What Mayweather-Pacquiao Teach Traders About This Bull Market

NEW YORK (TheStreet) -- The Mayweather-Pacqiao fight this weekend is a lot like trading this bull market: There are a ton of bears calling for the market to turn down (the Floyd-Mayweather-is-going-down camp), yet it continues to chug along to their consternation. 

Many fans hate that Mayweather is where he is and it further annoys them that he is usually correct in predicting the outcome of his fights. Therefore, they choose Manny Pacquiao to win the fight because Mayweather must be bound to be wrong at some point, right? These people are the trend-faders, the contrarians. 

The bears will eventually be right; the market will turn down at some point in the future. But right now it is the less likely scenario. Yet a lot of traders will constantly short the market because emotionally that is what they are hoping for -- rather than what they are seeing using analysis without emotion. As traders and athletes, hope should not be in our dictionary. If Mayweather was going to lose based on fundamentals, we would have had some notice in prior fights. If the stock market is going to turn from a bull to bear market, there would be clear signs leading up to it.

That doesn't mean that I won't be short the market and it doesn't mean that Pacquiao couldn't have won, I'm just saying that traders often make decisions based on what they want to happen, versus what they are actually seeing happen. The key to being a successful trader over time is to limit those emotional decisions and recognize you are about to make one so you can stop yourself before it's too late. 

We should all learn from these fighters. They had the guts to stick to their plans even if their fans wouldn't like it. A hat-tip to Mayweather for almost flawlessly executing his strategy -- staying defensive and taking shots when he had opportunities. And one to Pacquiao for sticking to his plan -- being aggressive when opportunities are there, but don't force it and put yourself in a bad position just to try and knock him out.

As traders we should take that lesson, too: Stick to your plan and execute your strategy. If you don't have a plan or a strategy (or aren't following it), then you're just out there throwing punches and, eventually, you'll get knocked out.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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