Sean Glickenhaus is in his mid 90’s and has been trading since the 1920’s. In the following video, he talks about a comparison between the Great Depression and what is happening currently.
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rssMANAGING RISK
Well, perhaps the best way is to emulate some of the trading principles used by the pundits of yesteryear who beat the stock market no matter the emotions and mechanics of the institutional herd. For instance:
Bernard Baruch – Some 70 years ago, he would research a stock, buy it, and then each time the stock rose 10% from his purchase price, buy an additional amount equal to his first purchase. If the stock began declining he would sell everything he had bought when the drop equaled 10% of its top price …
Baron Rothschild – His success formula was centered on the famous quote attributed to him – “I never buy at the bottom and I always sell too soon.” …
Jesse Livermore – This legendary speculator profited enormously by calling the various 1921 – 1927 advances correctly. In 1929 he reasoned that the market was overvalued, but finally gave up and became bullish near the top in the fall of that infamous year.
He quickly cut his losses, however, and switched to the “short side.” Livermore listed three major points for his success:
1. Sensitivity to mob psychology
2. Willingness to take a loss
3. Liquidity, meaning that stock positions should not be taken that cannot be sold in 15 minutes “At the market” …
Addison Cammack – A stockbroker from Kentucky who swore by the two-point stop-loss rule. “If you’re wrong,” he said, “you might as well be wrong by two points as ten.” He followed this method successfully and was one of the few bears to make a fortune on Wall Street and keep it …
Interestingly, all of these disciplines have one thing in common. They all adhere to Benjamin Graham’s mantra, “The essence of portfolio management is the management of RISKS, not the management of RETURNS. Well-managed portfolios start with this precept.”
Well, perhaps the best way is to emulate some of the trading principles used by the pundits of yesteryear who beat the stock market no matter the emotions and mechanics of the institutional herd. For instance:Seven surprising things you may not know about Warren Buffett
Here are seven interesting things I learned about Warren Buffett from The Snowball, and some ideas on how they can help your investing:
1. Buffett set goals young. (He really started, really young)
Buffet began obsessing over numbers as a child. He raced marbles with a stopwatch and calculated the lifespan of hymn composers when six-years old. He sold chewing gum at seven and Coca Cola when he was eight: the same year he began wearing a money-changer on his belt.
- His dad was a stockbroker. This gave him an early view of the markets
- At ten he was chalking stock prices at a local broker’s office
- The same year he visited the New York Stock Exchange, and was asked for a tip by senior Goldman Sachs partner Sidney Weinberg – an experience he never forgot
- His favourite childhood book was One Thousand Ways to Make $1,000
- At 11 he announced he was going to be a millionaire at 35, a seemingly crazy goal in 1941 (when a million really was a million)
- He filed his first tax return aged 14, having already made $1,000 (equivalent to around $12,500 in today’s money)
The takeaway: The power of compound interest takes years to work its magic. None of us has a time machine, so the main lesson is not to delay a day when investing for the future.
2. Buffett bought his first stock when he was 12-years old
Warren put everything his schemes had earned him into a stock, Cities Service Preferred, when he was 12. He also enrolled his sister, Doris.
Buffet was already learning how to hold shares through a slump
He paid $114.75 dollars for three shares, and watched the stock price fall from $38.25 to $27 a share. His sister Doris was not happy. When Cities Service went back up to $40, he sold. He made $5 a share profit, and got Doris off his back. After he sold, the stock rose to $202 a share.
Takeaway: We all learn the same lessons. Buffett’s business partner Charlie Munger says that because Warren started thinking about odds, stocks, and goals before he was a teenager, he’s years ahead of the rest of us.
I used to watch share prices rise and fall on the Teletext TV service when I was 11 or 12. At the same age Buffett was learning real-world lessons on holding shares through a slump and selling too soon.
You’ll only discover whether you have the stomach to invest through a bear market or whether you’ll be sucked up by the next property bubble by being an active investor. Start with small sums, sure, but don’t delay that start.
