“Wall Street people learn nothing and forget everything.” Ben Graham
“ Buy on the cannons, sell on the trumpets.” Old French Proverb
“A stock broker is one who invests other people’s money until its all gone.” Woody Allen
“It is fortunate for Wall Street as an institution that a small minority of people can trade successfully and that many others think they can.” Ben Graham (more…)
March 1 (Bloomberg) — The board of bankrupt LyondellBasell Industries AF rejected a bid from Reliance Industries Ltd., owner of the world’s largest oil-refining complex, two people briefed on the matter said today.
Reliance, based in Mumbai, had raised its offer for a controlling stake in Lyondell to $14.5 billion, two people with knowledge of the offer said Feb. 22. Lyondell is based in Rotterdam.
Buying LyondellBasell would create a company with more than $80 billion in revenue and give Reliance chemical plants and two oil refineries in the U.S. and Europe. The chemicals maker had rejected a revised Reliance bid that valued it at $13.5 billion, the Wall Street Journal reported Jan. 8.
Lyondell was formed in a 2007 deal financed with $22 billion in debt in which it was bought by Basell AF, a unit of Len Blavatnik’s Access Industries Holdings LLC. Creditors have said the buyout crippled one of the world’s largest polymers, petrochemicals, and fuel companies, causing it to seek bankruptcy.
Lyondell spokesman David Harpole declined to comment.
1. Never outshine the master. (You can trade better than your mentor, just don’t expect him to like it. You’ll also learn more from people who you help, than from those who you work against.)
2. Never put too much trust in friends. Learn how to use enemies. (The only one you can trust as a trader is yourself and your own decisions. When the herd is against your positions, find something that is misunderstood, overlooked, or not fully recognized in the current stock price.)
3. Conceal your intentions. (Limit orders are good for the novice and undisciplined, but the market makers will never let you pick off the bottoms and tops using these.)
4. Always say less than necessary. (Talk is cheap and being concise is a good thing. It’s ok to keep some things you learn and strategies you create all to yourself.)
5. So much depends on reputation – guard it with your life. (Wall Street watches where the smart money is going at all times and herd-like patterns typically follow. Find those with the best reputation and figure out what they’re doing now. It will help unlock some secrets to their success.)
6. Court attention at all cost. (The key is to be ahead of the tape before Wall Street takes notice. Find stocks that few are looking at which offer tremendous growth prospects. They’ll be tomorrow’s winners, not the stocks you hear so much about right now.)
7. Get others to do the work for you, but always take the credit.(It’s ok to use others’ research and opinions, but realize that none of these can serve as a substitution for common sense and developing your own edge in the market. What is already known and published by others has already been acted upon no matter what you may think or have been told. Assume you’re always the last to know.)
8. Make other people come to you – use bait if necessary.(Success breeds popularity. If others think that they can learn or profit from you, you’ll never be lonely. However, with respect also comes responsibility to act in the best interests of others, many times before your own.)
9. Win through your actions, never through argument. (Don’t waste time convincing others on message boards how good or bad a stock is and/or telling people how smart you were because of good calls you’ve made in the past. Instead, trade the stock and make your profit. Talk will never pay your bills. Show others by demonstration, not by time wasting chatter.)
10. Infection: avoid the unhappy and unlucky. (This is right on the money. I couldn’t have said this better myself. Who you surround yourself with will ultimately determine your destiny. Marry for love, choose your friends carefully, and spend time with people who’ve been more successful and who are much smarter than you. Good and bad emotional states are as infectious as a disease.)
11. Learn to keep people dependent on you. (If you tell everyone everything you know, they’ll end up knowing more than you know. Having others dependent on you will also serve as great motivation, especially when times are tough and you need a reason to work harder than ever before.)
12. Win through your actions, never through argument. (At the end of the day, all that matters is that you make good trades or investment decisions. There’s lots of hype in this business and you should run, not walk, from anyone who spends more time talking than learning.)
13. Use selective honesty and generosity to disarm your victim.(Sorry, I’m not in agreement with this. In my view, you have to be honest with yourself and others at all times. In addition, generosity is always a good thing, especially when it is done without the desire of getting something in return. Having good Karma through generous acts also go a long way in keeping the trading gods on your side!)
14. When asking for help, appeal to people’s self-interest, never to their mercy or gratitude. (Sad, but true. If you can help others, they’ll be far more likely to help you. I know I always make a tremendous effort to help those who’ve helped me in the past.)
