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Words of Wisdom for Traders

  
  Education
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Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.” ~ Jesse Livermore

“Wealth and rank are what people desire, but unless they are obtained in the right way they may not be possessed.” ~ Confucius

“Man has the power to act as his own destroyer—and that is the way he has acted through most of his history.” ~ Ayn Rand

“It is no measure of health to be well adjusted to a profoundly sick society.” ~ Jiddu Krishnamurti

“Men in the game are blind to what men looking on see clearly.” ~ Chinese Proverb

“The most exquisite paradox… as soon as you give it all up, you can have it all. As long as you want power, you can’t have it. The minute you don’t want power, you’ll have more than you ever dreamed possible.” ~ Ram Dass

“If thou wilt make a man happy, add not unto his riches but take away from his desires.” ~ Epicurus

“Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble… to give way to hope, fear and greed.” ~ Benjamin Graham

“The investor’s chief problem – and even his worst enemy – is likely to be himself.” ~ Benjamin Graham

“The ignorant mind, with its infinite afflictions, passions, and evils, is rooted in the three poisons. Greed, anger, and delusion.” Bodhidharma

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” ~ Ayn Rand

“Money often costs too much.” Ralph Waldo Emerson

Personally, I believe it to be futile to fight greed — something that is ingrained in human nature.  We can only acknowledge greed’s existence, choose our own behaviors as individuals, and react to its occurrence — it can not be prevented.  Greed will simply manifest into a different form.

10 Insights from Benjamin Graham

  
  Education
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Benjamin Graham doesn’t need an introduction. His sober look at the stock market has built an enormous following and for a good reason.

1. “If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.”   –  It is true that perfumes come and go out of popularity, but no trend lasts forever. There are trends that last 3 months; there are trends that last 3 years.

2. “Obvious prospects for physical growth in a business do not translate into obvious profits for investors.” – it depends on to what level has the expected growth been already discounted. The truth is that it is really hard to forecast growth in quickly developing businesses. The market always overdiscounts at some point, but in the meantime trend followers could make a killing. You never know how long or how fast a trend could go.

3. The only constants in the markets are change and uncertainty. Not only business environment changes, but also people’s perceptions of stocks change.

Most businesses change in character and quality over the years, sometimes for the better, perhaps more often for the worse. The investor need not watch his companies’ performance like a hawk; but he should give it a good, hard look from time to time.

4. Different catalysts matter for the different time frames:

Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.

5. The difference between a trader and investor

The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell.

6. How to think about risk (more…)

Benjamin Graham Quotes

  
  Education
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  • Individuals who cannot master their emotions are ill-suited to profit from the investment process. – View Quote Details on Individuals who cannot master their emotions are ill-suited to profit…
  • Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble…to give way to hope, fear and greed. – View Quote Details on Most of the time common stocks are subject to irrational…
  • You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right. – View Quote Details on You are neither right nor wrong because the crowd disagrees…
  • Warren Buffett, story from Benjamin Graham: A story that was passed down from Ben Graham illustrates the lemminglike behavior of the crowd: “Let me tell you the story of the oil prospector who met St. Peter at the Pearly Gates. When told his occupation, St. Peter said, “Oh, I’m really sorry. You seem to meet all the tests to get into heaven. But we’ve got a terrible problem. See that pen over there? That’s where we keep the oil prospectors waiting to get into heaven. And it’s filled—we haven’t got room for even one more.” The oil prospector thought for a minute and said, “Would you mind if I just said four words to those folks?” “I can’t see any harm in that,” said St. Pete. So the old-timer cupped his hands and yelled out, “Oil discovered in hell!” Immediately, the oil prospectors wrenched the lock off the door of the pen and out they flew, flapping their wings as hard as they could for the lower regions. “You know, that’s a pretty good trick,” St. Pete said. “Move in. The place is yours. You’ve got plenty of room.” The old fellow scratched his head and said, “No. If you don’t mind, I think I’ll go along with the rest of ’em. There may be some truth to that rumor after all.” – View Quote Details on Warren Buffett, story from Benjamin Graham: A story that was…
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