William 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.
Archives of “January 2019” month
rssHistoric defeat for EU as Ukraine returns to Kremlin control
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
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
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…)
Now Colgate Fights With Dant Kanti (Why so late ? )
Industrialization In India
1. Industrialization by the state as in socialist countries. This benefits the masses the most
2. Industrialization by the indigenous industrialists, as in England, France, Germany, Japan, U.S.A. etc. This also benefits the people to some extent, though it mainly benefits the industrialists.
3. Industrialization by the foreign powers, as was done to some extent by the British when India was their colony. This does not benefit the masses at all, but rather impoverishes them, and it only benefits the foreign rulers by giving them super profits, but ruining our domestic industries in the process.
The policy being pursued by the present Indian government, e.g. by inviting foreign investments and giving concessions to foreign businessmen, is of the third type
Lack of Patience
The fourth finger of the invisible hand that robs your trading account is Lack of Patience. I forget where, but I once read that markets trend only 20% of the time, and, from my experience, I would say that this is an accurate statement. So think about it, the other 80% of the time the markets are not trending in one clear direction.
That may explain why I believe that for any given time frame, there are only two or three really good trading opportunities. For example, if you’re a long-term trader, there are typically only two or three compelling tradable moves in a market during any given year. Similarly, if you are a short-term trader, there are only two or three high-quality trade setups in a given week. (more…)
How to Win Friends and Influence People (Dale Carnegie, 1937).
The Most Important Thing For Traders
The Inevitables of Success
