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It’s Investments Tuesday in the Mystical Money Machine Group.
This week’s topic is probability and what it means in the context of making financial decisions. When investing Your hard-earned money.
Each time we make an investment decision (or a decision in our lives in general) it has the probability to turn out good or bad for us. Good is when we make money and bad is when we lose it. Very simply put.
There are obviously times when You need to lose money in order to make money in the long run but for the sake of simplicity let’s look at it like this.
Making money = good, losing money = bad.
What is a probability for something?
Probability is the measure of the likelihood that an event occurs.
Or more simply put, how likely is that something will occur.
When making decisions, this is actually all that we have, probability or potential. Nothing is for certain, everything can change in an instant.
Now let us look at it more personally.
There are many different types of humans out there. Some are very data-driven, some are more woo-woo driven. (I call it woo-woo because currently, that is how most alternative methods of approaching things are looked at. Ridiculed and mocked. I don’t appreciate it but I get it.)
Some are somewhere in between these extremes.
It is very important to understand where You personally are in that spectrum. Because that will make it easier for You to actually make decisions in real life, in real time, in the real markets.
I myself am somewhere in between. I like statistical analysis, I really do. I think it is very important. But it’s not the end all be all of everything.
This world consists of energy. Different things have different energy. This energy affects us all.
Which leads to emotions. Humans have a lot of them. But one of the biggest ones is fear. This drives the markets. It is very important to understand. So that we don’t neglect this part of our investment decisions.
In my view, we need to look at the big picture, not just the data or the woo-woo side of things (like astrology for example = the science of energy.)
We have to look at it all. And add some secret magic to it as well…
But that is my approach. You have to figure out Yours.
Now we come to the second part of this piece.
How precise do You want to be with Your probability?
Some people need numbers, some people need intuition and feeling.
Some need both.
What do You exactly need? Do You need to know the exact percentage likelihood of an event happening? Or are You comfortable going with the approximate number?
Or are You more of a gut feeling, seeing things in a dream kind of a person? And going with that?
Or both?
You need to figure this out. Asking those questions is a good start. Making Your first investments will give You an even better indication. But whichever one it is, make sure it suits You personally. And then go test it out in the real world. Then reassess, re-configure and go for it again. That is how progress is made.
But a word of caution I had to learn the hard way.
No matter how certain You are, no matter how strong Your math is, it can always go differently than You thought.
Keep an open mind in all of this. You will learn much more and Your probability of success (in my opinion) rises exponentially.
Good luck out there!
Ian Altosaar
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