ABC of life and stocks

This is going to be a non stock analysis post as I am still reading on Reckitt Benckiser which shall be my next blog post. I learned an important concept last year when we bought a puppy and had to engage a trainer to aid us in his obedience training.

The most important concept of life and which is applicable to stocks as well is summarized in three words: ABC. A means antecedent which is described as a preceding situation or circumstance. B means behaviour which is what you do or react to the antecedent and lastly C is the consequences of your behaviour to the antecedent.

For example, you hate your job because of various reasons (antecedent), you decide to be lazy and not be as diligent as before (behaviour) and weeks pass by and your boss does nothing (consequence). You realize that if you disappear during office hours and become slower at delivering your work, your boss doesn't even call you out for counseling or reprimand you, you learned that it's A ok to continue doing what you are doing. On the other hand, if your boss called you out on your behaviour and gave you a huge scolding, you learned to adapt and behave in a different way to get the consequence you want, which in this case would be to do as little work as possible and not get scolded.

When it comes to stocks, it's the same concept I apply, which is damn this stock is so freaking cheap and I'm so tempted to buy it now (antecedent), I decide not to buy it as I want to monitor it for a while (behaviour) and shit I'm so glad I didn't buy it because it tanked further and I bought it at an even cheaper price (consequence).

Of course when it comes to stocks, it's never as easy as ABC because strangely you can never be 100% sure that your behaviour will bring about the consequences that you want. In fact, you can't even trust your gut 100% of the time thus just to be right on your stock picks most of the time would be indeed a happy life. 

PS Going forward it's likely that I continue to blog about stocks all over the world as I don't want to be restricted to just covering local stocks. If you do not wish to miss a post, please subscribe to my posts or follow me on Facebook / Seeking Alpha / Twitter @GoogirlInvestor.

Comments

  1. I like studying behavioral models, and this ABC one is a nifty mnemonic. Thanks for introducing it. This was the post I wished to comment on earlier but was unable to

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    Replies
    1. Without this ABC, ACCICB and I wouldn't be where we are now. Previously just couldn't see it happening but with ABC everything just became crystal clear.

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  2. Is this similar to cause and effect?

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    Replies
    1. Yes it's very similar except that behavior is missing. Cause is why something happened and effect is what happened but it leaves out what we do that could possibly change the effect

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