Jim Rogers’ Keys to Success (taken from the titles and sub headings of each chapter of the new book, “A Gift To My Children”):
1. Do not let others do your thinking for you
2. Focus on what you like
3. Good habits for life & investing
4. Common sense? Not so common
5. Attention to details is what separates success from failure
6. Let the world be a part of your perspective
7. Learn philosophy & learn to think
8. Learn history
9. Learn languages (make sure Mandarin is one of them)
10. Understand your weaknesses & acknowledge your mistakes
11. Recognize change & embrace it
12. Look to the future
13. “Lady Luck smiles on those who continue their efforts”
14. Remember that nothing is really new
15. Know when not to do anything
16. Pay attention to what everybody else neglects
17. If anybody laughs at your idea view it as a sign of potential success
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rssThe 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…)
FEAR
Fear is not always a bad thing, though. In fact, for traders, feeling fear is not a problem, as long as they don’t panic and allow it to drive them out of or in to trades.
Among the fears traders face:
- Not making enough money in these huge market moves
- Missing out on big trades
- Getting caught on the wrong side
At times like this, top traders see opportunity when others crawl into a hole because they are frozen by their fears.
Traders who keep their cool make money from the fear (i.e. shorting oil). Others keep their head and cut positions so they don’t get blown up (Greece and the ripple effect). Still others are waiting patiently for the moment to strike, like a sniper.
So how can all traders think like the top traders when it comes to fear?
- Lay out the data and look at it from an objective point of view.
- Pay attention to where the disconnects are because others are trading based on fear.
- Keep positions smaller with wider stops; be ready to get bigger quickly the moment the uncertainty starts clears up, which it always does.