Hi, this Adam Hewison and I am writing to you from my desk at the corporate headquarters of INO.com.
I have been asked to judge a science fair competition at a local elementary school here in our hometown. Judging the science fair is going to be fun, and I’m really looking forward to it. This is because I love science and love the idea of working with kids and expanding their minds.
Being asked to be a science fair judge got me thinking about how a child’s mind works.
Many children have a much simpler way of looking at the world. We as adults tend to clutter and over think almost everything, including the market.
Today, I would like to share with you some thoughts and ideas about the market and how you can benefit from thinking like a child.
The bottom line is, the market can only do three things, it can go up, it can go down, and it can go sideways.
If I were to make my own little experiment for a science fair, I would issue a child a line chart of a stock or futures market. I'd say to them “Is the line pointing up, or is the line going down? Depending on which way the direction of trend was leaning, they would give me the correct answer.
If I were to show the exact same line chart to an adult they would say “oh, maybe it's overbought, the markets gone too high or it's off the paper and has gone too low. The fact is, we as adults overthink everything.
In this amazing age of communication, we are bombarded by all the news and world events on a 24-7 basis and it’s overpowering. I purposely try to shield myself everyday from all this media blitz. There are so many rumors in the marketplace that you are better off not listening to them in order to be successful.
In fact, I like to think as a child when it comes to the market.
| So when you look at a chart and that’s the only visual history we have, ( you can’t look at the fundamentals the same way) think like a child.
Oh, believe me the fundamentals are important, but in many ways what is more important is seeing which direction the lines are headed. Are they going up or are they going down? |
William Shakespeare might have posed the question: “Is the line going up, or is the line going down, that is the question?”
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You know, we have a beautiful mural at our headquarters that was painted by some local students from the the same elementary school where I’m judging the science fair. The aquatic scene was derived from the imagination of children and I use it as a conversation piece for any new office guest.
If we have someone new in the building, I always give them the fish test. What is the fish test?
Take the fish test: What kind of fish is this?
One day we had a very important visitor who had a very high security clearance from the government. He came to do a background check on one of our former staff as he wanted to employee him. I think that this government job was going to be involved with homeland security.
So I decided to give this very high security clearance guy the fish test.
Here’s what I found and it was amazing to me. Here was a man with credentials and clearances from the US government staring at a fish on a wall. So I turned to him and asked him what kind of fish do you think this is? He did exactly what I thought he would do. He was over thinking the situation. He was basically speechless as he searched in his mind for the right answer.
You can find the answer to the fish question here.
So here’s my advice, think like a child when it comes to the market and don’t over complicate things. It will only give you a headache. Buy when the market is going up, sell when the market is going down and when the market is moving sideways... wait for a breakout and go with the direction of that break out.
I know this sounds very simple but the reality is it is simple. Don’t over think this post or the market.
Every success in life and in the marketplace,
President, INO.com
Getting the trend right is what’s important in trading. We've said this many times before that they don't ring a bell at the top or bottom of the market. Often times the fundamentals look the most bullish at the top and the most bearish at the bottom market. When a market pulls back, fundamentalists see this as another great buying opportunity and sometimes they are right. However, some of these buying opportunities can turn into disasters when a market makes a major turn. Witness the disasters in Enron, WorldCom, Crocs and a host of other companies that basically turned south and cost investors billions. 
