Columbia Economist Dr. Jeffrey Sachs speaks candidly about corruption in the United States: from Washington DC and Wall Street, including the entire financial/banking system
Archives of “wall street” tag
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What I say to the youngling… “It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.” – William O’Neil “When asked if there was a technique for making money on the stock exchange, Nathan Rothschild said, “There certainly is. I never buy at the bottom and I always sell too soon.” – William O’Neil “Only a fool holds out for the top dollars,” said Joe Kennedy, one-time wall street speculator and the father of former President John F. Kennedy. The object is to get out while a stock is up, before it has a chance to break. Gerald M. Loeb states, ” Once the price has risen into estimated normal or overvaluation areas, the amount held should be reduced steadily as quotation advance.” (At this point it’s all right to ask yourself, “Why didn’t I sell when it was going up and looked so strong?”)” — William O’Neil “Another thing to bear in mind is this: Never try to sell at the top. It isn’t wise. Sell after a reaction if there is no rally.” – Jesse Livermore |
The Virtue of Patience
Waiting for the right opportunity increases the probability of success. You don’t always have to be in the market. As Edwin Lefevre put it in his classic Reminiscences of a Stock Operator, “There is the plain fool who does the wrong thing at all times anywhere, but there is the Wall Street fool who thinks he must trade all the time.”
One of the more colorful descriptions of patience in trading was offered by Jim Rogers in Market Wizards: “I just wait until there is money lying in the comer, and all I have to do is go over there and pick it up.” In other words, until he is so sure of a trade that it seems as easy as picking money off the floor, he does nothing.
Mark Weinstein (also interviewed in Market Wizards) provided the following apt analogy: “Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in the bush for a week, waiting for Just the right moment. It will wait for a baby antelope, and not Just any baby antelope, but preferably one that is also sick or lame. Only then, when there is no chance it can lose its prey, does it attack. That, to me, is the epitome of professional trading.” (more…)
New "Wall Street: Money Never Sleeps" Trailer Drops
Michael Douglas reprises the role of Gordon Gekko that won him an Oscar two decades ago in the sequel to the Oliver Stone directed classic, with Shia LaBeouf and Carey Mulligan on board.
10 Things I’ve Learned About Markets
1. “There is no such thing as easy money”
2. Events that you think are affected by cardinal announcements like the employment numbers at 8:30 am on Friday are often known to many participants before the announcement
3. Markets that have little liquidity are almost impossible to profit from.
4. When the stock market is way down, policy makers take notice and do what they can to remedy the situation.
5. The market puts infinitely more emphasis on ephemeral announcements that it should.
6. It is good to go against the trend followers after they have become committed.
7. The one constant, is that the less you pay in commissions, and bid asked spread, the more money you’ll end up with at end of day. Too often, a trader makes a fortune on the prices showing when he makes a trade, and ends up losing everything in the rake and grind above.
8. It is good to take out the canes and hobble down to wall street at the close of days when there is a panic.
9. A meme about the relation between today’s events and those of x years ago is totally random but it is best not to stand in the way of it until it is realized by the majorit of susceptibles
10. All higher forms of math and statistics are useless in uncovering regularities.
WallStreet Movies and S&P 500 :Great Correlation
If you had gotten out of the market when these movies were released, you’d definitely have missed some big moves…to the upside. Wall Street came out after the crash of ’87 in December 1987, and taking money off the table for the multi-year bull market that followed would have been a big miss. Boiler Room came out just a month before the peak in 2000, so in this case it was a good sell signal.
