Archives of “January 6, 2019” day

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Top 5 Quotes From Market Wizard Ahmet Okumus

  
  Education
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“I spend a hundred hours a week on research.” – Ahmet Okumus

While we spend our time researching different things, Okumus and I both share the drive to learn as much as we can about our investments. Okumus spends his time studying fundamentals, while I have been spending my time studying trading systems and successful traders.

Regardless of what you are studying, a strong desire to learn is obviously very important to trading success.

“On average I would say 35 percent school and 65 percent stock market, but the stock market percentage kept going up over time. By the beginning of my senior year, I was devoting 90 percent of my time to the stock market, and I quit school altogether.” – Ahmet Okumus

Okumus is discussing the amount of time he invested in studying for school vs studying the stock market while in college. This stuck out to me because it reminded me of my college days. I was bored by most of the classes I was forced to take, so I would bring my own personal studies to class with me and work on that, completely ignoring professors.

Unlike Okumus, I did stick it out and finish school. I am not sure that that was a good decision though.

“My main goal is not to lose money.” – Ahmet Okumus

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Focus on You

  
  Education
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It is never the system or author writing the trading book that fails.
It is YOU! It is your lack of focus.
Focus on yourself and then you can focus on trading successfully.

Trading is at least 98% psychological. It’s a mental state of mind based upon your beliefs of what may happen. Books, systems and technical indicators can only take you so far! You must accept and understand that the market is all in your head. It is you versus the other trader. If you don’t understand YOU, how will you ever understand other traders; thus taking advantage of market moves based on their mental state of mind and their underlying beliefs.

Many investors, both novice and experienced, drift from book to book to book and system to system to system, never understanding why they produce inconsistent profits. They are confused, looking at too many things, complicating the entire process while ignoring the essentials to success.

Keep it simple.

Why complicate things when simplicity works; especially when it comes to trading? We know that trading may be the most difficult endeavor that any human may attempt to undertake.

Thousands of different systems work in the stock market so we can conclude that it is the user that ultimately fails because of lack of concentration and motivation to stay the course. Wall Street is not for drifters and most people can’t play the game profitably because they never sharpen their own mental skills while applying basic money management techniques. They focus on the wrong set of skills.

We all see people come and go every day: rags to riches to rags. They are motivated for weeks, months and sometimes years but most fizzle away after they fail and can’t figure out what they are doing wrong. Some investors copy a system from a so-called guru and may find success for a while but they don’t tailor it to their personality, integrate it with their investing style and focus on their mental state of mind, therefore, it will become obsolete and they will fail. Working hard to become successful in the market is fine but understand that working smarter will always take you further.

Our goal as traders and investors is to understand the crowd and anticipate how they will act and react based on the thoughts we had, prior to focusuing on the proper skills, when we were just one of the sheep (waiting to be slaughtered)!

Focus on what is important and the success will follow.

Stop focusing on iffy stochastics, Bollinger bands, MACD, ADX, earnings releases and bogus news stories. Yes they can aid you to success but the main focus is on you!

Personally speaking, I require specific fundamentals, price, volume and basic daily and weekly charts to succeed but they are secondary tools. They can help me make money as long as I am focusing on the overall picture which is my mental focus and my emotional balance.

I know I am getting all “Dr. Perruna” on you but it is true.

Once your conscious mind understands how the beliefs of the crowd work, your subconscious mind takes over and intuition kicks in and you start making some of the best decisions of your life by flawlessly following your system.

As Jesse Livermore said:

“Wall Street never changes, the pockets change, the stocks change, but Wall Street never changes, because human nature never changes”

Why? Because humans never change!

Once you understand this and learn to trade other humans, you will become successful. Yes, you will need some of the tools mentioned above but don’t focus your attention in this area. Focus when investing by mastering the beliefs of the crowd and you will always be one step ahead.

The Wisdom of Burton Pugh

  
  Education
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It was true when he wrote it in 1948, and it’s still true today:

“To the professional short-turn trader who can spend all his time at the exchange, it
is, of course, permissible and expected that he will try to secure frequent fragmentary profits in an effort to compound them into larger funds, but this is not investment. Few are the ones who can afford to become ‘professionals’ and, in the final wind-up of a financial campaign, the outright investor following [a] plan will far exceed the results achieved by the less patient in-and-out trader.”

Investment Jokes

  
Education, Humour, Life
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The Godfather, accompanied by his stockbroker, walks into a room to meet with his accountant. The Godfather asks the accountant, “Where’s the three million bucks you embezzled from me?” The accountant doesn’t answer. The Godfather asks again, “Where’s the three million bucks you embezzled from me?”

The stockbroker interrupts, “Sir, the man is a deaf-mute and cannot understand you, but I can interpret for you.” The Godfather says, “Well, ask him where the @#!* money is.”

The stockbroker, using sign language, asks the accountant where the three million dollars is. The accountant signs back, “I don’t know what you’re talking about.” The stockbroker interprets to the Godfather, “He doesn’t know what you’re talking about.”

The Godfather pulls out a pistol, puts it to the temple of the accountant, cocks the trigger and says, “Ask him again where the @#!* money is!”

The stockbroker signs to the accountant, “He wants to know where it is!” The accountant signs back, “Okay! Okay! The money’s hidden in a suitcase behind the shed in my backyard!”

The Godfather says, “Well, what did he say?” The stockbroker interprets to the Godfather, “He says that you don’t have the guts to pull the trigger.”

The Pessimist sees the glass as half empty. The Optimist sees the glass half full. The Stock Market Day Trader JUST ADDS WHISKEY …

Market statistics are like a bikini:

What they reveal is important, what they conceal is vital!

Uncertainty

  
  Education
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1) Uncertainty is always subjective. It is a state of mind that is derived from a mix of objective data, emotions and personal experience. To say that the market is always equally uncertain is to say that mood is always the same. It is not. It constantly changes.

If the perceived uncertainty is always the same, earnings reports would not have such huge impact on prices. We all know that this is not the case. In many cases, earnings reports provide new data that changes market expectations and therefore prices. Options premium is higher before earnings exactly because uncertainty is higher.

2) Uncertainty has become a synonym for bad mood in our everyday life.

The future is always uncertain, but our perceptions of the future vary. And perceptions define actions. Actions (supply and demand) define prices. Somehow uncertainty is used with a highly negative connotation in our everyday life. It is a game of words. Just like the weather people always say that there is a 30% chance of rain and never that there is 70% chance of sun.

3) Uncertainty is basically another word for market sentiment. High levels of perceived uncertainty (bad mood) and high levels of perceived certainty (good mood) have historically been good contrarian indicators, IF your investing horizon is long enough.

4) There are different types of uncertainty.

There is an economic uncertainty. Uncertainty leads to a decline in economic activity. Less people are hired. Old machines and software licences are used longer. Investments are cut. This is what it has been happening in Europe for 2 years.

There is market uncertainty that impacts volatility. When correlation is close to 1.0 (another way to say that stocks move together disregarding of their individual characteristics), uncertainty is perceived as high. It leads to choppy environment that market timers prefer to sit out in order to preserve monetary and mental capital. Perceptions define reality.

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