A profound recent lesson that I’ve absorbed about trading, and by extension, investing, is the concept of emotional contrarianism. While we’re familiar with the term “contrarian investor” – someone who seeks out investments that others have abandoned in search of a market bottom – I am actually speaking more-so from the psychological side of investing and applying a similar mindset in a new era of non-stop noise.
By now, we are all aware of the simple fact that today’s market is heavily influenced by social media, instant news, viral memes, and continuous online interactions. It is a drum that won’t stop beating. It grows louder by the day. They are all trying to get your attention.
In these environments, it’s incredibly easy to be swayed. Traders and investors alike can find themselves making decisions based on the emotional pull of a social media post or a viral moment. And now, with the election in full swing (see my previous post about this), we are reaching the peak media thunderstorm. The memes, news, and conversation is trying to pull you. Trying to get you to react.
When the digital world is screaming for your attention, the simple solution is to do the opposite.
Wait out the storm.
The louder it gets, the more relaxed you become.
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