Financial Field Trip - The Invested Life Season 2 Episode 2

In the last episode, Tom admitted his fear of re-engaging in investing.  After all, who wouldn't be afraid of the stock market after losing $500k in a day? (Or worse, telling everyone of your friends that the stock market is bad, bad, bad!)

In this episode, Tom faces his fear head-on.  This time though, he has help.

I take Tom to the Chicago Board of Trade to meet with Commodities Specialist, Michael Seery.

Michael gives Tom starts dropping knowledge bombs immediately after the handshake from the floor of the CBOT. He quickly identifies the Achilles Heel investment strategy Tom follows currently, in which all of his eggs are in one basket -  real estate.

Tom isn't diversified.

To ease Tom's fear of investing, Michael stresses the importance of understanding volatility in the trade of futures.  He wants Tom to understand that to minimize risk and volatility, he has to limit his trades to 1-2% otherwise called a "stop loss".

He gives him the basics of applying this technique where Tom can win when the markets go up and win when the markets go down.

Tom walked out of the CBOT smiling.

Hopefully you can learn from Tom that in order to face your fears, you not only have to gain courage to do so but surround yourself with people that can educate and encourage you.

In any situation, you can either deal with fear or faith.  And whichever you feed to most...wins.

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