End destination

Winding Road, Road, Travel, Curved Road, Curvy Road

It’s almost school holiday’s here in the UK. It that time of the year when families typically drive to the airport, to their next Airbnb, to the campsite. Anything to get away from the typical British summertime (this year has been especially dreary). Almost always it involves spending more time than you have done all year with your family, in a confined space for hours, being distracted by “How much further?”, complaints about your driving all the while having to focus on the road ahead of you for several hours I’m lucky(!) enough to be counting myself among that group over the next few weeks.

In preparing for my journey I happened across an article about being a better driver during the holidays. Two suggestions in particular struck me as important lessons; to always look further ahead, and to always think about your own journey as personal to you.

Being able to anticipate the speed of other cars further down the road, the actions of pedestrians and the conditions of the road should help you be a better driver. In essence its about being able to give yourself enough time to react to events. The more you practice, the greater your experience, the more likely (at least in theory) that you will avoid any trouble.

Meanwhile, always thinking about your own journey as personal to you means that you don’t react negatively to the behaviour of others on the road, while also becoming more proactive and compassionate in how you interact with other road users.

What does this all have to do with investing and trading commodity markets? First its about looking ahead, looking for the signs that things may be about to turn, that sentiment is too extreme and that investors may be about to run for the exits. In commodity markets this can take the form of extreme market positioning in futures markets, commodity producer sentiment (supply discipline for example) and seasonal demand and supply trends.

Second, whatever your outlook, whatever your trading or investing style its important to always consider that your own journey. That goes for your own level of risk, the instruments you trade, what time period you are considering, what your hopes and dreams are. Its your commodity market play book, no one else’s.

It’s always been challenging balancing your own objectives versus the fear of missing out, comparing yourself to others and then overly reacting. It’s now much harder to sift through what is important to your journey, and what is not. Someone’s tweet about their view on gold may run counter to your own, but they may have a completely different time frame to yours. Their concerns may just represent a mere footnote in years to come on your investment journey.

The danger (to return to the driving analogy) is that you get caught up in someones else’s race, someone who has a completely different destination to you, an alternative set of time constraints with completely contrasting priorities to you. We’re all on the same road, but we’re all on very different journeys. As it is with our highways and byways, as it is in the markets, keep a watchful eye on others but never let them dictate how you should respond to events. As with driving, as it is with investing always have your end destination in mind.

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