15. Pose as a friend, work as a spy. (You can find out more about people and companies you invest in by having friends who have specialized knowledge about certain industries. Their unique insight can be a powerful edge if you can get it. Sometimes a simple phone call or email to someone who works in the business will tell you much more than any chart or balance sheet.)
16. Crush your enemy totally. (When you’re right in a trade or investment and things are going well, don’t back off UNTIL you have good reason to sell.)
17. Use absence to increase respect and honor. (Knowing when not to trade is a skill few possess. Take vacations and breaks away from the market. It will only empower you to return refreshed, relaxed, and well-motivated. Remember, we trade to live, not live to trade. Achieving balance in your work and personal life will lay the foundation for long-term success.)
18. Keep others in suspended terror: cultivate an air of unpredictability. (It’s good to mix it up from time to time to relieve trading/investing boredom. If you think you’re in a rut, make some changes and go find something you can get excited about again.)
19. Do not build fortresses to protect yourself – isolation is dangerous. (Take time to bounce ideas off of people who are smarter than you. At all times, seek out opinions that are against you instead of with you – you’ll learn a great deal more. And, remember, no one is right all of the time. But some people are more right than others.)
20. Know who you’re dealing with – do not offend the wrong person. (As a small investor, it is best to avoid picking fights with market elephants (i.e. institutions, hedge funds) who think they know your stock better than you do. They have the power to move the market and your stock for longer than you have time or money to fight it.) (more…)
His latest take on the facebook IPO is here. His points are in bold.
1. Say goodbye to the individual investor on Wall Street. Mr. Cuban argues that because the media hyped the FB IPO that Wall Street is to blame. OK, I agree the IPO was hyped. But is that Wall Streets fault? Isn’t it the media’s fault? Isn’t it the buyers fault for not doing their due diligence? Didn’t Morgan Stanley spend millions propping up the stock the first day?
No one has long term success by reading any single piece of media, especially without knowing the writers intentions.
Here is a brief explanation on how the market works. If there are more buyers than sellers it goes up or vice versa. Or more important right now, if they have the means to buy.
2. The Valuation Bubble in Silicon Valley is bursting – but not for the reasons you think. The idea of private investment seems great but the execution is far off. The value of any market is liquidity. That has to be one of the important factors when making an investment. You know why futures are gaining popularity and what will eventually lead to their demise? A central market place and the lack thereof. Their spawns will kill the market and liquidity. The less central a market place the more likely the forces within that market are able to take control.
Mark agrees with me on liquidity but my interpretation is that he makes an argument against his point not for it. Didn’t the public market do a much better job at pricing? Didn’t the private market fail more dramatically than the public is this case? (Some one that knows the details better than I, when they went public did private shares get converted 1 to 1? If it did not get converted 1 to 1 let me know and I will gladly change it)
I believe Shark Tank is a great reason why Wall Street will always exist. I do not feel bad for the euntrepreuners and or the Sharks. Each assume the other person will add value. Wall Street assumes the same thing but to more people But as Mr. Cuban already knows, not everyone can win. But would they do better if there were 10 sharks or 100 sharks? Would more companies get funded?
If you allow people to be stupid, they will continue to be stupid. Howard Lindzon wrote a post as well that I disagreed with on the basis of access. They are both a lot more successful than I so I could be wrong. Also both of those guys should know that you are more likely to get screwed privately than publicly. I think this might be changing but it hasn’t yet. Open is not bad, closed is not bad, bad is bad. Liquidity and cash is always king, deeper markets should lead to better pricing. (more…)
Although Jessie’s life ended too early, his words of wisdom live on for discovery. The book is filled with obscure references and colorful characters long forgotten by the general public, but the key themes of the text remain as relevant as ever. Therefore, I’ve pulled out my favorite quotes, below, though I highly recommend reading the entire text.
- There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.
- The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among professionals.
- I never lose my temper over the stock market. I never argue the tape. Getting sore at the market doesn’t get you anywhere.
- They say you can never go poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market. Where I should have made twenty thousand I made two thousand. That was what my conservatism did for me.
- Remember that stocks are never too high for you to begin buying or too low to begin selling.
- A man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street…nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.
- After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was the sitting. Got that? My sitting tight!
- Losing money is the least of my troubles. A loss never bothers me after I take it…But being wrong—not taking the loss—that is what does the damage to the pocketbook and to the soul.
- Prices, like everything else, move along the line of least resistance. They will do whatever comes easiest.
- The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you hope that every day will be the last day—and you lose more than you should had you not listened to hope—the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out—too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts…Instead of hoping he must fear; instead of fearing he must hope.
It is funny how the best traders of all times basically repeat the same things with different words. 
