Lessons From A Successful Investor: Control Your Worst Enemy, Your Emotion

During his latest interview on King World News, Rick Rule explained the most fundamental principles to be a successful investor. He has a proven track of record, as one of the most successful resource investor. The key to success is very simple: control your emotions. But let’s be honest, it is not that simple in reality.

Insight 1: “Your expectations for the future are set by your experiences of the immediate past.”

Between 2009 and mid 2011, both the metals and the shares have been performing very well. People’s expectations for the future have been influenced by their most recent experiences. People should be looking at the current consolidation period in the metals as an opportunity and buy the dips. The gold shares have been smashed between 40% (seniors) and 70% (juniors) since 2010. Instead of looking at the buying opportunity, “people feel depressed” says Eric King.

Insight 2: The brain of a successful investor overwhelms his emotions

In a recent article, Rick Rule described today’s mental state of most investors: “It is like someone walked in the street and ignored every store that a for sale sign and went to the only store that had the full price, no discounts ever sign. Now is the time to time to buy as we are in a bear market. We sell high in a bull market; we buy low in a bear market.”

The key is that an investor must master his/her emotions. “Either you take advantage of your emotion, or you will be taken advantage of your emotion.”

As an example, he refers to investors emotions in 2010 compared to today (in particular when it comes to the shares). The stocks are much cheaper today, but investors feel more depressed. The better gold stocks are substantially cheaper; they can be bought today with a 60% reduction. Yet people “feel depressed” about it.

From an earlier interview: “In resources you are either a contrarian or a victim, the choice is yours.”

Insight 3: People want to see the facts demonstrated

Especially the metals have a hard time currently. That is very strange if you think about it. Fiat banking and currencies are in the worst situation ever. A real confidence crisis is brewing below the surface, and it is crystal clear for everyone who can look with an open mind to what is happening. Rick Rule says: “The root word of confidence is “con.” He believes that more people over time will become comfortable with gold and prefer metals over currency which are one by one losing their value. Yet, people do not see the facts, so they are not comfortable.

Gold’s bigger picture

Rick Rule shared some high level thoughts about the gold market:

  • We are in the midst of a commodity supercycle. Secular bull markets always experience mid-cycle corrections.
  • Although there the gold price is being suppressed, the market is ultimately bigger than the morons. Also, the Chinese government is stimulating their citizens to hold gold. So investors should not be fixated on the sudden and suspicious price drops.
  • The higher the try to suppress the gold price, the bigger the consequent move.

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