Latest Posts

rss

Marty Zweig, Ned Davis, and Humility

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

MUST READIt is perhaps poignant that with many people looking for a market correction and much talk of elevated sentiment measures bringing back memories of 1987, that we learned today of the death of Marty Zweig, widely known not only for the put-call ratio, and ‘Don’t fight the Fed’, but also his prescient call in October 1987 just before the crash.

Marty Zweig calls the Crash of ’87 (The whole thing is worth watching but Marty comes in around the 6:40 mark)

Watching that piece of history again there’s much that modern business networks could learn from it. Notice the easy-going style of Louis Rukeyser, the complete lack of confrontation with his panelists, no raised voices, no sound effects, no gotchas. This is after one of the most wretched weeks in Wall St, (worse was to come obviously), but you would barely know it from the calm civility which permeates their discussion.

What I particularly like and admire however, is in making his observations Marty Zweig is almost apologetic about it. He fears we’re on the verge of something severe but rather than take the opportunity for grandstanding as many of today’s pundits would, he’s almost scared to tell everyone. He says: (more…)

To Be Happy

  
Education, Life
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

be-happyIf you are after specific investment advice, stop reading now. We seek to explore one of Adam Smith’s obsessions: what it means to be happy. We also discuss why that’s important to investors, and how we can seek to improve our own levels of happiness. The list below shows our top ten suggestions for improving happiness.

  • Don’t equate happiness with money. People adapt to income shifts relatively quickly, the long lasting benefits are essentially zero.
  • Exercise regularly. Taking regular exercise generates further energy, and stimulates the mind and the body.
  • Have sex (preferably with someone you love). Sex is consistently rated as amongst the highest generators of happiness. So what are you waiting for?
  • Devote time and effort to close relationships. Close relationships require work and effort, but pay vast rewards in terms of happiness.
  • Pause for reflection, meditate on the good things in life. Simple reflection on the good aspects of life helps prevent hedonic adaptation.
  • Seek work that engages your skills, look to enjoy your job. It makes sense to do something you enjoy. This in turn is likely to allow you to flourish at your job, creating a pleasant feedback loop.
  • Give your body the sleep it needs.
  • Don’t pursue happiness for its own sake, enjoy the moment. Faulty perceptions of what makes you happy, may lead to the wrong pursuits. Additionally, activities may become a means to an end, rather than something to be enjoyed, defeating the purpose in the first place.
  • Take control of your life, set yourself achievable goals.
  • Remember to follow all the rules.

Trading Wisdom

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #
  • Buy from the scared, sell to the greedy.
  • Buy their pain, not their gain.
  • Successful traders are quick to change their minds and have little pride of opinion.
  • I made my money because I always got out too soon. (Bernard Baruch)
  • Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars. (Bernard Baruch)
  • Throughout all my years of investing I’ve found that the big money was never made in the buying or the selling. The big money was made in the waiting. (Jesse Livermore)
  • The faster a stock has climbed, the quicker it will fall.
  • The more certain the crowd is, the surer it is to be wrong. (Menschel)
  • Bear markets begin in good times. Bull markets begin in bad times
  • Never confuse genius with a bull market.
  • Always sell what shows you a loss and keep what shows you a profit

THE DISCIPLINED TRADER

  
Analysis, Education

When an aspiring trader asks me to recommend books on technical analysis he or she is often surprised at my answer.  While I do have a technical favorite or two (besides my own) I am quick to redirect him or her to books on trading psychology.
Technical analysis is worthless without a thorough understanding of the psychology behind winning and losing, buying and selling, fear and greed, risk versus reward, the past versus the future, the knowable versus the unknowable.  Technical analysis is best used as a psychological tool to help the trader manage random price action and the emotions associated with it, not as a way to predict price action and thus confirm the trader’s egotistical need to be right.  Psychology first; technical second.
One of my favorite “go to” authors on trading psychology is Mark Douglas.  Although he is best known for his book Trading In The Zone, Mr Douglas’ first book The Disciplined Trader is a gem of a read also.  I recommend both but start with The Disciplined Trader.  It will help you better understand and appreciate the principles discussed in Trading in the Zone.
 
The following is from the INTRODUCTION and provides the thesis for the book.  In it Douglas discusses the following
THE MENTAL GAME IS MUCH DIFFERENT IN THE MARKETS THAN IN EVERYDAY LIFE
THE MARKETS HAVE NO POWER OR CONTROL OVER YOU
YOU ALONE ARE RESPONSIBLE FOR YOUR ACTIONS AND REACTIONS
YOU MUST LEARN TO CONTROL YOURSELF
YOU CREATE THE MARKET YOU CHOOSE TO TRADE
YOU MUST DEVELOP YOUR OWN RULES…AND FOLLOW THEM
YOU MUST ALWAYS BE PREPARED…OR FACE DISASTER
WHILE YOU CANNOT CONTROL THE MARKET YOU CAN CONTROL YOUR PERCEPTION OF IT
YOU MUST WORK ON SEEKING OPPORTUNITY INSTEAD OF TRYING TO AVOID PAIN
IN YOUR ATTEMPTS TO AVOID LOSSES YOU ACTUALLY CREATE THEM
TO BE SUCCESSFUL YOU MUST DEVELOP SELF CONFIDENCE AND SELF TRUST (more…)

Go to top