Gerald Loeb is the author of ‘The Battle for Investment Survival’ and is one of the most quotable men on Wall Street. Here are 12 of the smartest things he has ever said about the stock market:
1. The single most important factor in shaping security markets is public psychology.
2. To make money in the stock market you either have to be ahead of the crowd or very sure they are going in the same direction for some time to come.
3. Accepting losses is the most important single investment device to insure safety of capital.
4. The difference between the investor who year in and year out procures for himself a final net profit, and the one who is usually in the red, is not entirely a question of superior selection of stocks or superior timing. Rather, it is also a case of knowing how to capitalize successes and curtail failures.
5. One useful fact to remember is that the most important indications are made in the early stages of a broad market move. Nine times out of ten the leaders of an advance are the stocks that make new highs ahead of the averages.
6. There is a saying, “A picture is worth a thousand words.” One might paraphrase this by saying a profit is worth more than endless alibis or explanations. . . prices and trends are really the best and simplest “indicators” you can find. (more…)
The quotes below are provided by John F. Carter, master day trader; pulled directly from his new book Mastering the Trade.
This may be the best quote of all:
“The financial markets are naturally set up to take advantage of and prey upon human nature. As a result, markets initiate major intraday and swing moves with as few traders participating as possible. A trader who does not understand how this works is destined to lose money”
“The financial markets are truly the most democratic places on earth. It doesn’t matter if a trader is male or female, white or black, American or Iraqi, Republican or Democrat. It’s all based on skill.”
“A trader, once in a position, can deceive himself or herself into believing anything that helps reinforce the notion that he or she is right”
“…professional traders understand this all too well, and they set up their trade parameters to take advantage of these situations, specifically preying on the traders who haven’t figured out why they lose”
“…markets don’t move because they want to. They move because they have to.”
“After all, the money doesn’t just disappear. It simply flows into another account – an account that utilizes setups that specifically take advantage of human nature.” (more…)
101% Must Read this article +Buy this Book too …A Bible for Every Trader !
The book starts with Livermore’s early trading career that was essentially scalping the markets for short trem profits using the tape and how he got to understand price movements before a bullish or bearish run. Livermore made $millions 3 times and lost it each time. He sadly ended up committing suicide in 1940 in the Sherry Netherland Hotel. He had amassed a $100m fortune by this time and no-one knew what happended to it. Maybe a trading disaster of some kind….who knows.
Some quotes and passasges I loved from the book
Grades of Suckers : The beginner knows nothing and everybody, including himself, knows it. But the next, or second, grade thinks he knows a great deal and makes others feel that way too. He is the experienced sucker, who has studied not the market itself but a few remarks about the market made by a still higher grade of suckers. The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner. It is this semisucker rather than the 100 per cent article who is the real all-the-year-round support of the commission houses. He lasts about three and a half years on an average, as compared with a single season of from three to thirty weeks, which is the usual Wall Street life of a first offender. It is naturally the semisucker who is always quoting the famous trading aphorisms and the various rules of the game. He knows all the don’ts that ever fell from the oracular lips of the old stagers excepting the principal one, which is: Don’t be a sucker!
This semisucker is the type that thinks he has cut his wisdom teeth because he loves to buy on declines. He waits for them. He measures his bargains by the number of points it has sold off from the top. In big bull markets the plain unadulterated sucker, utterly ignorant of rules and precedents, buys blindly because he hopes blindly. He makes most of the money until one of the healthy reactions takes it away from him at one fell swoop.
Sitting Tight : It was never my thinking that made me my big money; but my sitting. Sitting tight! Men who can both be right and sit tight are uncommon
Being Wrong : I was wrong; and the only thing to do when a man is wrong is to be right by ceasing to be wrong. get out of the trade.
Being Right : What is the use of being right unless you get the most use out of it ?! (maximising trades)
News : I work in harmony with the markets and take the path of least resistance every time. The trend is always established before the news is published. In Bull markets bear items are ignored and Bull items are exaggerated. (more…)
After many hours of toil and deep thought I have compiled a dependable guide for stock traders: Ten Ways to Lose Money on Wall Street. I shall not attempt to explain or qualify these precepts, realizing that my readers will doubtless follow them regardless of any advice, from any source, to the contrary.
1. Put your trust in boardroom gossip.
2. Believe everything you hear, especially tips.
3. If you don’t know—guess.
4. Follow the public.
5. Be impatient.
6. Greedily hang on for the top eighth.
7. Trade on thin margins.
8. Hold to your own opinion, right or wrong.
9. Never stay out of the market.
10. Accept small profits and large losses.
