Its only been about 5 years since we had major scares in the marketplace regarding Y2K. You might recall that many computer systems were not programmed to be able to understand the change from 1999 to 2000. There was a tremendous amount of panic created by those who were convinced that as the clock hit midnight on on New Years Eve 2000 that we were going to enter the Dark Ages.
By my analysis this never occured. . . . unless I slept through it and nobody bothered to wake me up! (Note to self: Make sure Staff wakes me up when Y2K occurs!)
The word we are supposed to learn from and understand is; TEOTWAWKI. . . . (The End Of The World As We Know It ) It was a word created by the Y2K scare.
I think there is a very profound lesson to be learned from the Y2K scare. That being that forecasting is pretty much worthless. The real issue with trading as with life itself is to manage risk. Risk can be defined many ways but usually it involves not being prepared for the future and embracing an opinion.
The one advantage of living in a free society is that we are fortunate enough to be exposed to numerous viewpoints on a daily basis. As traders we must learn to constantly differentiate the difference between FACT and OPINION and determine how new data can affect us.
For those who never learn to do this, The End of The World As We Know It will reflect itself in their portfolios. For the rest of us all we can learn to do is MANAGE RISK. It is the only trading secret there is.
There are two schools of thought in trading. . . . TEOTWAWKI and Risk Management. You make the choice.
The only constant in life is change. Don't forecast. Manage your RISK.
Harald Anderson is the founder and Chief Analyst of eOptionsTrader.com a leading online resource of Options Trading Information . He writes regularly for financial publications on Risk Management and Trading Strategies. His goal in life is to become the kind of person that his dog already thinks he is. http://www.eOptionsTrader.com .