Google’s chief legal officer David Drummond joined me last night to discuss dramatic reports that the internet giant is considering exiting China following “highly sophisticated” cyber-attacks aimed at human rights activists.
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Look at trading like a pie chart
- Risk Management: Stop loss, profit target, Risk / Reward, and position sizing.
- Trading Game Plan: expectations for the next session, Levels of Interest, and intraday tape reading.
- Psychological Health: Staying positive and keeping your head.
Notice the three green segments in the middle of the circle (that, as I was told today by a friend of mine, looks like the Google Chrome icon). These three segments are isolated to remind you how crucial it is to have ALL of those pieces full of their green color while you’re trading – if one of them is missing, the other two will have to compensate for its absence. If we took the above example, we would notice that the psychological health was damaged right away, as the trader immediately went into denial about the initial failure of his position. The trader then got pissed off, and risked more money in order to compensate for his initial loss, damaging both his trading game plan and his risk management. The center circle is now empty for this particular trader, and he has become a loose cannon.
Facebook now 'worth $33 billion
Facebook is now worth as much as $33.7 billion, after investors have paid up to $76 for a share in the company ahead of its much-hyped flotation on the stock market, according to a report.
The Financial Times has said that the implied valuation means that Facebook is now has a higher valuation than technology giants such as eBay and Yahoo!, which have capped market values of $30.1 billion and $18.3 billion respectively.
David Gelles, a reporter for The Financial Times wrote: “Common stock in Facebook is trading as high as $76 a share as investors scramble to get a piece of the company before it files for an initial public offering, which analysts say could be the biggest technology IPO since Google’s $1.67bn flotation in 2004.
“While Facebook and other successful Silicon Valley companies, such as Twitter, LinkedIn and Zynga, are delaying their IPOs because of perceived weak appetite on the public markets, some investors are not content to wait. They are acquiring stakes in technology companies while they are still private, hoping that their eventual IPOs will send share prices even higher.”
Facebook, which registered its 500 millionth member last month, is currently financed through a mixture of investment firms and venture capital companies. It is not yet know when the company will float, although there have been hints it will not be until 2011.
The company was the brainchild of Mark Zuckerberg while he was still studying at Harvard University and launched in February 2004. Zuckerberg remains the chief executive.
Marc Faber's 2010 Investment Outlook: Bullish Sentiment Too High For His Liking
Always the contrarian, Marc Faber’s investing advice for 2010 is this — listen to the experts, and then do the opposite. Faber, the editor of The Gloom Boom & Doom Report, wrote in his most recent January newsletter that he was bullish on U.S. stocks.
Nothing lasts forever, though.
He’s changed his mind after participating in this week’s Barron’s round-table discussion. “Everybody was looking for further gains in stocks,” he tells Henry in this clip. That opinion is also reflected by Bloomberg’s latest investor survey, which registered its highest level of bullish sentiment since the survey began in 2007.
That overwhelming consensus worries Faber. He now thinks a correction in U.S. stocks could come much sooner than most predict. Momentum players who are driving the market could “pull the trigger relatively quickly,” he says. He also observes that the charts of stocks favored by momentum investors, like Google, RIM, Apple and Amazon, look to be flattening out.
Overall, 2010 will not be one for the record books, as 2009 was. He’s looking at a more normal 5%-10% rate of return for global investors.
10 Elements of Successful Trading
Traders that have the right mind set, money management, and winning method make money, those that are missing even one of the three, will eventually ‘blow up’ their account. This applies to both professionals and amateurs.
Whether you are a swing trader just trading the market with the $SPY ETF, a growth investor up to your eyeballs in Google and Apple, or even a day trader, these principles still apply to you. I believe these are universal principles for all traders, many professionals have proven they are not bigger than these laws of trading, by destroying the capital in hedge funds and even entire banks.
Trading Methodology:
- Winning system-Only trade tested systems with a positive expectancy in the long term.
- Faith– Your system has to allow you to trade your beliefs about the market.
- Risk/Reward-Never trade unless your profit expectations are greater than your capital at risk.
Trader Psychology:
- Discipline-You have to keep trading your method even when it doesn’t work for a given time period.
- Ego-Admit when you are wrong.
- Emotions-Trade the math not your emotions.
The Greatest Investment Book Ever Written
No, I’m not talking about Security Analysis or Intelligent Investor by Benjamin Graham or even Greenblatt’s You Can Be a Stock Market Genius. I’m talking about Doyle Brunson’s Super System: A Course in Power Poker.
OK, so the title of this post is a bit of an exaggeration and yes, there are probably tons of better poker books out there now post-extended-poker-boom. The first edition of this book was published in 1978. The connection between poker and trading is nothing new. Just google “poker and trading” and there’s a lot of stuff out there; how poker guys started hedge funds, how a hedge fund guy became a poker guy, how they are similar/different, what can be learned from one or the other etc. And the connection between gambling and trading was well documented in Fortune’s Formula.
But I just wanted to make a post about this book because I’m starting to reread it again (don’t ask). I am not a poker player, but I remember reading this book a few years ago having borrowed it from a poker-playing friend. Knowing that many traders and investors are very good poker players, I wanted to see what I can learn from reading about poker.
I remember falling out of my chair at the similiarites between poker and investing. I come from more of a trading background than an investing one and what was written in this book, particularly the early chapter “General Poker Strategy”, has great advice that applies to traders and investors too. I would make that chapter required reading along with the other investment “must reads”.
Anyway, here are some comments about what Brunson talks about in this chapter by sections. I only comment on some of the stuff so this isn’t a summary of the chapter by any means. (more…)