1- “I will not alienate my friends and antagonize my family by reminding the world on every possible occasion how right I was about the upturn – or downturn – in steels, motors, airlines, or whatever.
2 – When I buy a stock I will not mobilize all the good news to make it look pretty. I will try to consider both the favorable and unfavorable angles as impartially as I know how.
3 – I will not close out a stock position that is doing well by me for no other reason than that I have a profit. I will not cut short my gains in a good situation.
4 – I will not hang on to a stock that is persistently going against me. I will limit my loss and close out any position that seems to have gone really bad before I am in danger of serious trouble.
5 – I will not be swayed or panicked by news flashes, rumors, tips, or well-meant advice.
6 – I will not put all my eggs in one basket nor will I be swept off my feet to plunge into some unknown or low-priced stock on a purely emotional basis.
7 – I will not attempt to tell the market what a stock ought to be worth. I will try to understand what the market has to tell me about what people are willing to pay for it.
8 – I will never forget that I am not in the market primarily to prove – to my broker, my friends, my wife, etc. – that I am smarter than everybody else, but to protect and, if possible, to augment my capital.”
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rssWords of Wisdom — John Templeton
20 Ways to Stop Losing Money
1. Don’t trust the opinions of market gurus. Remember that it’s your money at stake, not theirs. Listen to what they say, then step back and do your own homework.
2. Don’t believe in a company. Trading isn’t investing, so you need to focus on the price action and forget the balance sheets. Leave the American Dream to Warren Buffett.
3. Don’t break your entry and exit rules. You made them for bad trades, just like the one you’re stuck in right now.
4. Don’t try to get even. This isn’t a game of catch-up. Every action you make has to stand on its own merits. Take your losses with detachment and make your next trade with absolute discipline.
5. Don’t trade over your head. If your last name isn’t Kass or Cramer, stop trading like them. Just concentrate on playing the game well, and stop thinking about making money.
6. Don’t seek the Holy Grail. There is no secret trading formula, other than good position choice and solid risk management. So why are you looking for it?
7. Don’t forget your discipline. Anyone can learn the basics of the trading game. Sadly, most of us will fail because of a lack of self-control, not a lack of knowledge.
8. Don’t chase the crowd. Tune out the groupthink and dance to the beat of your own drummer. Get out of the chat rooms and off the stock boards. This is serious business.
9. Don’t trade the obvious. Everyone sees the most perfect-looking patterns, which is why they set up the most painful losses. Simply stated, if it looks too good to be true, it probably is.
10. Don’t ignore the warning signs. Big losses rarely come without warning. Don’t wait for a lifeboat before you abandon a sinking ship.
11. Don’t count your chickens. That delicious profit isn’t yours until you close out the trade. Trail stops, take blind exits and do everything possible to get that money into your pocket.
12. Don’t forget the plan. Remember the reasons you took a trade in the first place, and don’t get blinded by greed or fear when the position finally starts to move.
13. Don’t have a paycheck mentality. You don’t need to get paid every week or every month, as long as you take advantage of the opportunities as they come. Classic wisdom: traders book 80% of their profits on just 20% of the days the market is open for business. (more…)
Trading Lessons
The market is always right–except at significant tops and significant bottoms.
Keep and open and flexible mind. When in doubt, get out.
If you must have a guru, take him or her with many grains of salt
Do not add to losing positions.
Try every day to make yourself stronger, better and more integrated as a person.
Stay true to yourself. Lying to yourself and others, and trading on hope and prayer do not work
Most importantly, accept and recognize that you are not perfect. You are human and are going to make mistakes. Trading is the only profession where losing is actually winning. BUT— unless you accept mistakes as mistakes and learn from them, you will not progress and be upside down. Unless you are able to get your trading brain out of the cave you will not accumulate regret. It is only through the true acceptance of a mistake as a mistake that we accumulate regret. This is how we learn and grow as traders and human beings.
The desire to understand ourselves and to understand life is a deep thirst
Biggest Bubble Ever? 2017 Recapped In 15 Bullet Points
Here are his 15 bullet points that show why in 2017 we may have seen the biggest bubble ever (and why we can’t wait to see what 2018 reveals).
