7 Steps to Happiness
Archives of “January 23, 2019” day
rssThe Crash of 1929 -Video
Here is a link to the transcript of this documentary.
Narrator: At sea and on land, everyone seemed to be making money. It was a stampede of buying. And major speculators like John Jacob Rascob whipped up the frenzy. He told readers of The Ladies’ Home Journal that now everyone could be rich. September 2nd, Labor Day. It was the hottest day of the year. The markets were closed and people were at the beach. A reporter checked in with astrologer Evangeline to ask about the future of stock prices. Her answer: the Dow Jones could climb to heaven. The very next day, September 3rd, the stock market hit its all-time high.
Ben Karol, Former Newspaper Delivery Boy: My father and I had an ongoing discussion about the stock market. And I used to say, “Pop, everybody’s getting rich but you. You know, you work so hard and you’re never going to make a nickel. All you do is you keep delivering these newspapers and that’s about it. The guy who’s shining shoes is in the stock market, the grocery clerk is in the stock market, the school teacher’s in the stock market. The teller at the bank is in the stock market. Everybody’s in the stock market. You’re the only one that’s not in the stock market.” And he used to sit and laugh and say, “You’ll see. You’ll see. You’ll see.”
Narrator: On September 5th, economist Roger Babson gave a speech to a group of businessmen. “Sooner or later, a crash is coming and it may be terrific.” He’d been saying the same thing for two years, but now, for some reason, investors were listening. The market took a severe dip. They called it the “Babson Break.” The next day, prices stabilized, but several days later, they began to drift lower. Though investors had no way of knowing it, the collapse had already begun
IMF Seeking Boost In Lending Cap By $250 Billion To $1 Trillion
In the latest sign yet that things in the world are roughly 25% worse than expected (give or take), the FT reports that the IMF will seek an imminent rise in its lending cap from $750 billion to $1 trillion to build safety nets that could prevent financial crises. “Even when not in a time of crisis, a big fund, likely to intervene massively, is something that can help prevent crises,” Dominique Strauss-Kahn, the IMF managing director told the Financial Times. “Just because the financing role decreases, doesn’t mean we don’t need to have huge firepower … a $1,000bn fund is a correct forecast.” At this point it is glaringly obvious that without the explicit support of the various central banks and of such fake international but really US organizations as the IMF, the already prevalent liquidity crisis would simply destroy the world. The troubling theme is that instead of taking away incremental worries, we have now gotten to the point where one bailout, like a butterfly in China, merely requires 10 more down the road. Alas, instead of a virtuous Keynesian dynamic, this is anything but.
Some more on the IMF’s feeble attempt at justifying the need for its exploding funding requirements, as well as its own attempt to validate that all is well:
South Korea, as this year’s president of the Group of 20 leading economies, is helping craft the plan. Seoul hopes to convince the G20 countries to back the increased IMF funding at a summit in South Korea in November. The G20 meeting in London in 2009 tripled IMF resources from $250bn. A US official said Washington was sympathetic to improved safety nets but needed more details on the Korean-IMF plan.
South Korean economists forged the plan because of their own bitter experience of their currency and stock market plunging in 2008. In spite of robust economic fundamentals, Seoul needed to be rescued from a dangerous liquidity shortfall by swaps from the US, Japan and China. (more…)
The Paradox: a surgeon versus a trader (Why 95% Traders Lose Money ? )
“Have you ever met someone who goes to a bookstore on a Friday, buys a book on surgery, read it over the weekend and attempt to go into the operating theater on Monday and start to operate like a real surgeon?”
Every single one of the audience agreed there is a zero chance that this man could perform a successful surgery just by reading a surgery textbook over the weekend.
However, Jack went on to ask the next question,
“Have you ever met someone who goes to a bookstore on a Friday, buys a book on trading, read it over the weekend and attempts to head into the market on Monday and start to trade like he is a professional trader?”
The audience giggled upon Jack’s second question, which probably suggested that this example of a aspiring trader is a common occurence.
The fact, as Jack explained, is that anyone with zero experience in surgery will almost definitely fail in his first duty as a surgeon.
But someone who has zero experience in trading could still potentially make money (sometimes a lot) on his initial trades!
This paradox gives people a general false feeling that trading is and can be very easy for any newbie.
According to Jack, the truth is that in order to be a profitable trader in the long run, you will have to put in effort in honing your trading skills.
