ZF Capital

AMERICANS MAKE dangerous, delusional and self-destructive decisions on a regular basis. Just look at the statistics: Plenty of us smoke, overeat, unbuckle our seatbelts, use drugs and have unprotected sex, just to name a few acts of random idiocy performed by seemingly intelligent and well-educated people every day.

Here’s the thing: Sooner or later, we pay for our stupidity. Whether it’s cancer, a car crash, a heart attack or herpes, most people who tempt fate end up losing. George Burns is the exception, not the rule.

And so it goes in our portfolios. More than any other endeavor, trading comes down to a series of choices made over time. The best advice I can come up with is also the simplest: Do the right thing.

Of course, that’s easier said than done. Navigating our place within the financial markets is quite a challenge.

Most of us follow a religion, or at least have a general philosophy that governs our actions. Indeed, from Christians and Muslims to atheists and anarchists, most of us have strong feelings about how best to approach the world. In the markets, some advocate growth investing while others put their faith in value. Some buy only large companies while others swear by the small caps. Technical traders trust only the charts while most purists follow the fundamentals. (more…)