Email of the day (2)
Comment of the Day

March 07 2011

Commentary by David Fuller

Email of the day (2)

More on 'a cautionary tale':
"Re: 'A cautionary tale' from Friday:

"This trader's actions are certainly proving masochistic but I do not assume it is a spoof as his description of his resulting emotional trauma strikes me as honest and heartfelt and is unfortunately all too familiar to me. My own story is that I sold all my property (including the family home) in early 2008, believing a property crash was coming in the UK; I put the money in the bank intending eventually to invest it conservatively as opportunities offered. In the meanwhile I subscribed to Fullermoney to educate myself in these matters. When in October 2008 the UK banks appeared to be insolvent and their losses simply too large to be underwritten by the UK government, I was shocked and traumatized. The government deposit guarantee covered only a tiny fraction of my balance. I felt that I had to move my money straight away into something that would have enduring value; gold at that time was falling fast so I opted for the large diversified miners which were then well down from their spring highs but stable. I invested just in time to catch their precipitous declines down to levels I never thought I'd see and I am ashamed to say that this left me so traumatized that I fully believed we were heading into the next great depression so I'd better get out what little of my money remained before I made my family completely destitute. I capitulated pretty much at the bottom and ever since I haven't had the confidence to invest in recovering markets and this has proved a further torment to me as I have seen the miners move up to new highs without me.

"Now there are many lessons to be drawn from this but the ones I want to share with the collective are these:

"It's easy to convince ourselves that we have understood the 'fundamentals' but all we have done is to embrace the story that appeals to us emotionally and rejected other interpretations of the 'fundamentals'

"Real world outcomes are pretty unpredictable. Emotions are the enemy of analysis but we are often not aware of our emotional biases"

David Fuller's view Thank you so much for this email which must have been painful to write. To me, it shows honesty, candour and character. However I especially want to thank you for your generosity of spirit in sharing with the Collective what you have learned from your traumatic experience. You have paid a high price but learned something invaluable which should serve you well in future. I commend you for it.

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