The sequel to the original Wall Street, Money Never Sleeps came out during a leg down in the current bull market in 2010, and its placement in the upper chart is a bit misleading. Yes, filming for the movie began in late 2009, but the market bottomed in early 2009. Whether you use the dates they began filming or the release date, Money Never Sleeps did not coincide with a peak for the equity market, and in retrospect was a great time to get in. As for the Wolf of Wall Street? Only time will tell, but keep in mind that unlike the other movies, it is not intended to be set in present day, instead romanticizing the heady days of the 1990s. (more…)
Traits of Livermore That Fueled His Success
You know, and I know that human nature is like the leopard that can’t change his spots. Even armed with all the latest findings into the inner workings of our psyche, it seems to provide scant help-certainly when we need it the most. I don’t know about you, but it seems like a lot of people are crying foul when it comes to the market-like it’s a rigged game. I asked Jesse about that issue:
“Get the slips of the financial news agencies any day and it will surprise you to see how many statements of an implied semi-official nature they print. The authority is some “leading insider’ or a “prominent director” or “a high official” or “someone in authority” who presumably knows what he is talking about…Quite apart from the intelligent study of speculation everywhere the trader must consider certain facts in connection with the game in Wall Street. In addition to trying to determine how to make money one must also try to keep from losing money. It is almost as important to know what not to do as to know what should be done. It is therefore well to remember that manipulation of some sort enters into practically all advances in individual stocks and that such advances are engineered by insiders with one object in view and one only and that is to sell at the best profit possible.”
So, is it not true that the more things change, the more they remain the same? What about all the talk about the retail investor leaving the market for good-because it’s not a level playing field? Do they not detest their own gullibility? Again, from Livermore: (more…)
Beating The Game
My satisfaction always came from beating the market, solving the puzzle. The money was the reward, but it was not the main reason I loved the market. The stock market is the greatest, most complex puzzle ever invented – and it pays the biggest jackpot….it was never the money that drove me. It was the game, solving the puzzle, beating the market that had confused and confounded the greatest minds in history. For me, that passion, the juice, the exhilaration was in beating the game, a game that was a living dynamic riddle, a conundrum to everyone who speculated on Wall Street. Jesse Livermore
Two Trading related Films
Question. Have you seen the new Wall Street film, Money Never Sleeps? If so, what did you think?
http://www.wallstreetmoneyneversleeps.com/
The original film is, of course, a classic. I have no idea how many times I’ve seen it over the years, and no doubt will see it again several times in the future. I haven’t, as yet, seen the new one, but I fully expect to do so.
It seems like the box office figures haven’t held up very well, but that’s not necessarily a reflection of the quality of the film where someone from a markets background is concerned. This doesn’t strike me as being one that requires the big screen experience, however, so I can see myself waiting for it to come out on DVD.
Should I not do that? I’d love to hear from folks who been. If so, leave a comment below with your thoughts.
A film I did see recently is Floored, the documentary about the decline of pit trading in the Chicago futures exchange arena. It was screened at the Vegas Futures & Forex expo, with the director in attendance. There were some interesting elements, but I’m not going to sing its praises from the rooftops or anything like that. Basically, it’s a tale of a disappearing business, which is part of they way things work in a free enterprise society. New, better ways replace older ones and folks who cannot adopt are left behind.
One of the most amazing scenes in Floored is one where a guy who clearly has embraced computer assisted trading is facing off against a floor trader. The latter is ranting about how computers are evil. It’s sad, really.
Art Huprich’s Market Truisms and Axioms
Raymond James’ P. Arthur Huprich published a terrific list of rules . Other than commandment #1, they are in no particular order:
• Commandment #1: “Thou Shall Not Trade Against the Trend.”
• Portfolios heavy with underperforming stocks rarely outperform the stock market!
• There is nothing new on 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, mostly due to human nature.
• Sell when you can, not when you have to.
• Bulls make money, bears make money, and “pigs” get slaughtered.
• We can’t control the stock market. The very best we can do is to try to understand what the stock market is trying to tell us.
• Understanding mass psychology is just as important as understanding fundamentals and economics.
• Learn to take losses quickly, don’t expect to be right all the time, and learn from your mistakes.
• Don’t think you can consistently buy at the bottom or sell at the top. This can rarely be consistently done.
• When trading, remain objective. Don’t have a preconceived idea or prejudice. Said another way, “the great names in Trading all have the same trait: An ability to shift on a dime when the shifting time comes.” (more…)