- Da Vinci’s “Salvator Mundi” sold for staggering record $450mn
- Bitcoin soared 677% from $952 to $7890
- BoJ and ECB were bull catalysts, buying $2.0tn of financial assets
- Number of global interest rate cuts since Lehman hit: 702
- Global debt rose to a record $226tn, record 324% of global GDP
- US corporates issued record $1.75tn of bonds
- Yield of European HY bonds fell below yield of US Treasuries
- Argentina (8 debt defaults in past 200 years) issued 100-year bond
- Global stock market cap jumped1 $15.5tn to $85.6tn, record 113% of GDP
- S&P500 volatility sank to 50-year low; US Treasury volatility to 30-year low
- Market cap of FAANG+BAT grew $1.5tn, more than entire German market cap
- 7855 ETFs accounted for 70% of global daily equity volume
- The first AI/robot-managed ETF was launched (it’s underperforming)
- Big performance winners: ACWI, EM equities, China, Tech, European HY, euro
- Big performance losers: US$, Russia, Telecoms, UST 2-year, Turkish lira
As Hartnett summarizes, “2017 was a perfect encapsulation of an 8-year QE-led bull market”
- Positioning was too bearish for either a bear market or a correction in risk assets.
- Profits were higher than expected (global EPS jumped 13.4%) this time thanks to a synchronized global PMI recovery.
- Policy was aggressively easy, as the ECB and BoJ bought a massive $2.0tn of financial assets; fiscal policy also easy (e.g., US federal deficit up $81bn to $666bn).
- Returns were abnormally high in 2017 (Table 3); corporate bonds and equities soared, but the biggest surprise was stubbornly low government bond yields: thematic leadership of scarce “growth” (e.g. tech stocks), “yield” (e.g., HY, EM and peripheral EU bonds) and “volatility” once again remained the core of the bull.
For peace sake!
Two Palestinians boarded a flight out of London. One took a window seat and the other sat next to him in the middle seat.. Just before takeoff, a rabbi sat down in the aisle seat. After takeoff the rabbi kicked his shoes off, wiggled his toes and was settling in when the Palestinian in the window seat said, ‘I need to get up and get a coke. ”Don’t get up,’ said the rabbi, ‘I’m in the aisle seat, I’ll get it for you.’ As soon as he left, one of the Palestinians picked up the rabbi’s shoe and spat in it.. When the Rabbi returned with the coke, the other Palestinian said, ‘That looks good I’d really like one, too.’ Again, the rabbi obligingly went to fetch it. While he was gone the other Palestinian picked up the rabbi’s other shoe and spat in it. When the rabbi returned, they all sat back and enjoyed the flight. As the plane was landing, the rabbi slipped his feet into his shoes and knew immediately what had happened. He leaned over and asked his Palestinian neighbors: ‘Why does it have to be this way? How long must this go on? This fighting between our nations? This hatred? This animosity? This spitting in shoes and pissing in cokes?’
Knowledge, experience, creativity
Light, Taming the Beast
Larry Light’s Taming the Beast: Wall Street’s Imperfect Answers to Making Money (Wiley, 2011) is perfect summer reading fare. The author, a financial reporter and editor, is a skilled storyteller. In this book he explores a range of investment strategies and instruments, traces their development, and in the process profiles some of the best-known investors and academics.
He covers value investing (Benjamin Graham and Warren Buffett), stocks (Jeremy Siegel), indexes (John Bogle), bonds (Bill Gross), growth investing (Thomas Rowe Price), international investing (John Templeton), real estate (Donald Trump), alternatives, asset allocation, short selling (James Chanos), hedge funds (Alfred Winslow Jones and Steve Cohen), and behaviorism (Daniel Kahneman and his followers).
Light’s thesis is that “investing success does not come in one flavor” and that “the trick is to be sufficiently flexible to dip into any or all of [the approaches he describes], but by the same token, to know their limitations.” (p. 254) He does a good job of spelling out these limitations. Even for more experienced investors who are well aware of many of these limitations, Little’s prose is so quick-paced that the book should be read, not skimmed. (more…)
Why they use the terms 'bull' and 'bear'
