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Bull Markets vs. Bear Markets :Some Facts

  
  Education
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Bull Markets: Fear of missing out.
Bear Markets: Fear of being in.

Bull Markets: Everything I buy is going up — I’m a genius.
Bear Markets: Everything I buy is going down — I’m an idiot.

Bull Markets: See, fundamentals always win out.
Bear Markets: See, technicals and sentiment rule the markets.

Bull Markets: I knew I should have had more of my portfolio in stocks.
Bear Markets: I knew I should have had more of my portfolio in bonds.

Bull Markets: That guy’s been calling for a crash for years — he’s an idiot.
Bear Markets: That guy just called the crash — he’s a genius.

Bull Markets: I want to be a long-term buy and hold investor.
Bear Markets: I want to be a short-term trader.

Bull Markets: I’m glad I was buying during the last market crash.
Bear Markets: Never try to catch a falling knife.

Bull Markets: I’ll sit tight when the market falls.
Bear Markets: Dear Lord, get me out of stocks NOW!

Bull Markets: Time to buy stocks?
Bear Markets: Time to sell stocks? (more…)

14 things financial journalists won't tell you.

  
Analysis, Education
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IF YOU’RE READING the business section, you need to read between the lines. Here are 14 things financial journalists won’t tell you:

  1. That unbelievably telling anecdote at the top of my article? I scoured the country for three weeks to find that schmuck.
  2. The Dow industrials fell 263 points today. Why? By the time deadline arrives, I’ll have cooked up a reason.
  3. What qualifications do I possess? An ability to dial a telephone.
  4. Actually, I always wanted to be a sports reporter.
  5. Today, I had to bang out a long feature story on the mortgage market. My editor is looking to buy a new house.
  6. What qualifications do my sources possess? A willingness to pick up the receiver.
  7. If you saw my portfolio, you’d never ask me for financial advice.
  8. In the story, the company’s PR guy is quoted as saying, “no comment.” But on background, the senior counsel sung like a bird.
  9. The more the market falls, the giddier the newsroom gets.
  10. I don’t understand collateralized mortgage obligations, but I just wrote 1,000 words about them.
  11. My sources aren’t nearly as articulate as I make them sound.
  12. That joking, throwaway comment that the CFO made as we hung up? It’ll be in the second paragraph.
  13. We’ll get the online version up now, and figure out the real story for the print edition.
  14. I want my editors and sources to think I’m smart. What about readers? Yeah, I guess they’re also important.

Candlesticks: Patterns Signalling Range-Trading

  
  Education
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  • Doji
    • Psychological state of uncertainty.
  • Engulfing / Outside bars
    • This pattern must appear after a preceding trend in the price.
    • An outside bar would have taken out the stops of both the bulls and the bears, with no follow-through. Hence both sides become less confident and this leads to range-trading behavior.
  • Hammer bottom
    • After a downtrend, the market opens near to the previous close, drops a lot, before closing the period up towards the level at which it opened.
    • Signals an end of the downtrend where the next period will be characterised by range trading.
  • Shooting star
    • After an uptrend, the market opens near the previous close, rallies a lot, but closes the period down towards the level at which it opened.
    • Signals that that supply and demand have become more balanced, and this balance can mean range trading.
  • Hanging man
    • After an uptrend, market does not rise much but falls a lot, before closing back up near to the level at which it opened.
    • This is bearish, and represents the last buyers getting into the uptrend.

A history of Pfizer (1849 to 2015 )

  
Analysis, Education
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Started in the 19th Century as a New York-based chemicals company, Pfizer has morphed into one of the titans of the healthcare industry. fastFT reviews the company’s history on the heels of its $150bn agreement to buy botox maker Allergan in the biggest-ever deal that will see it move its headquarters to Ireland.

1849:

Charles Pfizer and Charles Erhart, cousins, launch Charles Pfizer & Co. using $2,500 borrowed from Mr Pfizer’s father. The company’s first product was “a palatable form of santonin,” used to treat intestinal worms.

The company already grows roots in New York, utilising a warehouse in the Willamsburg portion of Brooklyn as an office, laboratory, factory and warehouse.

1880:

Pfizer begins making citric acid, and becomes the leading maker of the tart substance. Demand is boosted by new soft-drinks like Coca-Cola, Dr. Pepper and Pepsi-Cola.

1891:

Mr Erhart dies, and Mr Pfizer leverages an agreement that lets him consolidate ownership of the burgeoning company.

