As featured in the Herald Sun – Friday 23rd December 2016.
By Gary Stone – Author of Blueprint to Wealth: Financial Freedom in 15 Minutes a Week & the Founder of Share Wealth Systems
Some may say that 2016 has been a strange year in the financial markets. With Brexit, Trump’s election and the Italian Referendum you might say it has been a year of unexpected outcomes. In reality, it has been business as usual – uncertainty and unknowns are norms in our world. Most fear and try to avoid these two risky imposters when, really, the degree to which they are embraced and managed will be the degree to which you will succeed, particularly with investing.
2016 started as the “worst start to a year in a century” in the stock market. In the first 6 weeks of 2016 the S&P500 fell 10.5% and the ASX200 fell 10%. According to many Henny-penny mainstream financial commentators, 2016 was potentially shaping up as another 2008, when stock exchanges around the world all plummeted by more than 50%!
For 2016, the S&P500 is currently up 11.1% and the ASX200 is up 5.6%, excluding dividends. Since the Henny-penny predictions at the market trough in February, the two indices are up 24.2% and 17.3%, respectively!
My long-standing customers know that one of my favourite investing phrases is “anything can happen.” Believing this puts the investor into a neutral mindset. This allows the investor to perceive the opposite to the ‘noise’ of opinionated commentators as a possible outcome. Such thinking allows an investor to be at peace with any outcome and to set themselves up to take advantage of and to protect against other possible outcomes that others can’t perceive before the event.
For example, those that abandoned the stock market after it had fallen by 10% at the start of 2016 missed out on strong gains. Or abandoned the market during Brexit or Trump’s election win. Perhaps because they believed the Henny-penny doomsayers. Or, overcome by fear and negativity, were just unable to perceive that the market could possibly rise strongly from those points.
I learnt about instilling an “anything can happen” mindset from Mark Douglas, a friend and well-known financial author of the book “Trading in the Zone.” He personally motivated me to write my recently published book, “Blueprint to Wealth.” “Anything can happen” is one of his Five Fundamental Truths, with respect to investing.
Humans have a need to put a narrative around events where the outcome was unexpected – a narrative that explains, or rather, justifies, after the fact why something happened. If it is so obvious a few hours after the fact, why wasn’t it obvious a few hours earlier?
It was unexpected because people were massively biased just before the event against the actual outcome. Bias blinds people to the truth that is emanating from the environment at that moment. “Anything can happen” overcomes bias and opens up one’s mind to other possibilities.
Liberate your investing decision-making and take an “anything can happen” investing mindset into 2017 and beyond. I trust that your Christmas and 2017 will be as thoroughly enjoyable as I find writing this column.
On the journey…
Author of Blueprint to Wealth: Financial Freedom in 15 Minutes a Week www.blueprinttowealth.com/
Check out Gary’s other media appearances: https://www.blueprinttowealth.com/