PROJECTED HINDSIGHT

My motivational seminars—which are few and far between—bring up the topic of making better choices now based on what you will wish you had done in a year or so. I call it Projected Hindsight. Here's how it works. Say you're thinking of going into business, or choosing a stock, or getting married. Project out one year or even five years and ask yourself, "At that time, what will I wish I had done?" Project out and look back, and try to ascertain what you would like to say.

For example, there are many great companies in this country. You query yourself: Should I by Facebook? Or Microsoft? It sure is high right now, you think.

Okay, now project out 3 years or so. Put yourself there and think back. What will you wish you would have done. Looking back 3 years may be helpful, but it is a past tense viewpoint.

Here are a few helpful hints.

  1. Start with what you would consider a good decision today.
  2. Now, do the opposite of what you area contemplating. For example, ask yourself the opposite: "If I owned Microsoft or Google, would I sell it now.
  3. This focuses your thoughts on a good question. Don't rush. The stock will be there tomorrow or next week.
  4. Now, here's an important thought. Facebook is $168. You are looking for a better time to get the stock. It goes to $248 or $310 as that's the trend it's on. Will you really care whether you paid $162 or $182?
  5. Do I want to use this stock as a long-term hold? Or, do I want to use it for generating income?—say in Writing Covered Calls.
  6. Are there others ways of capitalizing on the future of this stock—say, using options?

Where are you going? What type of investments do you want to own? This means you have to ask some subsequent questions.

  1. Is this stock in a comfortable field—for you? How much do you know?
  2. What kind of problems do you like to solve? Does this company have the kind of problems that you are familiar with?
  3. What is your purpose for buying this stock? Are you going to use it just to hold? What is your exit strategy. Even it you're not sure of the exact exit price, you can get a good idea entrenched in your brain.
  4. Then be ready to ask yourself the opposite question given above: At a time you're thinking of selling, ask: would I buy this stock now—as compared to, should I sell the stock here? Check the storyline—including earnings growth, debt, competition, etc.

You can tell from these words that I like reversing the thought process. Anything we can do to stimulate our brain. Good answers come from ask appropriate and far-reaching questions.

You can always figure out the what, when you know the why. Focus on WHY questions.

Stock MarketWade Cook