"I sometimes think that speculation must
be an unnatural sort of business, because I find that the
average speculator has arrayed against him his own nature. The
weaknesses that all men are prone to are fatal to success in
speculation -- usually those very weaknesses that make him
likable to his fellows or that he himself particularly guards
against in those other ventures of his where they are not nearly
so dangerous as when he is trading in stocks or commodities.
The speculator's chief enemies are always boring from
It is inseparable from human nature to hope and to fear.
In speculation when the market goes against you -- you hope that
every day will be the last day and you lose more than you should
had you not listened to hope -- to the same ally that is so
potent a success-bringer to empire builders and pioneers, big
and little. And when the market goes your way you become fearful
that the next day will take away your profit, and you get out
too soon. Fear keeps you from making as much money as you ought
to. The successful trader has to fight these two deep-seated
instincts. He has to reverse what you might call his natural
impulses. Instead of hoping he must fear; instead of fearing he
must hope. He must fear that his loss may develop into a much
bigger loss, and hope that his profit may become a big profit.
It is absolutely wrong to gamble in stocks the way the average
What is written above is a very very simple concept that is very very difficult to follow. It is almost becoming second nature to me in at least being able to observe this natural tendency. I still find it hard to add to winners, but that is what makes me money. What is so hard about that?