Archives of “risk” tag

rss

Warren Buffet’s Investment & Life Wisdoms

  
  Education
#  #  #  #  #  #  #  #  #  #  #

Spending: If you buy things you don’t need, you’ll soon sell things you need.

Savings: Don’t save what is left after spending; spend what is left after saving.

Hard work: All hard work brings profit; but mere talk leads only to poverty.

Laziness: A sleeping lobster is carried away by the water current.

Earnings: Never depend on a single source of income.

Borrowings: The borrower becomes the lender’s slave.

Accounting: It’s no use carrying an umbrella, if your shoes are leaking.

Auditing: Beware of little expenses; a small leak can sink a large ship.

Risk-taking: Never test the depth of the river with both feet.

Investment: Don’t put all your eggs in one basket.

12 Habits of Highly Successful Traders

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #

Successful Trader– Preparedness
– Detachment
– Willingness to Accept Loss
– Taking Controlled Risk
– Thinking in Probabilities
– Being Comfortable with Uncertainty
– Consciousness of Abundance
– Optimism
– Open Mindedness and larity of Thought and Perception
– Courage
– Discipline

Anirudh Sethi's Lessons From 2008 : Part – II

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

 

1)In panics there is almost nowhere to make money without taking excessive risk
2)Timing entries and exits to oversold & overbought conditions helps achieve low-risk/high-reward entries
3)There is no such thing as a safe investment
4)Markets are dysfunctional, corrupt, and have no oversight
5)To let a stock prove itself to me, prior to jumping in based on my analysis alone (more…)

Where Are You Placing Your Bet?

  
  Education
#  #  #  #  #  #  #  #

Some love risk. Others avoid it till the grave. Whether you take it head on or run in the other direction it will always catch you. Risk cannot be avoided so you better know how to put the odds in your favor. Consider the following:

You want to see life as a continuum running on a loop back and forth from risk to reward. If you want a big reward, take a big risk. If you want an average reward and an average life, take an average risk. Easier said than done, however, if you want the big reward. Our system is notorious for playing Whac-A-Mole with achievers.

From an early age, people are conditioned by families, schools, and virtually every other shaping force in society to avoid risk. To take risks is inadvisable; to play it safe is the message. Risk can only be bad. However, winners understand risk is highly productive, and not something to avoid. Taking calculated risks is different from acting rashly. Playing it safe is the true danger. Far more often than you might realize, the real risk in life turns out to be the refusal to take a risk.2 If life is a game of risk, then to one degree or another, being comfortable with assessing odds is the only option for a fulfilling life.

Consider trading from a “startup” business perspective. Every business is ultimately involved in assessing risk. Putting capital to work to make it grow is the goal. In that sense, all business is the same. The right decisions lead to success, and wrong ones lead to insolvency. Blunt, but true. There are ways to go in the right direction, however. Ask yourself these questions:

  • What is the market opportunity in the market niche?
  • What is your solution to the market need?
  • How big is the opportunity?
  • How do you make money?
  • How do you reach the market and sell?
  • What is the competition?
  • How are you better?
  • How will you execute and manage your business?
  • What are your risks?
  • Why will you succeed? (more…)

Ten word investment philosophies

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Every writer knows that trying to express an idea in the fewest number of words is one of the hardest tasks.  That is, in part, why there are editors.  There is a legend that Ernest Hemingwaywon a bet by writing a six word short story:

For sale. Baby shoes. Never worn.

The folks at Snopes are skeptical of this legend, but the fact remains that the six word story is a compelling one, Hemingway or not.

Jason Zweig writing at Total Return asked a number of investment professionals to do something similar when it comes to expressing their investment philosophy in ten words or less.  One might think that ten words would be too much of a constraint, but the participants did compelling work.  Zweig wrote this:

Anything is possible, and the unexpected is inevitable. Proceed accordingly.

We also liked Elroy Dimson’s contribution as well:

Risk means more things can happen than will happen. (more…)

The Essence of Success

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Charles Dow used to counsel that no individual should ever be promoted if they hadn’t made a large error at some point. Phil Fisher used to insist only in investing in those stocks that had management teams willing to make big mistakes. If they didn’t make mistakes, they wouldn’t also take the risks required for success. Is this the essence of success? How does a corporate management team, upon the fruition of such errors, survive being “stopped out” of their positions in today’s hair twitch paradigm? Is being expropriated from your career rather than your capital not the bigger risk today? And thus can it only be stocks with founder, family or veto shareholdings that make for truly great growth stocks today? Should not Tim Cook undertake an LBO with the Qataris?

The Seven Mistakes Novie Traders Make

  
  Education
#  #  #  #  #  #  #  #  #  #  #

mistakes7

MISTAKE ONE
Lack of Knowledge and No Plan
It amazes us that some people expect to trade the stock market successfully without any effort. Yet if they want to take up golf, for example, they will happily take some lessons or at least read a book before heading out onto the course. (more…)

Trading Quotes for Traders

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Human emotion is both the source of opportunity in trading and the greatest challenge.
Master it and you will succeed.
Ignore it at your peril.

Trade with an edge, manage risk, be consistent, and keep it simple.
The entire Turtle training, and indeed the basis of all successful trading, can be summed up in these four core principles.

Good trading is not about being right, it’s about trading right.
If you want to be successful, you need to think of the long run and ignore the outcomes of individual trades.

Trading with an edge is what separates the professionals from amateurs.
Ignore this and you will be eaten by those who don’t.

Edges are found in the places between the battleground between buyers and sellers.
Your task as a trader is to find those places and wait to see who wins and who loses.

Mature understanding of and respect of risk is the hallmark of the best traders.
They know if you don’t keep an eye of risk, it will set its eye on you.

Ruin is the risk you should be concerned with the most.
It can come like a thief in the night and steal everything if you’re not watching carefully.

Don’t spent all your time admiring the fancy tools in the magazine.
First learn how to use the basic ones well. It’s not the size of your tools that counts but how you use them.

Keep it simple. Simple time-tested methods that are well executed will beat fancy complicated method every time.

Trading with poor methods is like learning to juggle while standing in a rowboat during the storm. Sure, it can be done, but it is much easier to juggle when one is standing on a solid ground.

Trading is not a sprint; it is boxing. The market will beat you up, screw with your head, and do anything it can to defeat you. But when the bell sounds at the end of the twelfth round, you must be standing in the ring in order to win.

The market does not care how you feel. It will not prop up your ego or console you when you are down.
Therefore, trading is not for everyone. If you are unwilling to face the truth about the markets and the truth about your own limitations, fears and failures, you will not succeed.

Go to top