TJ 94: Noah Davidson on the importance of mindset

Mindset is important. Not just while trading, but while moving through life. Too often, people just go on autopilot; afraid to take a chance on something new. Breaking out of that rut can be scary. Newness is unfamiliar, and unfamiliar can hurt. True enough, but potential hurt lessens greatly if you're prepared beforehand, which for many things is as simple as taking the time to research the new thing, whether it be a new job or day trading. Large financial institutions are allowed to exist thanks to this autopilot mentality. People drop their money into hedge funds and so forth, expecting them to be actively traded over the long run. Thing is, that isn't the case. Many hedge funds are set on their own autopilot to almost always be in a bullish position and in aggressive sectors regardless of market conditions. The managers don't care; they get paid regardless of performance of the accounts. Why pay somebody else to do that? More often than not, such hedge funds do worse than market average for returns. If you want to be an inactive trader and not think about it too much, another option is the actual S&P 500, which you can get shares of. It's always made of the 500 largest companies in the US across all sectors, so it's more balanced than many hedge funds. Or, if you're willing to put forth just a bit more effort, you can actively trade yourself and, with practice, completely blow hedge fund performance away. It may be scary at first, but what new thing isn't?