Being Emotionally Firm

"You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right." -Benjamin Graham

A golden piece of advice, easy to say, very hard to do. When people all around you thinks that you are wrong, any normal person would start wondering if he is really the one with the delusion. Staying emotionally firm can sometimes feel like you are driving on the wrong side of the road. When does one really decide whether his principles are right or wrong irregardless of the crowd? The answer is not as simplisitic as it seems to be. Unfortunately the answer can only be obtained by keeping an open mind and learning through experience.

I still hold firm to my belief that markets are currently overvalued, this does not mean it cannot go higher, neither does it mean it should start going lower either. Historically speaking, overvaluation or undervaluations can go on for decades at times. To be someone who to hold strong beliefs against the crowd for that long a period of time must be someone who is truly extraordinary. It seems that there is certain element of truth that most investment carries an element of speculation. There are times when faced with a formidable opponent, even a chess grand master would have to take his chances.

Often we hear stories about people placing a huge bet which ended up to be a life changing event by which they go on to be hugely successful stories. What we don't hear often though, are the stories of those who made the bet but lost.

We humans are genetically programmed to be seek out the success stories and disregard the warnings of the failures. Unconsciously, we avoid and despise the "losers" as we do not want to be associated with them. Any idiot can take the plunge and make huge amounts of money just because of luck. That same idiot will be wiped out when his luck turns. Blessed is the one stupid enough to fancy his chances and realizes his mistake whilst he is on a winning streak.

Even extremely shrewd businessmen and investors like Oei Hong Leong can fall into such traps. When he was winning, people call him the man with golden touch. Now, I bet many are sniggering behind his back, silently celebrating his fall from grace. My opinion is that he maybe down but certainly not out, I do not think we have seen the last of him just yet.

Speculation with high leverage is just like playing a game of russian roulette maybe one with a hundred barrels. I tell you that this gun is loaded with five live bullets which are totally random. For each time you pull the trigger, you will be rewarded a million dollars. How many times would you like to play this game?