! That was and is the right risk management for the savannah, that was “inbred” into us. For the stock exchange it is however grottenfalsch!

Because who thinks in such a way at the stock exchange, hesitates always too long and is always too late, upward as downward. Well, does this sound familiar to anyone?

The desire in us to wait until “the coast is clear” is overwhelming, to wait until the lion is gone for sure! For the savannah a perfect behavior, for the stock exchange the guarantee to miss a good part of a bull market and then to be the last to enter before the prices fall again!

Because we like to feel “safe”, we wait until the market has already run too far and all those who wanted to buy, have already done it. That’s why the market then turns down after we security seekers have also bought, we “bagholders” who then get the buck.

And such a classic moment we had in the market now also in mid-October on 14.10. I had prepared them here also in the free area with the article -> The 4th quarter – Yesterday, Today, Tomorrow on the fact that the correction in the course of October should be to buy.

I also clearly showed the signals on Twitter -> here and -> here.

Nevertheless, many will have hesitated, then the courses have taken off on 14.10. but with power and one has waited as a man of the savannah further to “play it safe”. 5 days later, however, all-time highs were already reached again and the hesitants had once again waited too long.

This is exactly the monkey brain, this is exactly the behavior in the savannah when in the bushes could be a lion. We must simply recognize that our instinctive behavior for the stock market *is usually wrong and a contra-indicator*!

The correct thing to do here would have been instead to be already in, but to have hedged just below the recent lows. Or to be so agile and prepared that one would have bought directly into the first thrust on 14.10.. Both were sensible approaches, simply waiting until the “coast is clear” on the other hand was not, that is a guarantee of losses.

All this, all these psychological problems are always a topic with us at Mr. Market, because it is the central problem of all of us, we all have this evolutionary imprint to deal with uncertainty. If you can’t and don’t want to see that, a thousand other indicators won’t help you either, you’ll always see the same

make any mistakes.

You do not have to join us, look for your teachers and coaches wherever you want. But one thing I can tell you with certainty: Choose sources that also deal intensively and competently with the psychological side of stock market trading and do not just indulge mechanistically in numbers or colorful line satisfaction. Because our psychology is the central factor that accounts for at least 50% of success or failure in investing. Theorists don’t get you anywhere here, neither do number fetishists, if it were otherwise, accountants would be the most successful traders in the world – but they are not.

The real problem that lets many investors fail looks at us in the mirror and is the unreflective action reflexes of evolution, which are completely unsuitable for a reflexive system event.

And if they now believe that this would only affect the traders, the “evil gamblers”, then they are completely mistaken. The self-proclaimed investors are particularly affected, wonderfully last to admire during the Covid crash in March 2020. There one has first the situation schöngeredet, with 20, 25 and 30% minus then nevertheless cold feet get and then that suppressing from outside looked away, as the courses rose again. Too late, both up and down – once again.

And because this is not so easy to accept and not everyone is prepared to recognize and tackle their own weaknesses, comparatively little is said and written about it. Because it is easier to sell clicks and subscriptions with the illusion of control of the “secret indicator”, “hot tips” or the “secure system”.

Stupid question, why does someone with “safe system” need to catch customers with ads at all? Why isn’t he in his own Gulfstream already on his way to a private island in the Bahamas? Exactly.

The man of the savannah waited in front of the bush until the risk of the lion had really disappeared. And that was the right thing to do.

The modern investor in the reflexive market, on the other hand, coldly evaluates opportunities and risks, and if the opportunities outweigh the risks, he marches straight through the bush and secures himself with armor (risk management) in such a way that the lion’s bite can never become life-threatening.

Because to chances also always belong risks, the art is to deal with it and *not* to avoid these!

That is the way! You can train it, but it will not be given to you.

Your Michael Schulte (Hari)

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