Conviction implies a settled state of opinion and the inertia of a decision already made; this simply leads to a kind of prejudice towards one market direction or another. But let’s face it: assumption is always the path of least effort. And when has the market ever rewarded the followers of that path? It’s far better to strive to be continually skeptical and yet boldly decisive when the moment requires. The difference may seem limited to semantics, but I think the interaction between our perceptions and the market should be a continually active process, and that includes methodically denying ourselves the allure of false comforts that accompany an unyielding sentiment.
Archives of “allure” tag
rssTrading Wisdom
“The trend is your friend” – perhaps the best known trading adage of all time, it is meant to remind traders to always identify the prevailing trend, and never to trade against it, but rather wait for retracements and then enter trades in the direction of the trend.
“The market can stay irrational longer than you can stay solvent” – The way the market reacts to certain news or events may not seem rational at times, but there is no sense in trying to fight the market – it moves where it moves and does not care one bit about your opinion.
“A fool and his money are soon parted” – If you are not smart about where you put your money, you will most likely lose it.
“The trading rules I live by are: (a) Cut losses, (b) Ride Winners, (c) Keep bets small, (d) Follow the rules without question, and (e) Know when to break the rules.” – Rules are important, but following them blindly does not necessarily lead to success. Know which conditions produced those rules in the first place, so that when the conditions change, the rules can too.
“Amateurs Focus On Rewards. Professionals Focus on Risk.” – Experienced traders think first about how much they can lose on a trade, base their calculations on that, and then see if they are happy with the potential reward the trade offers. Novices usually do the opposite, blinded by the allure of quick riches.
Trading Wisdom
“The market can stay irrational longer than you can stay solvent” – The way the market reacts to certain news or events may not seem rational at times, but there is no sense in trying to fight the market – it moves where it moves and does not care one bit about your opinion.
“A fool and his money are soon parted” – If you are not smart about where you put your money, you will most likely lose it.
“The trading rules I live by are: (a) Cut losses, (b) Ride Winners, (c) Keep bets small, (d) Follow the rules without question, and (e) Know when to break the rules.” – Rules are important, but following them blindly does not necessarily lead to success. Know which conditions produced those rules in the first place, so that when the conditions change, the rules can too.
“Amateurs Focus On Rewards. Professionals Focus on Risk.” – Experienced traders think first about how much they can lose on a trade, base their calculations on that, and then see if they are happy with the potential reward the trade offers. Novices usually do the opposite, blinded by the allure of quick riches.
Types of People and Views on Market
What are the many types of people who disseminate their views about the market? What are the major categories that I am missing or what is a better way to classify and make this useful?”
No doubt, there is a book to be done on the subject. That said…
This list is presented in order of published appearance. A caveat: “many fall into more than one category and mobile via age and wealth changes.”
The Connected Person, who makes you feel without saying it that she/he is or will be connected to the very lynch pin of policy at the Interior or some such.
Tout, who has position and wants you in for his/her favor.
Sponsor, who advertises or sponsors programs that treat him/her well.
Would-be-manager without funds impresses with his/her knowledge/ideas for you to join.
Old lion, who is not virile but still fights younger from replacing him/her in power/ romance.
Curmudgeon, who hates everything modern and wants all back to old days before tech.
Spankist, a beauty but aggrieved to give spanking unless things in order her/his way; observed to be everywhere and influence growing among spankisto and spankista’s.
Iconoclast, who is always contrary, never reads papers or travels, and feels market is wrong.
Hole-In-Shoes, who only drinks coke and eats hamburgers, never pays a fee more than 10%.
Sanctimonious, who pretends to be honest while blind to any firm dishonesty/misdoing.
Academic-Consultant, who manipulates numbers retrospectively to allure investors.
Mystic, who looks at stars and bent keys.
Old Timer, who is guided by iron castings reports and freight car loadings and newsprint figures [sample]: all as timeless methods (non retro) with healthy respect for knowledge.
Fund Manager, who is quoted as “good buy” on stock that he/she sold bulk of before recall.
Jack of All Trades, who explains every rise and decline due to (un)certainty about earnings and rates and other well chosen factors. Always welcome on TV because of his versatility. (more…)