The effort will be as much as a trainee surgeon who spend years of his life learning how to become a proficient surgeon.
When a newbie trader’s beginners luck runs out, he will start losing a lot of money, usually much more than the amount he made during his lucky winning streak.
So, if you are a amateur trade and if you want to become a proficient trader over the long run, there is simply no short cut way for you.
You will have to spend years honing your trading skills until you become one of those market wizards.
It's not what you say…
The Right Side
A quote from one the best traders of our time, Jesse Livermore: “It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation.”
Being a bull or a bear alone is meaningless out of the crucial context of the current market conditions. All that really matters for the great game of speculation is being on the “right side”, knowing when the markets are in a bull or a bear trend and deploying your speculative capital accordingly.
Once again Livermore ties speculation back into the speculator’s own internal emotions. He points out that it makes no sense to be bullish or bearish as a rule, but to carefully watch the market conditions in order to be on “the right side” at any given moment. Most speculators are burdened with an innate emotional bias to be bullish that is dangerous and must be eradicated if they wish to succeed in speculation. (more…)
The art of War
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.
IV. 13 The successful trader wins his battles by making no mistakes. Making no mistakes establishes the certainty of victory.
V. 13 The quality of entry is like a well-timed swoop of a falcon which enables it to strike and destroy its victim.
V. 15 Proper preparation may be likened to the bending of a crossbow; decision, to the releasing of the trigger.
VI. 5 Take advantage of opportunities such as support and resistance where the enemy must put up a strong defense; take swift action and catch the enemy off guard.
VI. 19 Be prepared for battle by knowing the exact time and place for proper trade entry.
VI. 32 Just as water retains no constant shape, so in trading know the market is constantly changing.
VII. 5 Trading with familiar stocks is advantageous; with unfamiliar most dangerous.
VII. 13 We are not properly prepared to trade a stock until we are familiar with the most likely direction of the general market.
VII. 21 Ponder and deliberate before you enter a trade.
VII. 28 Now the trader’s spirit is keenest in the pre-market; by noon day it is becoming weary; and by post market ready to relax.
VII. 32 To refrain from entering a market that is prepared to defend its current course is the art of practicing patience by studying current market conditions.
VIII. 3 There are trades which must not be taken; sectors that are not ready to be attacked; patterns that are set up for failure; positions that are to be surrendered; egotistical commands that are not to be obeyed.
IX. 28 In a mixed market when some stocks are seen advancing and some retreating, it is a trap.
IX. 41 He who does not think through his trade while making light of the situation is sure to fall victim to a loss.
X. 24 The trader who makes money without coveting fame and loses money without fearing disgrace, whose only thought is to protect his equity and ignore his ego, is considered to be a jewel of the kingdom.
XI. 17 When it is to the trader’s advantage, he will enter a trade; when otherwise he will not.
XI. 67 Trade in the path defined by rules and do not face the enemy until you feel you can trade with confidence.
XII. 15 Unhappy is the fate of the trader who tries to win his battles and succeed in his decisions without cultivating the spirit of confidence, for the result will be a waste of time and a drain on his trading account.
XII. 17 Do not trade unless you see there is an advantage in doing so; use not your money unless there is something to be gained.
XII. 22 The successful trader is heedful and full of caution. This is the way to have peace of mind and to live to trade another day.
XIII. 4 What enables the wise and successful traders to trade and conquer, and achieve things beyond the reach of ordinary traders, is proper preparation.
25 rules of trading discipline
- The market pays you to be disciplined.
- Be disciplined every day, in every trade, and the market will reward you. But don’t claim to be disciplined if you are not 100 percent of the time.
- Always lower your trade size when you’re trading poorly.
- Never turn a winner into a loser.
- Your biggest loser cant exceed your biggest winner.
- Develop a methodology and stick with it. dont change methodologies from day to day.
- Be yourself. Dont try to be someone else.
- You always want to be able to come back and play the next day. Once you reach the daily downside limit, you must turn your PC off and call it a day. You can always come back tomorrow.
- Earn the right to trade bigger. Remember: if you are trading poorly with two lots you must lower your trade size down to a one lot.
- Get out of your losers.
- The first loss is the best loss.
- Dont hope and pray. If you do, you will lose. (more…)
Capital gains from bonds, income from stocks… probably nothing
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