Risk and uncertainty

I opened my stock account today. The whole portfolio has been down 42% since January.

Terrified, not quite. Sad, not quite. Shame, quite a bit. Most of the time, confusion.

The stock market is a market where people trade businesses - people buy and sell shares of the company they own. The sellers know something the buyers don't, so they sell. The buyers know something the sellers don't, so they buy. Each side has a margin of error in their estimate, which we call the risk of being wrong. The future outcome is always uncertain.

The stock market is like an auction market. Buyers always bid on the price, while sellers ask for their own price. Anything being auctioned, even businesses, has no price ceilings or floors. The roller coaster can go either way for a long time.

Human beings have great instincts. We can handle risk, and sometimes we love taking risks, but we don't like uncertainty. We'd rather drive a car without a seatbelt than send an intimate text to a woman.

So the best way to deal with uncertainty is to educate yourself. Education, skills, and mental models all need to be upgraded every once in a while. With proper education, we can see things from different angles and decide how to act.

When the stock market is uncertain, the best investment is in ourselves, not in the stock.

Education is a lifelong pursuit.