- What everyone else knows is not worth knowing. Knowledge is useless without application. There are many, many miles between doing and knowing.
- Stocks are always way overvalued in a bull market and way undervalued in a bear market. I would argue there is no such thing as value only prices, price is function of supply of buyer and sellers.
- The best stocks will always seem overpriced to the majority of investors. Not sure what constitutes best.
- Expectation, not the news itself, is what moves the market. Density of buyers and sellers move the market but expectation and news can affect that.
- Three basis elements should be considered when evaluating a stock – 1) quality (fundamentals, liquidity, management), 2) price, and 3) trend (the most important). I will take his word for it.
- Stocks act like human beings and go through the same stages and phases as people do, including infancy, growth, maturity, and decline. The key in trading is to be able to recognize which stage the stock is in and to take advantage of that opportunity. In futures markets, what changes is the participants, their objective, and how aggressively they pursue that objective.
- Pyramid your buys – start with an initial position and then add to it only if the trade moves in your favor. A loser does not always mean you got a bad price, that is an important distinction.
- The more experienced and successful you become, the less you should diversify. Stock specific.
- Traders must always resist the urge and temptation to change their strategies for each and every different market cycle. The process is a bajillion times more important than the strategy.
- To succeed in trading you must 1) aim high, 2) control the risks, 3) be unafraid to keep uninvested reserves and 4) be patient. One of the most important things I have learned from my mentor is about risk. People mess up risk too often.
- Successful traders are intelligent, they understand human psychology, they practice pure objectivity, and they have natural quickness. Trading is a cooking not baking. Quickness comes with having a plan.
- You must always trade with the actions of the market and not simply by how you might think the market should trade. Do not risk too much trading that way and understand the psychological risks of trading that way. As far as not using your experience, I am not sure.
- Knowledge through experience is one trait that separates successful stock market speculators from everyone else. Experience is important but can also be a detriment.
- The stock market is more an art than a science and far more complex than most people understand. Complexity of the market is irrelevant to the success as a trader. The process is a science.
- Always sell when you start patting yourself on the back for being smarter than the market. Agree, get out when you have time think about being smarter than the market or anything.
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