Compare the average investor's returns around the world to the average Wall Street firm's returns. I think we would all agree that the average Wall Street firm is making the lion's share of the money, while the average investor is either losing or not making much at all. Next, think about what the average investor does in the markets, they "buy stock." Now, think about what the average Wall Street firm does, they "sell stock." Hhmm... One group is selling and making super high returns each year, and the other who is buying hardly makes any returns. Understand that I am not at all suggesting the average investor should stop buying stocks and start selling. What I am strongly suggesting is that the average investor needs to start "thinking the markets" like Wall Street does.

Let's think about how people around the world are conditioned to invest/trade. The education in grade school, high school, college, and graduate school is all the same. When buying a stock, you must follow rules:

1. Make sure it's a good company

2. Make sure the company has a good balance sheet

3. Make sure the company has good management

4. Make sure the company has good earnings

5. Make sure the stock price is in an uptrend

When all these items are true, "buy the stock." This is what everyone is conditioned to do at every level of education from a young age. Let me ask you, when all these items are true, where do you think the price of the stock is? It is hardly ever going to be cheap when this "must have" list is present. Most of the time, the stock price will be high.

Now let's consider the basic lesson of how you make money buying and selling anything. The most profitable retail companies in history have mastered the art of buying at wholesale prices and selling what they bought at higher, retail prices. They simply repeat this process over and over and over. Think about the people you know who are smart shoppers when buying anything. They cut coupons, look for sales, and negotiate for lower prices. This is also what our parents try to teach us during our development years.

The major issue here is that how we are conditioned to buy and sell in every other aspect of life and how we are taught to buy and sell in the markets are 100% opposite. When buying and selling anything in life outside of the trading and investing markets, we all try to buy at wholesale prices and sell at retail prices (homes, cars, whatever). When buying and selling stocks, for example, most people buy at retail prices and sell at wholesale prices. The average investor spends their life scratching their head because they can't make this concept work, while the Wall Street mind laughs all the way to the bank.

The reason the average investor never considers what I am suggesting in this piece is because they are blinded by the strong illusion that how we buy and sell in the trading and investing markets is somehow different from how we properly buy and sell anything. This illusion and misconception is single-handedly responsible for the massive transfer of accounts from those who are blinded by it, into the accounts of those who understand it. People in general focus on reducing fees, taxes, and other financial monkeys we all have on our backs. The 1000 pound gorilla, however, that no one seems to care about, is one that anyone can remove with a simple change in your thought process. Simply put, how you buy and sell things in every other part of your life, grocery shopping, cars, homes, and so on is EXACTLY how you should be buying and selling stocks and any other markets you may trade or invest in. There is NO difference in the proper action. Buy low, sell high and begin to smile at your finances just like Wall Street does. For more information on exactly where to buy and sell in markets, please read some of my prior articles that deal with identifying market turning points.