Here's a simple question. How come the market makers are never to blame when your stock goes up?
If that sounds like so much Swahili to you, it's a backward allusion to the blame-shifting habits shared by a certain class of "investors." You know the type. They're the same ones who pile into speculative whipsaws such as Ipix (NASDAQ:IPIX), Travelzoo (NASDAQ:TZOO), Altair Nanotechnologies (NASDAQ:ALTI), or Overstock.com (NASDAQ:OSTK) without even looking at a 10-Q. The same ones who subject the Yahoo! message boards to the world's most amazing spelling errors while watching every miserable tick on the tape.
Stock goes down? It must be a conspiracy. Somebody's doing something unfair. It's gotta be the specialists and market makers. If it's not them, it must be the naked shorts! Or those "montly fools are short!" Quite simply, it can't be my fault.
But the reverse never holds. Stock goes up? It's not market makers. It's certainly not the naked shorts. It can only be because I'm so smart. I made the right decision! I deserve my reward.
Don't believe it. There will come a time when your best-researched company falls and can't get up. Conversely, you will (as I have) make some pretty uninformed-- even downright stupid -- investments, and you'll be rewarded anyway.
Although your wallet won't know, there is a difference. As you move on down the road, bad bets will eventually take their toll. A few wins won't be able to make up for years of bucking the probabilities. In the end, the odds always win, but precious few people actually care. (Yup, that's why casinos such as Harrah's Entertainment (NYSE:HET), Penn National Gaming (NASDAQ:PENN), and Ameristar Casinos (NASDAQ:ASCA) are seeing such growth.)
The bottom line is this: Building wealth through stocks depends on betting the right side of the odds more often than not. Admitting mistakes and recognizing the real reasons for your success are vital for learning where the odds are.
For related Foolishness:
- Learn how to play the good odds and find the next home run stock.
- Much as you might wish it, others aren't to blame.
- Remember the probability curve.
- Take a look at the casino earnings talk.
At the time of publication, Seth Jayson had positions in no company mentioned. (Overstock is a Motley Fool Rule Breakers pick.) View his stock holdings and Fool profile here. Fool rules are here.
