Investment Climate Change: Three Ways to Adapt During Economic Change
terren@flcikr
Climate change is in the news–almost every day.
The one thing missing from the debate is that the climate always changes! The world’s climate has continually shifted. Ice ages have given way to warm periods. Warm ups have turned chilly. Not only has the global climate shifted, but regional climates change.
People have learned to adapt to the whims of climate.
What does all this have to do with investing?
Investment climates change, too. Global investment climates shift. National climates change. Even local economies alter.
The investor who wins is the investor who adapts. There are a few rules for this type of adaptation.
One. You can create wealth in any investment climate, as long as you’re disciplined and don’t let your emotions dictate your moves. It’s a lot harder than it sounds. People are emotional creatures. We don’t want to believe our economy is going under, so we may resist placing bets against a country (in the case of Forex) or a company (in the case of a company) that we may like. (Trust me. This happens!)
Two. Always use risk management techniques. Stop losses and money management will save you from Black Swan events that typically precede investment climate shits. Risk management measures can also ensure that your greed and enthusiasm don’t push you into over-investing in certain assets, too.
That brings me to the third key for navigating investment climate change. Use the tools that are at your disposal. New financial and investment technology is being created all the time. Use technology to edit out the natural greed and fear tendencies and make better informed, more researched investment choices.
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- Un-Risky Business: Six Ways Entrepreneurs Master Risk
- Change or Chance: Political Prediction Markets Fare Well
- Hacking The Depression: How You Can Use Technology To Thrive In Any Economic Era
- Reasons to be Skeptical about Automated Trading
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
3 ways to use this, it seems very effective. I’ll try it later in the year 2010. thanks for the information
Thanks for the comment Harry!
I hope you have a great 2010.