3. Buffet lied, shoplifted, and played truant as a kid
This one was a real surprise. As a teenager Buffett revealed a wild streak. He says:
“We’d steal stuff for which we had no use. We’d steal golf bags and golf clubs. I walked out of the lower level where the sporting goods were, up the stairway to the street, carrying a golf bag and golf clubs, and the club was stolen and so were the bags. I stole hundreds of golf balls.
“I made up this crazy story for my parents – I told them I had this friend, and his father had died. He kept finding more of these golf balls that his father had bought. Who knows what my parents talked about at night.”
Takeaway: Even Buffett had to learn to be Buffett. I don’t know about you, but I found this heartening to read. Together with discovering that Buffett was a shy child who enrolled himself in Dale Carnegie’s public speaking course, it made him seem more human.
It’s easy to feel you haven’t got what it takes to make money. Some are born special, you might conclude. But Buffett’s history shows that even the world’s richest and most admired investor had to iron out his kinks.
Buffett’s history also makes me proud to be an outsider. Many of my college classmates entered the city or became management consultants, and have earned six-figure salaries for a decade. When property prices were booming, I’d sometimes wonder if I’d made the wrong decision by deciding to go it alone – even though I know that working a nine-to-five in an office and answering to some buffoon of a manager would kill me.
Discovering Buffett made being his own boss a top priority puts me in good company. I also suspect the unusual structure of Berkshire Hathaway grew out of Buffett’s non-confirming mentality.
4. Buffett is a businessman first, investor second (more…)
Investment Jokes
The Godfather, accompanied by his stockbroker, walks into a room to meet with his accountant. The Godfather asks the accountant, “Where’s the three million bucks you embezzled from me?” The accountant doesn’t answer. The Godfather asks again, “Where’s the three million bucks you embezzled from me?”
The stockbroker interrupts, “Sir, the man is a deaf-mute and cannot understand you, but I can interpret for you.” The Godfather says, “Well, ask him where the @#!* money is.”
The stockbroker, using sign language, asks the accountant where the three million dollars is. The accountant signs back, “I don’t know what you’re talking about.” The stockbroker interprets to the Godfather, “He doesn’t know what you’re talking about.”
The Godfather pulls out a pistol, puts it to the temple of the accountant, cocks the trigger and says, “Ask him again where the @#!* money is!”
The stockbroker signs to the accountant, “He wants to know where it is!” The accountant signs back, “Okay! Okay! The money’s hidden in a suitcase behind the shed in my backyard!”
The Godfather says, “Well, what did he say?” The stockbroker interprets to the Godfather, “He says that you don’t have the guts to pull the trigger.”
The Pessimist sees the glass as half empty. The Optimist sees the glass half full. The Stock Market Day Trader JUST ADDS WHISKEY …
Market statistics are like a bikini:
What they reveal is important, what they conceal is vital!
Jordan Belfort interview – The Wolf of Wall Street
Must Watch ,Don’t miss it
Yachts, planes, women, drugs – stockbroker Jordan Belfort had it all and lost it all. Tom Leonard meets the man who taught the Mafia how to cheat – then wrote a book about it
Could there be a more compelling poster child for the dark side of modern capitalism than Jordan Belfort?
As a 31-year-old multimillionaire stockbroker, Belfort once landed his helicopter on his back lawn, flying with just one eye open because he was so stoned he had double vision. He sank his 167ft motor yacht, complete with seaplane and helicopter, after overruling the captain and taking it into a Mediterranean storm.
He organised a midget-throwing contest to entertain brokers on his trading floor.
And when he wasn’t completely out of his head on drugs, or getting executive relief from prostitutes in the presidential suites of luxury hotels, the man nicknamed the Wolf of Wall Street was presiding over a firm that swindled investors out of $200 million in a shares fraud that landed him and his chief confederates in prison. (more…)