I sat next to someone on the plane from California over the weekend and I was struck, nearly dumb by his comments. He spun a tale of conspiracy, paid-off government, oligarchs, financial misgivings, bail-outs, smoke and mirrors, uprising, chaos, and civil war. By the time he was done telling his tale I only had one question: "Why do you live in the United States?"
Seriously, if our country is so horrible and terrible, which he attempted to convince me in under 10 minutes, then why live here? He then answered that, at least for now, Americans believed in the "Rule of Law" more than any other country and as long as the government can keep us in the matrix, then the "Rule of Law" will govern us, even as we're free to rebel and overthrow our government (which he thinks oppresses us and keeps us impoverished because the government is owned by the banks and the oligarchs, of which I get the impression he thinks Warren Buffet is one). I couldn't bring myself to learn more about his twisted view of our world and I really couldn't stand the thought of another 10 minutes of terror if I asked him to tell me just who the oligarchs are. He made mention of Warren Buffet's deal for Preferred Stock with Goldman Sachs (which I get the impression that he thinks was done with fire and blood in a dark room with everyone wearing robes and fancy handshakes) and that was enough for my taste.
I felt like saying something that you'll hear Guy Adami say frequently on CNBC's Fast Money: "So what's the trade?" Seriously, all this conspiracy stuff is great for movies (if you like that sort of thing) but how do you make money? If the world is going to fall apart, or we're going to have a genuine populous revolt, shouldn't their be a way to profit from it? I know that sounds terrible, but one thing I've noticed since I started managing money (professionally) 6 years ago was that I was able to reduce everything to dollars and cents. It has made me much less emotional and that's how I'm able to think in black and white regarding decisions the people I advise/manage/work with is by eliminating my emotional attachment to the subject and look at it objectively.
Jim Cramer is great at reducing any caller's question to one thing: "Is the stock going to go up or down?" "It doesn't matter what your cost basis is," is something we've seen him tell dozens of callers and write in his books. It only matters whether or not you think the investment (of any kind) will go up or down. If you know/feel/think/believe that it's going to decline or there is significant risk to such, then you just sell it and look to allocate your capital elsewhere.
"Hope is not an investment thesis," is something I've heard several times, from both Guy Adami, Jim Cramer, and many others. I had a call, just today, and I was told "I know that solar power doesn't really make economic sense right now, but I'm really hoping that in the future we'll have cleaner energy and I want to benefit from it financially." But, his thesis was ultimately that he would like to see clean energy be successful and so if his hope is realized, then the stocks of solar companies would indeed rise in value.
Unfortunately, no matter what people want the future to look like, when it comes to your money, that should never be part of the thought process. The only two things you want to know are Guy Adami's "what's the trade" and Jim Cramer's "is it going to go up or down from here". If you can answer these two questions, then I think you can be successful as an investor. Do not find yourself investing in what you'd like to happen; but rather, what you think will make you money. It's fine if you will not put money into companies that you think are morally reprehensible, but you certainly shouldn't make the connection between buying something like Massey or BP and wanting to the world to burn on the use of dirty, unsafe carbon fuels. It means that the stocks went down and they're tremendously oversold and represent very attractive investments because all the bad news of the two events and MUCH MORE are now "priced in" to the stock's price. That's it, with investing, it's about doing just that...investing...making money.
Bottom line on this story, when it comes to where you place your capital to invest in your future, try to ignore what you'd like the future to look like and try to think about what you think the future probably will look like, and go with the latter. Now, when it comes to your social causes, where you donate your time and money...that's when you get your big heart out and give back to the world you live in. When you are being charitable, it helps to get out a big bag of hope and spread it like salt on mashed potatoes.
So lets recap: 1) When it comes to making money, ignore what's said on the news, ignore your friends, please don't listen to anyone at the office, do your homework, and make sure you feel like it's going to go up based on what you learn from doing your analysis before you invest. 2) When it comes to hope, make sure you have a lot of it as this world is a tough one and you'll face many challenges ahead, but make sure you check your hope at the door before you sit down in front of your computer to trade because "hope is not a valid investment thesis."
PS. Stop watching the news, and try putting CNBC on mute for most of Power Lunch unless Steve Grasso or Fast Money is on and when the market closes, you can come back at 5pm to take it off for 2 hours.