It's natural to look back. We live in the past.
For most people, the future isn't an unknown full of unlimited opportunity. It's about hoping the bad stuff in our past isn't a prelude to the future.
But what about the stock market?
2013 was a spectacular year - at least for stocks it was. And already people are afraid about the future. They're afraid that after a great year for stocks, the bloom is off the rose.
Are people naturally pessimistic? Are they afraid of the market?
The answer to both of those questions is, unfortunately, "yes."
I know because I used to be one of those people. But not anymore, though... not for a long time.Here's what I know now...
I Chose to Be Optimistic
I make money in the markets because I'm not pessimistic. I make money because I'm optimistic, because I'm optimistic about making money.
The past is the past. I've had my share of bad stuff, some so bad that I can't believe I made it out the other end, that I didn't break down and give up... on life. But I realized a long time ago that it's up to me. I decide what happens to me. And I learned that because I was being pessimistic, more bad things were happening to me.
When I realized I actually had a choice and the choice was all mine, I chose to be optimistic. I finally got it that the past wasn't coming back. It was the past. And I wasn't going to let it be my future.
That was the start of my success.
I'm talking about being successful in life - and that also means being financially successful.
There's money to be made trading markets - trading any of them or all of them. And it's impossible to be a successful trader or investor if you're pessimistic.
Sure, we all get down when we lose money.
Here's the difference between being a pessimist and an optimist. A pessimist thinks the past is his future. An optimist looks at the past, specifically our losses and our failures, and learns from them. With the best lesson being, there will always be losses and failures. That's life. That's life in the market.
And life is pretty good now.
We're Going to Make a Lot of Money in 2014
I'm optimistic about 2014 being a banner year, financially. That's because the market had such a strong 2013 and I am optimistic it can go higher, a lot higher, as in a LOT higher.
That doesn't mean it will go up in a straight line. That's not likely.
After all, there's "stuff" out there bugging economists, analysts, investors, and me too. There is stuff to worry about.
There are the Federal Reserve's extraordinary efforts to manage interest rates, so that the short end of the yield curve is zero and the long end (the 10-year is now the most watched benchmark) is 3%; meanwhile, the 30-year Treasury bond yields about 3.92%.
Where are interest rates going? Rates rising in an orderly fashion aren't a problem. I worry that the Fed could lose control of its ability to manage the rate of change in rates or the slope of the yield curve.
We have reason to worry that there's a huge disconnect between the market's strength and the economy's lack of strength.
The gross inequality in wages and household wealth is disturbing too.
So are the high levels of structural unemployment, and the low levels of job creation.
There are lots of things to worry about, socially and economically. But worrying isn't the same as being pessimistic.
I do worry. But, I'm optimistic a lot of these worries will be addressed and resolved.
And I know what's important...
The Most Important Realization
When it comes to making money in the stock market, it's important to first and foremost realize that publicly traded companies, especially giant multinational corporations, aren't the economy. They are proxies for their industries and their tiny slice of the economy, all the better if they're players in the global economy.
Listed companies account for a relatively very small number of the workers, wages (not including top executives), and problems the economy faces. Listed companies - the ones we can make money investing in - are not the problem. They are our financial way out of a lot of our problems... and if you are optimistic, you can make money in the market.
And why shouldn't you be optimistic that you can make money in the markets?
You had a bad luck streak in dancing school, so what?
You missed last year's almost 30% rise in stocks, so what?
You missed the run up since March 2009, so what?
We're in the first stage of a generational bull market - even if the first stage is getting a little long in the tooth.
We're going to have lots of downdrafts on the rocket ride higher. Some will be scary. But that's not any reason to be pessimistic.
Me personally, I love up-markets and I love down-markets. I can and do make money in both. I tend to make a lot more money, a lot quicker, in down-markets, which is not un-American. But, because I'm an optimist and I believe things can always get better, I am always in the market buying too.
Here's the takeaway today: I'm optimistic. I'm going to make a lot of money this year. And I'm going to tell you here, right here, what I'm doing, and I'll tell you why.