Here's what trading and investing legend, Richard Dennis, has said about making money in the markets... "I always say you could publish rules in a newspaper and no one would follow them. The key is consistency and discipline." The above quote is from the book, "Market Wizards" by Jack Schwager. Dennis is a guy who, as a trader, took a measly $400 and grew it into an estimated $200 million dollars in a matter of years -- not decades -- by being disciplined and following his rules. He is such a legend that several other "Market Wizards" interviewed in Schwager's book described Dennis with the comment, "I'm not in his league." There are probably thousands of investment and trading systems that make money. Some make big money. But the truth of the matter is that few of the users of these systems will ever make money. Why? Few people have the discipline to stick with a winning system or strategy. They'll go through an inevitable losing period and get impatient. They start tinkering with their rules or abandon them altogether. Have you ever seen one of those mountain charts marketed by the mutual fund companies that show that if you had invested $10,000 in 1950, or whenever, your investment would have grown to $10 million or so by 2005? I'll bet you don't know one person who ever did that. And it's not because it's not true. It's the absolute truth. It's not hype. That's what the investment would have done. But that's not what the investor would have done. The typical investor would have bailed out within a couple of years as soon as the market took a downturn or as soon as the money was needed to buy a boat or some other toy. Or the typical investor might have kept switching into whatever the "hot" investment was as any given time, always buying at the peak price. As Dennis says, the key is consistency and discipline. So don't spend time looking for the Holy Grail of investments or trading systems. It doesn't exist. The Holy Grail is within you. It's not the investment that's going to determine success or failure. It's the discipline of the investor. |
