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Five surprising lessons from a career on Stock Market

  
  Education
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1) Deep thought: Surprisingly few people rolled up their sleeves and thought deeply about why things in market are the way the are. What causes markets to go up and down? Why do things blow up? Why do most investors under-perform markets? Lots of myths and urban legends, not nearly as much quantitative evidence.

If you get really deep about it and study the data, there are some rules to learn. To succeed in markets, one needs to become a philosopher-mathematician.

2) Long-Term Greedy: Too many people went for the easy money, but that was never what motivated me. It was more about intellectual curiosity and honing ones craft, and less about the quick hit. I made less money compared to many of my peers, but I kept more of it and never blew up.

The phrase “long-term greedy” was coined by former Goldman Sachs director Gus Levy many years ago. You can make (lots of) money over time, but only by serving clients’ interests. Its amazing to me that view is so far out of fashion today.

3) Hard Work: There is no other field where a person of average skills and intelligence who is willing to put their head down and work hard can makes 100s of thousands or even millions of dollars a year — but only if they are diligent and patient and willing to put in the hours. (more…)

NUGGETS OF WISDOM

  
  Education
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1.) It’s not valuation that matters.  It’s risk and reward in the growth cycle of each company.   – Leigh Drogen “The Coming Tech Crash”
2.)  Most importantly for the upside of the market, no one owns stocks.
There are millions of traders flipping stock with institutions in high growth names, but there are no rational conversations about the growth opportunities.
3.)  The media latches on to Steve Jobs not distributing the cash and thank god he laughs in their faces. Why should he trust the public with that cash. The public has proven to be imbeciles.
4.) Err on side of caution, hit the gas when deemed apropos, and don’t paradiddle. – A comment to Chessnwine’s post , “You call yourself a trader, you sonofabitch”
5.) Nietzsche was right- what doesn’t kill you makes you stronger.  – Pension Pulse, “Put Yourself First“
6.) “You’ve got to have the passion to do your time. If you haven’t done the time, you just can’t get there.” He goes on to argue that only by paying one’s dues through time, effort, devotion, and experience can we, “develop the rich experiences that make life meaningful.” – Top 10 Things That Determine Happiness
7.)Economists who adhere to rational-expectations models of the world will never admit it, but a lot of what happens in markets is driven by pure stupidity – or, rather, inattention, misinformation about fundamentals, and an exaggerated focus on currently circulating stories. – Robert Schiller, via Stone Street Advisors ” Driven by Stupidity“
8.) No company gets to be worth twice as much in 60 days as it was before to any intelligent person, so when that happens, we take advantage of it. – Steve Wynn , via Stone Street Advisors “ Driven by Stupidity“
9.) Keep in mind that you dont have to be sending orders to be working.  Avoid nurturing the belief that nonparticipation is not working.  This leads to overtrading or compulsion which is the practice of poor risk management.
10.) A series of loses first eats into your account balance, and then begins to eat into what is most important of all: your confidence.  Trade with confidence or don’t trade at all.  If you cant take the heat, stay out of the kitchen.
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