FROM earnings estimates to research reports, most investors aren’t just informed. They’re saturated. There are literally hundreds of columnists, money managers and message-board contributors, all eager to tell you where the market may or may not be headed. And for every bullish voice, there’s usually an accompanying bearish one as well. After all, two sides make a market.
But all the Web’s information overload encourages most investors to focus on the wrong question — whether to buy, sell or hold a stock. Now, you wouldn’t think this would be such a complicated problem. After all, pick a stock and you’ve got at least even odds that it will appreciate. In fact, you’ve got better than even odds, since the market has historically demonstrated an upward bias. So then why do so many people lose money buying individual stocks, and lose even more money trading them?
The answer is because trading is a matter of technique, not simple prognostication. What has been missing from this seemingly endless (and often mind-numbing dialog) about the market’s next move is frank discussion about the craft of trading. (more…)