On What You Can’t Control

Mar 28, 2008: 4:58 PM CST

I was inspired by a recent article in my local paper entitled “What Then Must We Do?” which tackles the sense of ‘loss of control’ or uncertainty that is so common to stock market participants.

Author Bonnie Roberts of The Valley Planet pondered a list of 45 humorous points that were completely out of her control, and I wanted to list a few of the funnier points and then tie it into the Stock Market.

See if you can identify with some of these topics that Roberts notes is totally out of our control:

  • The destruction of sand castles, no matter how far from the shore
  • The number of letters in the Russian alphabet (33 letters)
  • Detours when we’re late
  • That Jokers are wild
  • Not being “007” and knowing whether to cut the blue or red wire
  • Ant invasions in Africa
  • Access to mysteries like Stonehenge, Area 51, or the Bermuda Triangle
  • That chickens have waddles
  • Cul de sacs that are not marked

… and many other factors out of our control.

Now, let’s think about the market! What can we not control in the market?

  • Whether or not our next trade will be a winner
  • Earnings reports and the market’s reaction to them
  • Fed announcements and the subsequent sometimes violent reactions
  • Mergers, acquisitions, and take-over announcements
  • Morning/Overnight Gaps against our positions
  • Jim Cramer’s recent recommendation (or stocks he says “Sell Sell Sell!”)
  • Major Analyst stock upgrades or downgrades

There is so much we can’t control in the market, and so we should not constantly stress ourselves beyond what we can reasonably handle. Realize your limitations and still play the game as best you can, given the fact that so much is out of your control.

You control what stock or ETF to trade, when to buy and sell it, where to place your targets and stops, and how much money (shares) you intend to place at risk. Beyond that, there’s not a whole lot else you can aggressively influence the outcome of a given event.

So, minimize your risk, lower your expectations (so you don’t get psychologically hurt), and play the game! Oh, and try to have fun as well.

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