Remember “Boastful Bob”? Sure you do, he’s the chap that can never be wrong. It is simply not in his makeup. Bob suffers from an inflated ego. He’s got an exaggerated sense of his own importance. Bob is often wrong in the stock market but he will not validate his mistakes by admitting his errors. Bob takes oversized loses because he refuses to modify his outlook. Somehow, Bob’s identity and emotional worth are both tied up in “being right”. He will never let you know that he is a stock market loser because that would shatter the image that he has of himself. Bob loves to pontificate on his market expertise and he “talks a good game”. In the meantime, Bob is well on his way to the “Stock Market Poor House”.

What’s the fix for Bob!?

1) Bob needs to take some “humility pills”. These pills are hard to swallow. They are large and bitter. He needs to brutally evaluate his trading account and assess his decision making. Bob needs to come face to face with the diminishing value of his account. I would suspect that he is fooling himself into thinking that he is a profitable trader.

2) Next, Bob needs to embrace the fact that those who are successful in the market put their egos aside and are not afraid to admit when they are wrong. In fact, the hallmark of a successful trader is one who has the ability to recognize when a trade has gone wrong and the flexibility to modify the trade.

If Bob were driving his car on a steep, treacherous, winding mountain road with no guard rails, would he take the turns at a slower speed or would he test his ability to make the curves with no regard for the conditions? It’s hard to say. The answer may be closely correlated to his risk tolerance.

Let’s now add another factor; it’s winter and the roads are covered with ice. Driving under such conditions requires great skill and concentration. Most people would not even attempt to drive at that point unless it was absolutely unavoidable. However, Bob – having already chosen to navigate this icy road at this time – is not about to stop, or to adjust his speed. To do so would be to admit that he was wrong. Bob is now an accident waiting to happen. Bob needs to modify his behavior and decision making to realize that the road conditions have changed. He needs to either get off the road or at least put on some tire chains and slow down.

To be quite blunt, no one really cares about whether Bob is right or wrong, unless they are unfortunate enough to be riding with him. He does not impress anyone. Usually, the “Boastful Bob’s” of the world are the largest losers in the market and the canyons are littered with the wreckage of those that have careened off the steep mountain roads of the stock market. Come sit around the fireside with us in Sherwood (www.MarketTamer.com), we can help you find the right road and if conditions change, we can help you understand and apply modifications that will keep you on the road and out of trouble.

Speaking of driving, “Will Scarlett” one of my “Merry Band of Traders”, was supposed to give me a lift back to Sherwood and he’s late again. It looks like I’m going to have to thumb a ride back. I’ve had enough of relying upon others for my ride. Besides, “Will” drives much too fast for my taste anyway. Until next week. Robin

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