Capital flows from those who fight trends to those who follow them.
- In the long term money flows to those who manage risk and are able to hold on to their profits from those who don’t manage risk.
- Traders that persevere through the learning curve stick around long enough to make money from those that just trade with no understanding of what they are doing.
- Robust systems take money from traders with no edge over the markets.
- Traders that trade price action take money from those that trade opinions.
- Traders that enter a trade based on a reversal signal make money form those that stubbornly hold on to a losing trade and hope.
- Money flows to those who let winners run from those that hold losing trades and hope.
- Capital flows from those that trade a winning methodology from those that trade on emotions.
- Those with big egos pay a price to try to prove they are right by holding a losing trade those that admit they are wrong quickly keep hard earned profits.
Money flows from those who do not know how to trade to those who do.
Archives of “term money” tag
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Thoughts from Legendary Investors
On Waiting…..
Wait for the fat pitch. – Warren Buffett: comparing investing to a baseball game where you can wait endlessly for the perfect pitch before you swing.
I only go to work on the days that make sense to go to work…And I really do something on that day. But you go to work and you do something every day and you don’t realize when it’s a special day. – George Soros talking to Byron Wien
His first conclusion was that he won when all the factors were in his favor, when he was patient and waited for all the ducks to line up in a row. – from Jesse Livermore, Worlds Greatest Stock Trader
Profits can be made safely only when the opportunity is available and not just because they happen to be desired or needed. …Willingness and ability to hold funds uninvested while awaiting real opportunities is a key to success in the battle for investment survival.- Gerald Loeb
You make money on wall street by being very selective and being patient, waiting for those opportunities that are irresistible, where the percentages are very heavily in your favor.- Seth Glickenhaus
Unless, however, we see a very high probability of at least 10 percent pretax returns (which translate to 6 percent to 7 percent after corporate tax), we will sit on the sidelines. With short-term money returning less than 1 percent after-tax, sitting it out is no fun. But occasionally successful investing requires inactivity.- Warren Buffett
Many equity investors feel compelled to remain 100% invested in equities at all times. Bond investors are often similarly constrained. We strongly believe that this mentality leads to pursuit of relative rather than absolute investment returns, a direction we certainly want to avoid…A smaller pool of funds seeking to avoid meaningful declines in market value at every point in time and seeking more aggressive return objectives cannot afford to be fully invested in the absence of attractive opportunities. – Seth Klarman
On Mistakes….
…if anything, I make as many mistakes as the next guy. But where I do think that I excel is in recognizing my mistakes, you see. And that is the secret to my success. The key insight that I have reached is recognition of the inherent fallibility of human thought. –George Soros
The only way you get a real education in the market is to invest cash, track your trade, and study your mistakes! – Jesse Livermore
On Psychology… (more…)