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Four Poisons

There is a Korean martial art called Kum Do. This is a brutal game that involves a fight to the death with very sharp swords. The way it is practiced today is with bamboo sticks, but the moves are the same. Kum Do teaches the student warriors to avoid what are called “The Four Poisons of the Mind.” These are: fear, confusion, hesitation and surprise. In Kum Do, the student must be constantly on guard to never anticipate the next move of the opponent. Likewise, the student must never allow his natural tendencies for prediction to get the better of him. Having a preconceived bias of what the markets or the opponents will do can lead to momentary confusion and—in the case of Kum Do—to death. A single blow in Kum Do can be lethal, and is the final cut, since the object is to kill the opponent. One blow—>death—>game over.

Instead of predicting, anticipating, and being in fear and confusion, you must do exactly the opposite if you are to survive a death blow from the market movements. You must watch with a calm, clear and collected attitude and strike at the right time. A few seconds of anticipation, hesitation or confusion can mean the difference between life and death in Kum Do—and wins or losses in the stock markets. If you are not in tune with the four poisons of fear, confusion, hesitation or surprise in the markets, you are at risk for ruin. Ruin means that your money is gone and the game is over.

How can you avoid the four poisons of the trading mind: fear, confusion, hesitation and surprise?

Replace fear with faith—faith in your trading model and trading plan

Replace confusion with the attitude of being comfortable with uncertainty

Replace hesitation with decisive action

Replace surprise with taking nothing for granted and preparing yourself for anything.

The natural laws of golf

golf rules

1)      If you want to get better at golf, go back and take it up at an earlier age

2)      The game of golf is 90% mental and 10% mental

3)      Since bad shots come in groups of three, a fourth bad shot is actually the beginning of the next group of three

4)      When you look up, causing an awful shot, you will always look down again at exactly the moment when you ought to start watching the ball if you ever want to see it again

5)      Any change works for a maximum of three holes – or at a minimum of not at all

6)      No matter how bad you are playing, it is always possible to play worse

7)      Never try to keep more than 200 separate thoughts in your mind during your swing

8)      When your shot has to carry over a water hazard, you can either hit one more club or two more balls

9)      If you’re afraid a full shot might reach the green while the foursome ahead of you is still putting out, you have two options: you can immediately shank a lay-up, or you can wait until the green is clear and top a ball halfway there

10)   The less skilled the player the more likely he is to share his ideas about the golf swing (more…)

Patience Is the Most Valuable Trait of the Endgame Player

John Hussman writes:

I’ve long been fascinated by the parallels between Chess and finance. Years ago, I asked Tsagaan Battsetseg, a highly ranked world chess champion, what runs through her mind most frequently during matches. She answered with two questions – “What is the opportunity?” and “What is threatened?”

He adds:

The final minutes of a Chess game often go something like this – each side has exhausted most of its pieces, and many pieces that have great latitude for movement have been captured, leaving grand moves off the table. At that point, the game is often decided as a result of some seemingly small threat that was overlooked. Maybe a pawn, incorrectly dismissed as insignificant, has passed to the other side of the board, where it stands to become a Queen. Maybe one player has brought the King forward a bit earlier than seemed necessary, chipping away at the opponent’s strength and quietly shifting the balance of power. Within a few moves, one of the players discovers that one of those overlooked, easily dismissed threats creates a situation from which it is impossible to escape or recover.

Hussman lays out a great case for trend following–even though that is not his intent.