Archives of “January 11, 2019” day

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Ten One Liner Lessons For Traders

  
  Education

10) Those who are willing can be taught almost anything.
9) Great people want to help others achieve great success.
8) Success in business requires tremendous concentration. Outside distractions must be avoided.
7) Sometimes it is best to leave politics to politicians.
6) Everyone fails at some point in his life. The true winners rebuild after their failures.
5) To put on a trade when everything is going against you requires character and commitment.
4) Rules are rules. Stick to them.
3) Adapt with the times. Be willing to be malleable.
2) Always leave yourself outs. Never commit everything to one position or to one person.

And the number one lesson:

1) The market is bigger, stronger and badder than you. Always respect it for the beast it is.

Paul Tudor Jones – 60 Minutes Interview

  
Education, Video
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Jones is considered one of the best traders in the business for one main reason: CONSISTENCY!He has produced positive returns for 25 straight years! I don’t know the exact number of years, but you get my point. The fuel behind his consistency is his discipline, specifically his ability to manage risk and cut losses.

Besides his tremendous success as a trader and a hedge fund manager, what makes Jones an even bigger hero in my view is his philanthropy. I love the phrase “The secret to living is giving” and Jones truly exemplifies this quote. In other words, what’s the point of being successful if you never give back to others? As Jones says in this 60 Minutes interview: “You find your joy in life through service and sacrifice.” Enjoy the video!

 

Stock market analysts don't exist to tell you want to 'buy', 'sell' or 'hold'

  
Analysis, Education

Image result for STOCK ANALYSTMaybe the best thing I’ve read this week is today’s column by Matt Levine on stock market research analysts and what they’re really doing.

You might think their job is to give investors advice on which stocks to buy, sell and hold. You would be wrong, as Levine explains:

Here are two models of sell-side equity research.

Model 1

  • Sell-side analysts are in the business of finding out what stocks will go up and then telling you.
  • They tell you to Buy stocks that will go up, Hold stocks that will stay flat (why?), and Sell stocks that go down.
  • You believe them, and do that.
  • Sometimes they lie to you, but it is always a shock when they do.

Model 2 

  • Sell-side analysts are in the business of helping institutional investors get access to corporate management teams.
  • They flatter management teams by giving most companies good ratings, to maintain access.
  • They help their clients, because investors who meet with management tend to outperform investors who don’t.
  • The clients aren’t too worried about the Buy/Sell/Hold stuff.

… “If you believe that the job of a sell-side analyst is to tell people which stocks to buy and which ones to sell, you need to stop believing that right now, because it is not true.”

He goes on to detais how analyst ratings basically exist to flatter management so those analysts can then set up meeting between large institutional managers and top executives.

Some examples of Overconfidence

  
  Education
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  • OverConfidenceA person who thinks his sense of direction is much better than it actually is. The person could show his overconfidence by going on a long trip without a map and refusing to ask for directions if he gets lost along the way. 
  • A person who thinks he is much smarter than he actually is. The person could show his overconfidence by not studying for his SATs, ending up with a lower score than he could otherwise have received. 
  • A person who thinks he has a photographic memory and a detailed understanding of a subject. The person could show his overconfidence by deciding not to study for a test that he has to take on the subject, thus doing poorly on the test due to lack of preparation. 
  • A person who thinks he is invaluable to his employer when almost anyone could actually do his job. The person might show his overconfidence by coming in late to work because he thinks he is never going to get fired, or by being overly demanding about getting a raise and threatening to quit if he doesn’t get his way. 
  • A person who thinks his spouse or partner will never ever leave because he or she loves him too much. The person might try to take advantage of the spouse or partner due to the overconfidence, thus driving the spouse away.  (more…)

Trading Wisdom – Paul Tudor Jones

  
  Education
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Paul Tudor Jones
Turned $1.5 million into $300 million in five years
“That cotton trade was almost the deal breaker for me. It was at that point that I said, “Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?”
I had to learn discipline and money management. I decided that I was going to become very disciplined and businesslike about my trading. I spend my day trying to make myself as happy and relaxed as I can be.
If I have positions going against me, I get right out; if they are going for me, I keep them. I am always thinking about losing money as opposed to making money. Risk control is the most important thing in trading. I keep cutting my position size down as I have losing trades.

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