The International Energy Agency came out with its five-year oil forecast this week.
Here’s one of the biggest growth markets: jet fuel.
Passenger traffic is soaring as the Asian middle class earns greater discretionary spending.
This is unlikely to slow down anytime soon.
You would think that would make a stock like Boeing (NYSE:BA) a great long-term bet.
Then comes a wild card…
Yep, you’ve already guessed. The tragic crash of the Ethiopian Airlines Boeing 737 Max 8 is now grounding the same model in different countries.
The stock is now down around 11% in two days.
Who knows the potential liability here? The market hates uncertainty.
It highlighted for me a perennial problem we have as investors: you simply cannot control outcomes no matter how much research or analysis you do.
Random events can hit at any time.
This came to my mind because I saw a presentation from an algorithmic trader recently.
One of the slides was called ‘Outcome Bias’. This is when we judge a decision based on the results of the outcome and not on the process.
It would be very easy to kick yourself for buying Boeing last week and see it tank straight away.
That’s an understandable reaction, but not helpful.
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Poker champ Annie Duke has some good writing around outcome bias in her book Thinking in Bets. It’s worth your time to read.
Poker is very similar to investing because it’s a game of incomplete information.
Good hands and good decisions can still lose.
But if you stick to a good process, you’ll come out ahead in time.
It’s also a good reminder that investing is more than numbers and statistics.
It’s also about your psychology and approach to the market.
I saw something interesting around this earlier today too…
Get happy or else
It came from an unlikely source: a professor who studies happiness.
His name is Shawn Achor.
The good professor’s work says that happiness brings success and not the other way around — in all walks of life.
To quote him directly:
‘If we can get somebody to raise their levels of optimism or deepen their social connection or raise happiness, turns out every single business and educational outcome we know how to test for improves dramatically.’
Apparently, some firms who have used him as a consultant now base their hiring around optimism — and not university grades, intelligence or technical skill.
Achor’s position is that 75% of long-term job success comes from three things:
- Social connection
- Your perception of stress
Point being: your attitude determines how successful you are.
I don’t know if Professor Achor’s work extends to investors.
However, I don’t see why any of this insight wouldn’t apply to you and I.
I used to work with a trader who teaches people that the market will expose any weakness they have.
For example, if you have low self-worth, you’ll probably find a way to lose your money and confirm that belief.
It bears thinking about.
Professors Achor’s work suggests spending less time reading mainstream news and more time getting in shape, connecting with good people and bringing your A game to everything you do.
Good set ups like this don’t come all that often
Why wouldn’t that approach work in the market? Every day the pieces shift and throw up opportunities or new insights you can take advantage of.
You won’t see any of it if you’re caught up with toxic people, too tired to care or think you’ll never find a winner anyway.
Granted, trading and investing can be stressful. Good friends can help out there too.
I have a mate with a big stake in one stock. It was going against him badly at one point.
He called me up to talk it over. Probably nothing I said was very useful, but he got to dump all the worries out of his head and sleep a bit better.
It can be nice to bounce investing ideas and themes around with others before you commit your money too. You can never know it all.
I mentioned an algorithmic trader above. This is not an area I know a great deal about. So I am excited to learn more.
I think that’s important too when it comes to the market. You have to be hungry to learn constantly.
I was chatting to James Woodburn yesterday. He joked about me blabbing on about oil so much lately.
It’s true, I am probably boring everyone who listens to death.
But having learnt so much about it now, I can see the massive opportunity right in front of us around it.
Good set ups to make a lot of money like this don’t come along all that often. I suggest you go here if you want to learn why alongside me.