1900:

Pfizer incorporates in New Jersey. (more…)

Great Trading Books -Just Read If U Have Time

  
  Education
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MY-LIBRARY

Trading Psychology :

  • “Trading to Win: The Psychology of Mastering the Markets”
  • “Trading in the Zone: Maximizing Performance with Focus and Discipline”
  • “The Psychology of Risk: Mastering Market Uncertainty”
  • “The Mental Strategies of Top Traders: the Psychological Determinants of Trading Success”
  • “Hedge Fund Masters: How top Hedge Funds Set Goals, Overcome Barriers and Achieve Peak Performance”
  • “Mastering Trading Stress: Strategies for Maximizing Performance”
    • Prior to his passing, I had been organizing a conference with Dr. Kiev.  He revolutionized the hedge fund industry in terms of trader performance
  • “Psychology of the Stock Market” – G.C. Selden
    • The book was written in 1912, but offers great insight in stock market speculation.
  • “On Managing Yourself” – Dr. Mario F. Conforti
  • “As a Man Thinketh” – James Allen
    • A timeless classic in my opinion.
  • “Fighting Attachment in Trading” – Jon Ossoff (Active Trader, August 2011)
  • “The Crowd: A Study of the Popular Mind” – Gustave Le Bon, 1896
  • “Who Are You?” – Linda Bradford Raschke (SFO, Aug. / Sept. 2003)
    • Linda has made a number of contributions to trading and I have utilized several of her general market observations and concepts.
  • “Maintain Your Mindset: Using the Three R’s & Positive Thinking” – Linda Bradford Raschke (SFO, July 2004)
  • “The Hour Between Dog and Wolf: Risk Taking, Gut Feelings and the Biology of Boom and Bust” – John Coates, 2012
  • “Deny Your Inner Gamble Monkey” – MarketWatch.com (December 11, 2012)
  • “Why Smart Traders Do Dumb Things: Understanding Prospect Theory” – David Silverman (SFO, July 2005)
  • “Self-Attribution Bias in Consumer Financial Decision-Making: How Investment Returns Affect Individuals’ Belief in Skill” – Arvid O. I. Hoffmann Thomas Post
  • “Conquering Sabotage Traps in Your Trading” – Adrienne Toghraie – INO.com
  • “Five Guiding Principles of Trading Psychology” – Brett N. Steenbarger, Ph.D.
    • Brett is one the must follows in the field of trading psychology. He has written so much on the topic and all is easily accessible on the web.
  • “Explaining the Wisdom of Crowds: Applying the Logic of Diversity” – Michael J. Mauboussin (Legg Mason, Mar.2012)
  • “The Playbook: An Inside Look at How to Think Like a Professional Trader” – Mike Bellafiore, 2014
    • The most comprehensive book I’ve read on what it takes to become a professional trader.  A lot of books talk about the concept, but this lays out a step-by-step blueprint. Very well written.

(more…)

“Markets Will Fluctuate”

  
Analysis, Education
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In the 1927 book “Security Speculation – The Dazzling Adventure,” Laurence H. Sloan repeated the now famous anecdote 1  about J.P.Morgan’s view of the stock markets:

History has it that young man once found himself in the immediate presence of the late Mr. J. P. Morgan. Seeking to improve the golden moment, he ventured to inquire Mr. Morgan’s opinion as to the future course of the stock market. The alleged reply has become classic: “Young man, I believe the market is going to fluctuate.

Fluctuate indeed.

That simple truism seems to been lost to some folks, who were taken aback by yesterday’s market decline. The Dow Jones Industrial Average fell 274 points, but that sounds worse than it is; in percentage terms the retreat amounted to 1.24 percent. The Standard & Poor’s 500 Index fell 38.1 points, or 1.54 percent; the Russell 2000 Index of small cap companies fell 1.78 percent (24.6 points) while the Nasdaq Composite Index had a 1.94 percent (123.2 point) fall.

As Bloomberg News noted, “Evidence is building that the market’s long stretch of tranquility is breaking. The S&P 500 swung at least 1 percent in three of the last six sessions after spending the previous three weeks without a move of more than 0.3 percent.”

The collective question investors are asking is “Why here and now?” It is tempting, and probably correct, to simply declare this the well-known random walk of markets. But rather than leave it at that, let us turn a critical eye to some of the explanations that were circulating. Here they are from least convincing to most . . .

Continues at: The Real Reason Markets Swooned Yesterday

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