This week’s focus in the core essential investment ideas is to Let go of EGO.

The attitudes and actions that work in the marketplace outside of the stock market often do not work so well in the market. For example, outside of the stock market, it is valuable to ‘be right.’ In the stock market, it is said — “you can be right, or you can be profitable. Hardly ever can you be both.”

Your EGO wants to be right. It wants to know what is going to happen in the future. An EGO can cause a person to hold on to a lost investment or a premise in an investment that is no longer valid. The market is always right…not the investor/speculator.

We put meaning behind rising and falling stock prices. Prices do not care about our beliefs or feelings. Price simply is what it is…a perfect representation of all the beliefs and actions of all the market participants. Each of them having different reasons, objectives, timelines, beliefs and temperaments.

Letting go of EGO means letting go of being right about an investment, curtailing risk and accepting that no one knows what will happen in the future with 100% certainty. If you can accept not knowing what will happen, you will work on strategy and not falling into the trap of an investment being ‘good or bad.’

Of course, we have bias formed through study and hopefully probability of success. The point is that bias can be wrong about an investment rising or falling.

Let me say it another way…with a question…what does knowing if an investment will go up have to do with being profitable in the market?

If you can let go of your EGO, let go of being right, let go of thinking the market is wrong, you can see the market for what it is and exit investments that simply are not working.

If you can let go of EGO, you can become a better investor by realizing and accepting all possible outcomes. If you can’t realize and accept all outcomes, you will lose sleep, become a nervous investor, be irrational, be irritable, and frankly put way too much meaning around single investment transactions.

Become a better investor by letting go of EGO.