You may have seen me quote Mark Cuban on Twitter the other day. This is Cuban's take on entrepreneurship in America from his, "How to Get Rich" post:
"...The nature of our country’s business infrastructure is that it is destined to be boom and bust. Booms are when the smart people sell. Busts are when rich people started on their path to wealth."
Kind of applies to trading and "investing" as well, doesn't it? The smart money and experienced traders are buying or preserving their capital and looking for signs of coming strength at the trough, following a panic or bust (bear market).
The bit players in the crowd are mostly on the sidelines, waiting for things to get exciting before they plunge in. They are driven largely by emotions and their knowledge of the market landscape is, shall we say, less than that of the experienced speculators.
When the boom is in full gear and evident to all, savvy veterans are lightening their positions and selling into a liquid marketplace that will take the inventory (stocks, etc.) off their hands.
Novices generally buy high and sell low, losing a great deal of their money in the process, while the expert traders buy at a reasonable, or high, price and sell higher.
This applies to business deals as well, as Mark points out in his post. But you need to put in a lot of hard work and learn your business well before you can identify the right time to invest or start building your company.
Whatever you have set out to do, there's no quick and easy path to excellence and success. If you want to learn more about what Mark Cuban went through to get to where he is today, read his post, "Success and Motivation". I suspect there are lessons here for all of us, whether you're an artist, a writer, a trader, or an entrepreneur.
Related articles and posts:
1. Mark Cuban interview: "Buy and hold is a crock" - Finance Trends.
2. Howard Lindzon interviews Mark Cuban (StockTwits TV) - Finance Trends.