Earn by killing Mice and Butterflies

Whoa…! Wait! Read first okay? Uh…I know we are not that greedy. I understand that everybody just wants to earn a living but… before we start, let’s disable that nuke and disassemble that smart bomb first, shall we? Some mice are cute and butterflies are just colorful, harmless, airborne creatures that are nice to look at. Hurting them won’t get us anything.

Kidding aside, there’s a kind of rat that is supposed to be in our chest, and a kind of butterflies that are supposed to be in our tummy (whenever the going gets tough), and they don’t just drum up and strain our hearts, and they don’t just produce and pour acid in our intestines – they also mess up our brains. They make us see things rather differently.

Those are the kinds of mice and butterflies that we should be exterminating…but still… I suppose, we don’t really want to nuke them, do we?

The reason we have to control those kinds of mice and butterflies is because, in most instances, they exaggerate things. They make mountains out of molehills, typhoons out of drizzles, and maybe even floods, out of somebody’s piss coming from the floor above us.

Maybe they help us recognize danger…? Maybe so, but why leave “danger recognition” to our senses? In cloak and dagger operations, or maybe even in a recon, where a decision made in a blink of an eye may mean life and death to a combatant, it is probably justified to depend on one’s senses in identifying dangers.

But in a business environment, where you have all the time in the world to study your options before making any decision, where you can even refuse to buy into the action, one has to know the risks and be prepared for it before going in. After all, those risks are all written in some documents that are available for the taking. To pinpoint danger in the investing world, one only has to read and/or seek counsel.

Okay, fine, so we know how to detect danger now. Then, what? Freeze? Like we have just been taken out of a cryogenic facility? Or, run the hell out, to god knows where, in panic not knowing what to do? In times like that, if we can compose ourselves for a bit, we might realize that we’d be better off keeping about our wits. Still, isn’t this scenario a tad too exaggerated?

We are talking about earning from our investments here, so let’s see how keeping ourselves together (I mean, as opposed to falling apart) can help us spot opportunities rather than see scary ghosts where there are none.

The market moves just like the sea. In rough times, it looks as if it is going to cause the end of everything – especially if we are caught in a boat right in the middle of the raging waters. But even the worst of storms never last forever. At worst, its fury lashes for less than a week. The moment it has dropped all its rains and the wind has dissipated, the sea could be as still as a sleeping baby. And everything all goes back to normal again.

It will, of course, be too bad if the storm hit while we are in the middle of the ocean riding a leaky tub that has holes like a hamper. That is why it is best that we choose our stocks properly. In good economic times when the market is driven by a raging bull and not by the stampeding bear, we may sometimes get lucky by speculating on “garbage stocks” (the ones with questionable fundamentals) but I, personally, don’t want to get caught holding them in times of economic disasters.

It is when we are not sure with the fundamentals of the stocks in our portfolio that we unconsciously breed those mice and butterflies. And they grow into some of those freaky giant monsters when the ground we are standing on begins to shake and we have no idea what is causing it.
Well, if we are the panicky sort, we are going to make a lot of sharks and predators happy. And they are the real kind too, not just a figure of speech. You know, sometimes, they are the ones causing the grounds to shake. Some of those guys, with considerable resources, at times will drive the prices of a certain stock so high (enough to cause you to panic and buy) so they can sell them to you – and then leave you holding the bag full of worthless stocks.

Sometimes, when they have nothing better to do (they always have nothing better to do) they will turn around and start dumping their favorite stocks (causing everyone to panic and sell) so they can buy them all back when the prices hit the ground. You know, buy low, sell high?

In the meantime, thanks to your well bred mice and butterflies, you just traded your stocks the other way around.

cheers!

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