The Wall Street Lessons You Wish They’d Taught You

It didn’t take most of us long to realize the stock trading education we got in school wasn’t going to come in handy. Looking back at the lessons we wish we were taught back in school, these two stood out like poop droppings from noisy birds roosting in a tree near your bedroom.

#2 – Contrary Opinion Is One of the Most Important Tools to Success On Wall Street

Think outside the box. In other words, you will want to go contrary to the crowd most of the time. This won’t make you feel too good, and it won’t rest well with some of your friends, family, or associates. By contrary opinion, I mean simply that you must assess the prevailing majority opinion, and you must be willing to think and DO the opposite. When most people are afraid to buy stocks, then you must seriously consider buying stocks.

When most people are convinced that things are good, and that the good times will never end, you must take actions that will serve you well when the good times do end. When most people are panicking, you must be calm and collected, taking logical steps instead of reacting irrationally. When most people are pessimistic, you want to be an optimist.

Take the recent terrorist attack of a passenger jet on Christmas day. While everybody else was busy getting mad and pointing fingers, you should have quietly been buying airport and sea port security stocks.

It wasn’t just one stock either, it was the entire airline security sector. Check out this stock.

These money making opportunities appear all the time. Let’s go back a few months to the swine flu. You were too busy sitting in front of the news and feeling scared like everyone else. While everybody else was glued to their TVs watching these scary news stories, you should have snuck out the back door and over to your trading station and started buying swine flu vaccine stocks.

You can even use the more extreme example of the much feared Y2K bug: which was supposed to bring with it financial chaos, the collapse of the power grid, anarchy, mass confusion, and worse. Some of the most well-known analysts, politicians, and scientists staked their reputations on the belief that cataclysmic events—socially, politically, economically, and technologically— would happen when the new millennium started. And nothing happened. Not one thing.

We were warned by TV News programs and newspapers that banks might close down, that we might not have electricity, that we might not be able to have medical prescriptions filled, and that food distribution would stop or be curtailed. We were told to buy canned food and expensive emergency Y2K packs. The Y2K bug was one of the most obvious examples of how panic can be infectious.

I’ll make it very simple and straightforward for you: What most people think is wrong and when most people are thinking one way, odds are that events will develop the opposite way. Yes, it will be very difficult for you to be a contrary thinker, but it can yield great rewards.

This takes us to the most important lesson you wish you would have been taught in school.

#1 – You Have to Think for Yourself On Wall Street

This seems very obvious, doesn’t it? By the way, we all think that we think for ourselves. In truth, we are brainwashed daily by the media, by newspapers, and by friends, family, and those we love. Does this mean that you should not read newspapers, watch television, or listen to the radio? Should you also diss those you love? The answer is simple: Develop your ideas independently, evaluating all other ideas and statements within the framework of what you believe yourself.

It’s easy to be a passive tosser (when you are influenced from external forces to make a particular decision and then flaunting that decision as if you thought of it only to end up with egg on your face at a later time).

The sophistamacated (people that think they are intelligent, but really have absolutely no idea what they are talking about), intelligent-looking, smooth-talking anchor person on business television or the nightly news may appear to know what he or she is talking about. The odds are that they know nothing more than what they’re reading. Their script has been prepared for them; they’re merely reading the words that OTHER people have written for them from a teleprompter.

Who are these OTHER people? Do they have hidden agendas like Glenn Beck of Fox News who recommended you buy gold and never disclosed that he was a paid spokesman for the company Goldline? Do they know what they’re talking about? Are they merely reflecting the opinions of others? You’ll find that most of the time their thinking is very standard, very average, and very wrong.