Archives of “January 21, 2019” day

rss

12 Insights About Markets and Life

  
  Education
#  #  #  #  #  #  #

12 insights about markets and life from reading Ken Roman’s The King of Madison Avenue and The Unpublished David Ogilvy.

1. Be unorthodox and imaginative in your hiring. Ready to hire people with unusual backgrounds. Would you hire this man for an advertising executive? “He is 38 and unemployed. He dropped out of college. Has been a cook, a salesman, a diplomat and a farmer. Knows nothing about marketing. And has never written any copy. Is interested in advertising as a career at the age of 38, and is ready to go to work cheap.” It was Ogilvy himself who 3 years later became the most famous copywriter in the world and built the eighth biggest ad agency.

2. Treat women as if they are as knowledgeable as your wife when you advertise to them. They don’t like to be talked down to or treated as robots. Peter Lynch and Jim Cramer are not the only investors who got 10 baggers from their wives.

3. The purpose of advertising is to sell a product. Make sure you go for the sale. Forget about aesthetics. Learn from the mail order ads where everything is tested, and no ad continues unless it pays it way. Forget about the 3rd and 4th moments in your quantitative measures and concentrate on making a profit on your trades.

4. Don’t show off or try to be funny. It doesn’t go well in print. It demeans the readers’ intelligence. If you show off in a trade or competition, it will defuse your energy, and take you away from the bottom line. (more…)

New Trading Rules for Traders

  
  Education
#  #  #  #  #  #  #  #  #  #

Play to win, not for a score. Traders who desire only to make money versus simply trying to trade well and their best ability will struggle. This is a money-focused game, but trading well requires you to focus on goals beyond the money to achieve the performance you really desire.

Recognize a real gamble. When you are trading well, take the possibility of a major loss out of the equation whenever you can. It is true, when we are the most vulnerable is when everything is going right and it seems like we can do no wrong. Moreover, there are times to make the big aggressive trade, and times when doing so is foolhardy. Recognizing the difference is so very important.

Root hard for yourself. When everything goes wrong, the quickest way to turn it around is to force yourself to be optimistic and enthusiastic. Even after making the so-so trades which only pay out puny returns, you’ve got to pat yourself on the back and slowly gain your confidence back. confidence is everything in trading and you need a steady supply of reassuring confidence to trade at your very best.

Forget the holes up ahead. Focus on today’s trade, not the next one or the one you think you see is falling into place weeks from now. As Hunter recommends, “You really have to stay in the present.” Traders often let big picture themes and views prevent them from seeing setups that occur daily. This tunnel vision can really limit overall returns. Find the next trade, focus on that trade, and after that, move to the next. Don’t let issues you see so far down the road prevent you from making profits today.

The right way to play safe. If you play chicken, you’ll invite bad trades and disaster. As others have said, you’ve always got to trade to win, instead of trading not to lose. There’s a tremendous difference. I know traders who try to hedge every trade they make and ultimately don’t achieve the returns they should. If your approach is sound, hedging should only be a tool to use sparingly, not as an entire strategy substitute or for protecting your ego when you are wrong.

Survival of the fittest

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

When he hear the term ‘survival of the fittest’ bandied about, people are usually referring to contests of absolute strength and think of the Darwinian struggle for life. Trading is often thought of in a similar light.

It’s interesting to note that while Darwin came up the idea of natural selection, the term ‘survival of the fittest’ was coined by economist philosopher Herbert Spencer. What is more, both Darwin and Spencer were not referring to competitions of brute strength, but of best fit. That is, the survivors were those who best fit in to the environment around them. Brute strength is an aspect of this, but it is only half the story. Adaptation to the environment is also required.
Chance and randomness plays a big role in natural selection, as it does with trading success, but we can be sure that regardless of how strong we are with respect to risk management, discipline etc, if we don’t have an edge then we will likely die out. Likewise, an edge and no strength could prove equally fatal. Because the environment of the active investor is dynamic and forever changing, it may be useful to think of the circles below as constantly moving around about other, only rarely intersecting.

10 Favorite Quotes from Reminiscences of a Stock Operator

  
  Education
#  #  #  #  #  #  #  #
  • There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.
  • The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among professionals.
  • I never lose my temper over the stock market. I never argue the tape. Getting sore at the market doesn’t get you anywhere.
  • They say you can never go poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market. Where I should have made twenty thousand I made two thousand. That was what my conservatism did for me.
  • Remember that stocks are never too high for you to begin buying or too low to begin selling.
  • A man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street…nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.
  • After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was the sitting. Got that? My sitting tight!
  • Losing money is the least of my troubles. A loss never bothers me after I take it…But being wrong—not taking the loss—that is what does the damage to the pocketbook and to the soul.
  • Prices, like everything else, move along the line of least resistance. They will do whatever comes easiest.
  • The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you hope that every day will be the last day—and you lose more than you should had you not listened to hope—the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out—too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts…Instead of hoping he must fear; instead of fearing he must hope.
Go to top