Student debt is out of control. Credit card debt is out of control. Household debt is out of control. The housing market is kind of slowing down.
Yes, I’m concerned.
But think about this: Do you ever stop to wonder if the passive investing we’ve all been taught to do over the generations is actually working? The idea that maybe handing control of our financial future over to some guy in a suit isn’t the greatest idea in the world?
Because the smartest guys in the room — the hedge funds — certainly can’t get it done. On average, they can’t even beat the market, and they have the best and brightest financial minds in the world.
But if you could make just 1% a month, you’d be set for life. You’d beat 90% of the hedge funds out there and you’d beat 95% of the so-called professional financial advisors too.
Trouble is, no one ever wants to do that. They want the big wins. They want the flashy cars.
But think about where you would be if, for the next X number of years, you beat the market? Five years running and you did 1% a month without any substantial drawdowns.
You’d have a track record that you could take to the bank. If you have 20 years left in your financial career; you could retire with $10 million in the bank.
All you have to do is think small. I’m talking like 1% a month.
Because small wins like that are (1) achievable on a regular basis, no matter what the market is doing, and (2) add up over time.
You could find 1% in bear markets. You could do it in the middle of a recession. You could do it in the bond market.
In order to make 1% a month and be happy with it you have to give up on this ridiculous notion that you want to double your account size because you’ve got bills.
Because there are two ways to go in this world: you can go for the big win and potentially lose everything, or you can for small consistent returns and, over time, you can win all of it.
And those returns add up over time. That’s where you need to focus your attention and your energy.
Every once in awhile, we’re all going to have bad trades. That’s just a fact of life as a trader. You don’t make money without taking some bets, and sometimes they just don’t work out. That’s OK. The real question is: how do you know that the thesis behind the trade is no longer valid? How do you know when it’s time to sell? Here’s how I do it…