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TRUTHS

As I attempted to stomach the National Conventions this past month, I was reminded of the movie “Liar Liar”. Jim Carrey plays a conniving attorney who suddenly finds that his beloved son has made a birthday wish that his dad would stop lying for 24 hours, and the dad suddenly can only speak the truth. 

If only that wish could have worked at the Conventions. The parties have made lying an art form, and they both painted masterpieces in July.

I wish there was a rule that if a politician was caught in a lie, they would be forced to immediately resign from office, or drop out of a race. How about a Presidential debate in which the candidates are incapable of lying? Now that would that be one humdinger of a debate between these two candidates.

And it’s not just politicians. It’s the media covering the politicians. 

It’s the news anchors and commentators. Its editors and journalists. Lobbyists and activists. Writers and historians. Bureaucrats and corporate officers. Actors and athletes. Young and old. It’s truly a worldwide epidemic.

But what’s even more alarming is the fact that we’ve become almost numb to it. We seem to accept that everyone lies. For fear of being accused of bullying, we’ve even come up with softer and gentler words to describe a lie. The word has been by fib, fabrication, inconsistency, misrepresentation, manufacture, stretch, fiction, and other more politically correct words.

Call it what you want, but a lie is a lie, and it’s completely out of control.

I’ve got an idea. In the smart phone age we live in, why doesn’t someone invent a truth phone? A smart phone that can filter lies.

“Siri, is this person telling the truth?” “No, he’s full of it.”

Or how about a smart watch that not only tells the time but also tells the truth. We have a watch that tells us when to stand up, when to turn right, when to take the cookies out of the oven, and even when to take our pills. Why can’t we get one smart enough to tell us when someone is feeding us a bunch of horse manure? The Truth Watch, or T-Watch for short (patent pending).

The stock market is also fraught with people who lie. Professional liars. They will say whatever necessary to take money out of your back pocket and put it in theirs.

The trick of the trade is to be able to cut through the lies that is the noise of the stock market to get to truth. The brutally honest, unbiased, unfiltered, unemotional truth. If you can find truth, you have a fighting chance to be successful in this business.

So allow me to share my Top Ten Stock Market Truths. These are the very basic but important realities you need to know about the stock market. Of course there are lots more, but these are the ones I would post on the refrigerator:

10. No one knows the future. Many in this industry will act and talk like they can prophesy, but the can’t. The only difference between you and them is they have an excellent wardrobe of ties in their closet.

9. The economy and the stock market are two completely different things. The economists want you to believe they go hand in hand with the stock market, but don’t buy it. Most of the time they aren’t even kissing cousins. The stock market moves in its own direction and its own pace, oftentimes completely opposite of the economy.

8. The professionals who make a living trading in the stock market want to take your money. This is a zero sum game with winners and losers on every trade. Look at the trained professionals as card sharks sitting across the poker table, and they know how to play. They may smile and extend a hand of friendship, but they are doggedly determined to take all you have, no more, no less.

7. There are no guarantees. No matter how much you learn, how hard you work, how foolproof your trading strategy, or how far you stack the odds in your favor, there are no certainties in the stock market (or in any other area of life for that matter). You can make money, or you can lose money on each trade, and you should be prepared for either outcome.

6. It is not the news that matters, but the reaction to the news. It doesn’t do you any good if a company reports blow out earnings. It only does you good if their stock price goes through the roof. Never focus on the event itself. Rather focus on the reaction to the event. That’s where the money is.

5. The people wanting to sell you something in this industry are not making money in the stock market. If they were actually making money in the stock market, do you really think they would want to share it with you? They would be too busy making bank, bro. They don’t make their money trading. They make their living trying to convince you to purchase their system, or book, or newsletter.

4. You can learn to time the market. If anyone tells you otherwise, run. They are the same guys who will take your account down with the next stock market crash, telling you to hang in there, that it will eventually come back. Try telling that to some good people who have watched their oil company stock blow away this past year.

3. A stock’s price may or may not be reflective of its real value. I’ve watched more people part from their money because they are lead to believe that the fundamental value of a company should always be reflected in its stock price. That sounds reasonable, but it’s not how it works in the real world. In an open market system, the price of a publicly traded company is determined by what a buyer is willing to pay, and that can vary from day to day and moment to moment based on human emotions, namely fear and greed.

2. No matter what you do, there is risk involved. When you get out of bed in the morning, you place your life at risk. After all, there are thousands of things that could kill you out there in this cold, cruel world, right? But stay in bed with the covers over your head and risk developing bed sores, or heart problems from being sedentary, or schizophrenia from watching soap operas all day. Put your money in the bank, and the bank could go belly up, or the FDIC could go broke. Place it under your mat- tress and your house could burn. Lend your money to  a company and that company could file bankruptcy and leave you holding a worthless piece of paper. Buy stock in a company and the price could go to zero. Leave your money in cash and risk missing out on a great opportunity. There’s always going to be risk no matter what you do. The secret is to do your best to clearly understand and mitigate risk as much as reasonably possible, because you can’t completely avoid it.

1. You can make money in the stock market. It’s hard work, and takes patience and discipline, but if you can fight through all the lies and day to day noise of today’s market and find the truth, you have an excellent opportunity to have success.

 So enough of the Presidential race for a while, and let’s all kick back and enjoy the purity and innocence of amateur athletics and the Olympics Games from Rio, where I’ve been told lies and deceit and cheating are banned from competition.