Listen to the Podcast
Subscribe to the podcastiTunes Stitcher
Today, I'm going to share with you a little bit of insight from my upcoming book - Mindsets of a Master Trader.
We're going into socializing about stocks. The psychology behind socializing stocks. At least a little brief insight behind it and why it's pretty much useless most of the time.
I'm going to cover four main points here:
- My Facebook friends
- Quantity versus quality
- Look at introvert, ambivert, extrovert and
- most conversations
Let's start with Facebook friends
I'll share with you the average or most people's Facebook friends or the amount that they start collecting. Let's say 500 plus.
As you start building and accumulating people, that number might go to 700, and it just depends on who you consider a Facebook front.
The reality is that very few are going to be close relationships. Most of the Facebook friends are in the far distance, so they'll be over here, and you have a very limited or few people that you're actually hanging out with, talking with, making pleasant conversation with, discussing things in general about ideas, big picture, concepts to take you to the next level. Many of them are just connections that you've built over time, and it's just like collecting trading cards and playing cards.
Quantity versus Quality
When you look at the stock market, it's very similar to a lot of people. You have to decide how many stocks am I going to own versus the quality of stocks.
What is more essential for you to - to have 10,000 Facebook friends or to have five close relationships or even one close relationship such as a significant other a partner?
Again, you got to recognize what is more important - quantity versus quality.
Is it important to own as many stocks as possible?
You'll probably want to be somewhere in a balance between quantity and quality. Here would be maybe quality because you're having little and there would be a quantity where you're just trying to add up as much as possible.
Introvert or Extrovert?
For some people, they want to be a little more active - they're extroverts. Maybe they're looking more at the quantity or socializing more.
Introvert maybe a little bit more focused on the inside. That's when you don't want that many could be falling somewhere in between ambivert.
It's the same concept of Facebook friends, how do these things tie together? Could be more of your personality.
As we socialize and we look at socializing, many of the conversations that happen in news reports and just a lot of things that occur about the stock market are pretty much useless.
With those Facebook friends, most of the conversations that you have with those 10,000 people are general conversation.
There's a famous phrase by Eleanor Roosevelt that says "Great minds talk about ideas average Minds talk about events and small minds talk about people."
If you look at the lowest form of conversation, you're just gossiping.
This is what's juicy.
You look at the news headlines, and they're gossipy. They suck you in.
If you look at those news reports as well especially stock market channels, a lot of them are talking about people. And people in the stock market world is stocks.
Let me bring you back to this point of when you're talking about stocks, and you're talking about people. It's because it's in gossip form. It's a form to suck you in to say hey this stock is hot, and this is a sexy stock. Why is it sexy? It's sexy because hey they got this new product coming out. This is launching next week. The earnings are great, the CEOs got this going on, and it is interesting because we're gossiping about it.
That's not great socializing. That's not a great conversation for you personally to help your portfolio, to take you to that next level.
What will take you to the next level?
Let's look at events
As we start taking a look at events, we're looking at history. You look at what's happened in the past. You're looking at what could happen in the future.
Now you're talking about historical chart patterns, maybe you're talking about what could happen in the future. What do they have coming out?
This is much better.
We look at this, this is much better because you're talking about what have they done in the past, how have they grown, and how are things involving these are events.
You're looking at a perspective of time.
What's the best form? Ideas
But you get very little of that on TV news channels and a lot of the reports that maybe have huge viewership.
Very few have ideas. If they do, it's a very small or limited amount. It might be a minute clip.
When we talk about ideas in the marketplace, we're talking about looking at a trade setup.
Here's a trade setup idea for you, this is how you manage it.
How do we make things better? How do we make things better for education? How do we make things better, so we have less poverty?
That's not an idea. It's more talking about people.
How do I do the trade set up? What would I do to take profits? Or what would I do to take losses? What is that set up? What is that idea? What is that situation going to do for my portfolio?
That's really what you want to focus on.
But the majority of the conversation is not about ideas - a majority of discussion in the stock market world is gossip. Just like it is in nine out of ten news reports and channels. It's about people.
Which, in our industry, if we look at stocks, it's about stocks. What's the hottest stock? What is the stock doing?
It's gossip about stocks which is the same concept of gossiping about people.
Then you get to events - which is a little better because now you're looking at historical things. If you can get and find the ideas, which is very rare, that is the best approach because that's where it takes your mindset to that higher level.
Beyond that, you're just really looking at tons and tons of quantity tons and tons of juicy gossip that sucks you in. Talking about those hot things that are attractive, that you can't avoid. But it doesn't take you to that next level.
It doesn't make you better in this space.