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As you’ve said, and I assume most people agree with, investing is as much about behavior as anything. So my question is how do you keep from going crazy and stay calm when the market, for lack of a better word, goes irrational? To grab a random example, around QE2 time heads of banks, investment firms, governments where talking about hyperinflation and you were saying asset swap. Now I could in theory understand the 99 tech bubble caused by every random person day trading, but things like this are from professionals. Like 2007, how do you keep calm when investment and central banks are making bad moves, but in the short term get rewarded for it.

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Posted by smith1111 (Questions: 26, Responses: 32)
Posted on 08/29/2017 6:35 PM
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I’ve come to believe that investor psychology is 90% of the battle all the time. Can you build a good plan and can you stick with that plan? This is so much of what Countercyclical Indexing is about. It’s not about having the best portfolio or the highest performing portfolio. It’s about having the appropriate portfolio so that you can have the confidence to stick with it. I eat my own cooking so I’ve grown very comfortable with the markets because I’ve constructed a strategy that I am very comfortable with.

So, I guess I would answer your specific question by saying that it’s smart to move against the predominant trends at times not because you are always betting on bad outcomes, but because you want to prepare your portfolio for bad times when times are good. The pitfall most people fall into is making big sweeping all in or all out changes to their portfolio due to emotion. This is all because they don’t have a good plan and/or a plan they can feel good about sticking with.

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Cullen Roche Posted by Cullen Roche (Questions: 10, Responses: 1749)
Answered on 08/30/2017 11:46 AM
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    I’m going to go sport analogies here, so you think it’s more like a workout plan were you just have to stick to your set regime no matter what people do, or more like football play calling were you have to adjust based on the opponent.

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    Posted by smith1111 (Questions: 26, Responses: 32)
    Answered on 08/30/2017 5:23 PM
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      Yep, create a good plan. Doesn’t have to be the best plan. But a plan you can stick with. Just like working out. You don’t need to become the next Arnold to meet your goals, but that’s what too many investors think they should do….and they fail because they’ve created an unrealistic plan that they can’t stick with.

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      Cullen Roche Posted by Cullen Roche (Questions: 10, Responses: 1749)
      Answered on 08/31/2017 1:03 AM
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        But what if I want to be the next Arnold, someone has to be in Terminator 8.

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        Posted by smith1111 (Questions: 26, Responses: 32)
        Answered on 08/31/2017 8:33 AM
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