Archives of “January 11, 2019” day

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Visualizing The Cost Of Living Around The World

  
Analysis, Education
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Imagine that users submitted hundreds of thousands of prices for everyday items, and that they all got compiled into a massive database. Then, suppose a worldwide index of prices was created that compared the cost of living across different places by using these many data points.

Well, that’s already happened at Numbeo which is the world’s largest database of user contributed data about cities and countries.

This infographic uses this information to show the most expensive and cheapest places to live by country. While it is missing some of the granularity of looking closer at individual regions and cities, it does do a good job of showing a broad perspective on living costs.

Switzerland and Norway may not surprise you as two of the most expensive countries. However, Venezuela might not have been a place that was on your radar. Of course, in retrospect, when you have inflation spiraling out of control at a rate of 64% per year, that will make things a bit pricey.

Want cheap goods and services? Head over to India, Nepal, and Pakistan. With about 1.5 billion people spread between those three countries, labour is cheap and the cost of living is very low. (more…)

Marty Schwartz Interview (1999)

  
  Education
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Day Trader Marty Schwartz spent a number of years in what he felt was a dead-end job as a financial analyst. Finally he quit the comfort of the corporate cotton wool and accumulated $100,000 of which he spent $90,000 to buy his seat on the American Stock Exchange in 1979.

Left with just $10,000 of trading capital, he made over $8,000 on his first trade and in his second year of trading he made $600,000 and $1.2 million in his 3rd year.

It’s interesting to note that he never made money trading until he made a plan, which only happened when his wife Audrey told him to make one.

When asked; “what is the most money you have made in one day?” he replied; “several million”. At one point in the early 1980’s, he was making $70,000 per day trading the S&P’s.

Click here to listen to Marty Schwartz being interviewed in 1999 by Dave Allman on Wall Street Uncut.

NOTE: This audio file will only open if you have RealPlayer installed. You can get it free here

Read Marty’s book: “Pit Bull: Lessons from Wall Street’s Champion Day Trader”

 

SUN TZU THE STOCK TRADER

  
Analysis, Education

Sun Tzu, the author of The Art of War, would make a great stock trader.  Although The Art of War is a 2500 year old military treatise it could just as easily be written for today’s stock trader as the principles outlined therein are as applicable in the stock market as in the theatre of war.  I read The Art of War again this past weekend and highlighted what I believe are some of the most pertinent and applicable principles for stock traders as seen through the eyes of Sun Tzu the would be stock trader.   Make sure you copy and post these in a prominent place for quick reference when in the heat of battle.
I. 17  When the market is rewarding your trading strategy, you should modify your position sizing accordingly.
I. 26  Now the successful trader prepares before he enters battle.  The unsuccessful trader makes but a few, if any, preparations before he enters battle.  Proper preparation leads to victory; a little preparation leads to defeat; and no preparation leads to ultimate destruction!  The one who is properly prepared is the one who is most likely to win.
II. 7   Appreciating the gains better helps you accept the losses.
II. 19  In trading, let your great object be a quick and decisive victory, not the slow death of a lengthy loss.
III. 18  If you know who the enemy is and you know yourself, you will never fear the next trade.  If you know yourself but not the enemy, you will win one lose one.  If you do not know the enemy or yourself, you will lose on each trade.
IV. 1  The good traders of old first put themselves beyond the possibility of defeat and then waited for the right time to defeat the enemy.
IV. 4  It is possible to know technical analysis without being able to properly apply it. (more…)

Emotional Satisfaction

  
  Education
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TeachingWilliam Eckhardt once said that “If you’re playing for emotional satisfaction, you’re bound to lose, because what feels good is often the wrong thing to do.” If any trade makes you feel like “kicking yourself,” then you’re likely trading for emotional satisfaction and that’s a problem. In other words, if every trade you make has the purpose of trying to make you feel good, prove you are right, feed your ego, eliminate pain from a prior mistake you refused to deal with early on, or something other than just making money for you, you need to learn how to put trading in the proper frame of mind if you desire to become a better trader and investor.

Historic defeat for EU as Ukraine returns to Kremlin control

  
  Education
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Twenty years after the collapse of the Soviet Union, Ukraine is slipping back under Kremlin control. Ukraine’s shock decision to opt for Vladimir Putin’s Russia and pull out of EU talks on the eve of an historic deal is a dramatic upset to the European balance of power.

It is the first major defeat for the EU in its eastward march since the fall of Communism. While the region’s geo-politics remain fluid, the upset may prove as fateful as the move by the Kossack chief Bohdan Khmelnytsky to turn his back on the West and accept Tsarist suzerainty in the 1640s.
“Ukraine’s government suddenly bowed deeply to the Kremlin. The politics of brutal pressure evidently work,” said Sweden’s foreign minister Karl Bildt.
Ukraine’s prime minister, Mykola Azarov, told Ukraine’s parliament that the country has been forced to cancel its trade and pre-accession deal with the EU because Russian sanctions are strangling the economy, “pushing Ukraine to the brink of a huge social crisis.” (more…)

Warren Buffett’s Biggest Losses

  
Analysis, Education
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Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” – Warren Buffett

A good starting point to gauge investment performance is to compare your results against a simple buy and hold portfolio.

While there are certainly ways to improve the performance of buy and hold, there are many more ways to make it much worse.  You have to determine if the effort and actions you take with your portfolio strategy are worth it when compared to this simple (but not easy) alternative.

Investors generally fare much worse than buy and hold so this is an important decision for the average investor to consider.

When you hear about the average long-term gains of 9-10% in the stock market you must remember that those returns contain every single type of market environment. That means high valuations, low valuations, high interest rates, low interest rates, high inflation, low inflation, bubbles, recessions, booms, busts and everything in-between.

It’s an all-inclusive number that contains the good and the bad. (more…)

Top 10 Lessons from the Lehman Collapse

  
  Education
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Sunday is the five year anniversary of the bankruptcy of Lehman.  So what have we learnt?

1 – Bank executives lie…

…they also got paid huge amounts, weren’t as smart as they thought they were and those that ended up at the top tended to be deeply flawed individuals…

On Sept 10 in a conference call with investors, days before Lehman collapsed, Dick Fuld clearly stated to his shareholders that “no new capital was needed” and that “real estate and investments were properly valued”. Yet only five days later, Lehman filed for bankruptcy.

 

At a congressional Committee just a few weeks later, Dick Fuld was defiant. He stood by his “no new capital was needed” statement: “no sir, we did not mislead investors”. And he added that “we (made) disclosures that we believed were accurate”. If no new capital was needed why did Lehman go bust five days later? And if he didn’t know the financial position of Lehman what was he doing as CEO?

As part of the Congressional Committee hearings, Dick Fuld was allowed to make a presentation before he was questioned. These are his exact words as to the cause of Lehman’s demise:

“Naked short sellers targeted financial institutions and spread rumours and false information. The impact of this market manipulation became self-fulfilling as short sellers drove down the stock prices of financial firms. The ratings agencies lowered their ratings because lower stock prices made it harder to raise capital and (it) reduced financial flexibility. The downgrades in turn caused lenders and counter parties to reduce credit lines and then demand more collateral which increased liquidity pressures. At Lehman Bros the crisis in confidence that permeated the markets lead to an extraordinary run on the bank. In the end despite all of our efforts we were overwhelmed.” (more…)

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