Warren Buffett on Risk
Archives of “February 4, 2019” day
rssMunger's Musings: Trump's "Not Wrong On Everything"; "Young People Should Shop Less, Learn More"
Charlier Munger, the 93 year old billionaire vice chairman of Warren Buffett’s Berkshire Hathaway who once said Trump was not “morally qualified” to be President, seems to be warming up to the new administration. Well, at least he doesn’t think Trump is quite as bad as Hitler anyway, which is a start.
In speaking with a group of investors and students for nearly two hours yesterday at the Daily Journal’s annual meeting, on a wide range of topics, Munger said that he’s “gotten more mellow” when it comes to Trump and is now convinced that “he’s not wrong on everything.” Per Yahoo Finance:
“Well, I’ve gotten more mellow,” Munger said at the Daily Journal’s 2017 meeting on Wednesday, adding, “I always try to think about the good as long as it’s not good.”“He’s not wrong on everything. And just because he isn’t like us, roll with it. If there’s a little danger, what the hell, you’re not going to live forever anyway.”
“And when Donald Trump says he wouldn’t touch Social Security and Republicans have all kinds of schemes for revising Social Security — I’m with Donald Trump. If I were running the world … I wouldn’t touch [Social Security].”
Donchian's 20 Trading Guides (First publication: 1934)
General Guides:
Beware of acting immediately on a widespread public opinion. Even if correct, it will usually delay the move.
From a period of dullness and inactivity, watch for and prepare to follow a move in the direction in which volume increases.
Limit losses and ride profits, irrespective of all other rules.
Light commitments are advisable when market position is not certain. Clearly defined moves are signaled frequently enough to make life interesting and concentration on these moves will prevent unprofitable whip-sawing.
Seldom take a position in the direction of an immediately preceding three-day move. Wait for a one-day reversal.
Judicious use of stop orders is a valuable aid to profitable trading. Stops may be used to protect profits, to limit losses, and from certain formations such as triangular foci to take positions. Stop orders are apt to be more valuable and less treacherous if used in proper relation the the chart formation.
In a market in which upswings are likely to equal or exceed downswings, heavier position should be taken for the upswings for percentage reasons – a decline from 50 to 25 will net only 50% profit, whereas an advance from 25 to 50 will net 100%
In taking a position, price orders are allowable. In closing a position, use market orders.”
Buy strong-acting, strong-background commodities and sell weak ones, subject to all other rules.
Moves in which rails lead or participate strongly are usually more worth following than moves in which rails lag. (more…)
‘Essential Qualities of the Speculator’
1. Self-Reliance. A man must think for himself,must follow his own convictions. George MacDonald says: “A man cannot have another man’s ideas any more than he can another man’s soul or another man’s body.” Self-trust is the foundation of successful effort.
2. Judgment. That equipoise, that nice adjustment of the faculties one to the other,which is called good judgment, is an essential to the speculator.
3. Courage. That is, confidence to act on the decisions of the mind. In speculation there is
value in Mirabeau’s dictum: “Be bold, still be bold; always be bold.” (more…)
What is going on in Europe at the moment ?
Patience
A Spiritual Stock Market Awakening
If you are confused about the market, the video below has the answers.
Fortune Favors the bold
Trend following, like any entrepreneurial endeavor, demands you be responsible for yourself. Charles Faulkner emphasized the point:
‘Trend trading and even trading in general isn’t for everyone. As too few people check out what the day-to-day life of a trader is like, and trend trading specifically, I strongly recommend they find out before making a life-changing commitment.’
What does ‘life-changing commitment’ involve? You commit to not wanting to be right all of the time. Most people, let’s face it, must be right. They live to have other people know they’re right. They don’t even want success. They don’t even want to win. They don’t want money. They just want to be right. The winners, on the other hand, just want to win.
What else can you do? You commit to patience and faith in a trading system that is not structured on quarterly performance or some artificial measure of the ‘mass’. You work hard to gain experience. Great experience leads to great intuition. You commit to thinking for the long term and not feeling insecure if you don’t have a steady earnings stream of 1-2 percent a month. You might have one year where you are down 10 percent. The following year you might be down 15 percent. The next year you might be up 115 percent. If you quit at the end of the second year, you will never get to the third year. That’s reality.
10 signs you’re a narcissistic investor
Some amount of narcissism (a strong belief in yourself) can be helpful in giving you the confidence to apply for a new job or ask for a raise but sometimes these same traits can become too extreme and you can find yourself part of the “narcissism epidemic” that psychologist Jean Twnege and Keith Campbell coined in their book of the same name.
The more you identify with these characteristics, the more likely you are to be a narcissistic investor.
- You always know what you’re doing.
- “I know I’m good because everybody keeps telling me so.”
- Everybody likes to hear your stories and you often boast about your latest or greatest winning trade during conversations.
- “Seeking admiration is like a drug for narcissists”, said Mitja Back a psychologist at Johannes Gutenberg University in Mainz Germany. “In the long run it becomes difficult because others won’t applaud them so they always have to search for new acquaintances from whom they get the next fix.”
- If an investment loses money it’s because someone else made a mistake, not you.
- I almost always hear how my broker sold me this (name a losing investment) vs. I bought this (name a winning investment).
- You’re a workaholic.You get upset when people don’t notice how well you’re doing financially. (more…)
Preparation -Purpose-Protection
- Preparation: If you put yourself in the best possible position and you lose money at least you spent that money wisely. Good things happen to those that are prepared because 90% of people do not know how to do it or are unwilling.
- Purpose: Acting with purpose. You prepared, you knew the risks, you executed the way you wanted to execute. In cold blooded evaluation you would do it the same with the information you had at the time.
- Protection: Losing the invisible money is how I have seen many people blow up. Invisible money is not locking in profits or losing more than your plan allowed. If you lose what you intended to risk you own the trade, if you lose more the trade owns you.