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Cruel to be Kind

  
Analysis, Education
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Many people come up to me, the most recent being a superior Greek Trader, Mr. Lambis, telling me that their two favorite books are Reminiscences of a Stock Operator and Edspec. I tell them they are cruel by being kind. Here’s why.
“History Lessons for Investors: An annotated reissue of Edwin LeFevre’s
Reminiscences of a Stock Operator is reviewed by hedge-fund manager and
author Victor Niederhoffer.”

IMAGINE THAT MASTER NOVELIST and chess
aficionado Vladimir Nabokov wrote a fictional memoir about
Capablanca—the 1920s world champion who never made a mistake on the
board—and that Bobby Fisher then published an updated and annotated
version, incorporating all of the important developments of modern
chess strategy, along with a foreword by Anatoly Karpov.

A similar multilayered feast on investment is now available, with minor differences. Edwin Lefevre’s Reminiscences of a Stock Operator
is a novel told in the first person by a character inspired by
legendary trader Jesse Livermore. This classic is now graced with
extensive annotations by investment advisor Jon Markman and a foreword
by hedge-fund manager Paul Tudor Jones.

The result is big and beautiful, cutting across two centuries of
booms and busts and market and economic history, with a myriad of
vintage historical photos and instructive historical charts throughout.

One of Lefevre’s favorite adages is that there’s nothing new on Wall
Street. The similarity between the financial panic of 2008 and the 1907
panic recounted in the book is a prime example.

The numerous squeezes, manipulations,
insider trading, government hauling in of scapegoats and frauds settled
for pennies on the dollar that Lefevre and Markman recount are horses
that are found as well in the modern stable.

17 Points from William J. O’Neil

  
  Education
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READITWilliam O’Neil is likely one of  the greatest traders of our time based on many things. O’Neil made a huge amount of money while he was only in his twenties, enough to buy a seat on the New York Stock Exchange. He runs an amazingly successful investment advisory company to big money firms. He is also the creator of the CAN SLIM investment strategy which the American Association of Individual Investors named  the top performing investment strategy from 1998 to 2009. This non-profit organization tracked more than 50 different investing methods, over a 12 year time period. CANSLIM showed a total gain of 2,763% over the 12 years. The CAN SLIM method is explained in O’Neil’s book “How to Make Money in Stocks”

Those closest to O’Neil that have seen his private trading returns say that they are greater tna Warren Buffett of George Soros over the same period of time. Here are some of the best things that he is quoted as having said.

RISK MANAGEMENT

  1. I make it a rule to never lose more than 7 percent on any stock I buy. If a stock drops 7 percent below my purchase price, I will automatically sell it at the market – no second-guessing, no hesitation.
  2. Some people say, “I can’t sell that stock because I’d be taking a loss.” If the stock is below the price you paid for it, selling doesn’t give you a loss; you already have it.
  3. Letting losses run is the most serious mistake made by most investors.
  4. The whole secret to winning in the stock market is to lose the least amount possible when you’re not right.

METHOD

  1. 90% of the people in the stock market, professionals and amateurs alike, simply haven’t done enough homework.
  2. The first step in learning to pick big stock market winners is for you to examine leading big winners of the past to learn all the characteristics of the most successful stocks. You will learn from this observation what type of price patterns these stocks developed just before their spectacular price advances. (more…)

David Halsey,Trading the Measured Move -Book Review

  
  Education
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David Halsey throws out the old notion of a measured move: that you copy an AB move up (or down) and paste it on a retracement low (or high) of C to get your price target D. In Trading the Measured Move: A Path to Trading Success in a World of Algos and High Frequency Trading(Wiley, 2014) he substitutes Fibonacci levels.

He uses three trade setups: the traditional 50% retracement measured move (MM), the extension 50% MM, and the 61.8% failure. When a trade is entered, its target is 123% from a swing high or low (and sometimes from a breakout) that is followed by a retracement (50% in the traditional setup). That is, the target is AB + 23%. Halsey shows both successful and failed MM trades on charts—unfortunately usually grey bars on a black background, which makes them hard to decipher.

The measured move trade setups are not stand-alones. Halsey discusses the use of multiple time frames, seasonality, NYSE tools, tick extremes and divergences, and gaps. He also discusses how to manage positions and take profits, advanced (actually, pretty basic) risk management, trading psychology, and having a trading plan and journal. (more…)

The problem of Having too much

  
  Education
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affluenza2Let me introduce you to some of the better -known victims of affluenza.I want to take you back to the year 1923 ,as a group of the world’s most suscessful businessmen met at the Edgewater Beach Hotel in Chicago for financial planning session.Present were :
The president of the largest independent steel company.
The greatest wheat speculator
The president of the New york Stock Exchange
A member of the President’s cabinet
The greatest bear on Wall Street
The president of the Bank of International Settlements
The head of the world’s greatest monopoly
Individually ,these men symbolized what the world  so frequently terms “success “.Collectively ,these men controlled more wealth then  there was in the U.S.Treasury.Twenty-five years later ,however their lives told a different story. (more…)

The Largest Employers in the World

  
  Education
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You might be surprised to learn what the largest employer in the world is. Want to take a guess? It is the Chinese Army, also known as the Peoples Liberation Army, at 2.3 million employees. WalMart (WMT) is in second place with 2.1 million employees, then the Indian Railway at 1.4 million, and the National Health Service in the United Kingdom at 1.33 million.

In fifth place is China Petroleum & Chemical Corporation (SNP) also known as Sinopec Corp. with 639,690 employees. Then there is G4S, a private security company in England in sixth place at 585,000 employees. Seventh is PetroChina (PTR), China’s biggest oil producer which trades on the NYSE, with 539,168 employees.

Deutsche Post (DPSGY.PK), is another publicly traded big employer. This mail and package delivery company has 436,650 employees. The engineering conglomerate Siemens (SI), also publicly traded and trades on the New York Stock Exchange, has 420,800 employees. Last but not least, McDonalds (MCD), the fast food company, has around 400,000 employees.

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.

“The Stock Market is Rigged!”

  
  Education
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Once upon a time in the late 1700′s, there were two types of sonofabitches trading the earliest version of securities in Lower Manhattan: There were the auctioneer sonofabitches and there were the merchant sonofabitches.

The auctioneers were all-powerful and totally destructive at times. They presided over trade, which took place outside under a Buttonwood Tree on Wall Street. What the auctioneers did that was most maddening to the rest of the participants in these protozoic markets was charge exorbitant commissions and allow for securities to trade in a lawless fashion, without regard for fairness of any kind.

Meanwhile, the cutthroat speculators were growing to be quite fed up with this arrangement so they did what all would-be conspirators do – they met in secret to plot an overthrow. In March of 1792, twenty four of these merchant sonofabitches snuck into the Corre’s Hotel, which occupied what is now 68 Wall Street (which has since been absorbed into 40 Wall Street, aka the Trump Building), for their clandestine sitdown.

Two months later, they hatched their scheme, signing a document called the Buttonwood Agreement (at left), named for the tree they’d been wheeling and dealing under each day. The accord meant that all twenty four signers were bound to trade securities only amongst each other, to deny entry into their clique to outsiders who’d not been accepted by the membership and to fix commissions on trades at a set amount (.25% of face value for all shares of stock or similar instrument). This banding together made these twenty four large-scale merchant sonofabitches into the de facto monopoly that controlled all trade and it sent the other sonofabitches, the auctioneers, out of business. (more…)

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