In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral. That may seem self-evident; it is not, and it is a lesson learned too late by far too many.
– Dennis Gartman
On October 26, 2009, In Thought of the Day, by ElfLord
On October 26, 2009, In Good Articles, by ElfLord
WHEN THE PUBLIC is in the market, they’re always long the market, and during those periods when the market falls, the masses invariably go looking for someone to blame. Because they appear to profit at the public’s expense, no scapegoat is more popular, or unfairly vilified, than the short seller.
It’s almost as if one of the freedoms inherent in a capitalist democracy, specifically the ability to buy stocks we feel are due to rise and sell those we feel are due to fall, isn’t extended to short sellers. Their activities are often characterized as immoral, unethical and downright un-American.
For a long time, of course, they were just downright unprofitable. During the mid- and late-1990s, short sellers like Manuel Asensio or bears like Jim Grant were seen as old-fashioned heretics, steadfastly refusing to accept the fact that we were in a new paradigm where historical oddities like interest rates or valuation no longer mattered. The fact that the shorts were losing hundreds of millions of dollars as the market rocketed higher didn’t seem to bother anyone. After all, it was their poor judgment to bet against the market to begin with. Indeed, guys like Charles Allmon, Robert Prechter and David Tice were frumpy, charming leftovers from a bygone era that, until last year’s precipitous decline, seemed as if it would never return.
But these days, with short sellers reaping huge profits from declining markets, they have become Public Enemy No. 2. A cursory scan of the popular message boards will yield more than a few examples of antishort sentiment. (more…)
On October 25, 2009, In Thought of the Day, by ElfLord
Being busy does not always mean real work. The object of all work is production or accomplishment and to either of these ends there must be forethought, system, planning, intelligence, and honest purpose, as well as perspiration. Seeming to do is not doing.
– Thomas Alva Edison
On October 24, 2009, In Thought of the Day, by ElfLord
Trading is the greatest profession in the world because you have total freedom, you are your own boss, it’s different every day and you meet some of the nicest people in the world and your success can be limitless.
– Larry Pesavento
On October 23, 2009, In Thought of the Day, by ElfLord
Consistency is a major key to investment success. And consistency means first to preserve capital, second to have consistent profits, and then third to build wealth.
– Mike Moody
On October 23, 2009, In Good Articles, by ElfLord
SOME PEOPLE WON’T miss an episode of “The Practice” but have no idea what their 401(k) has done over the past six months. And there are those who bought Pfizer (PFE) after hearing Leno make a Viagra joke and haven’t looked at the stock since. They know who Richard Hatch is but couldn’t tell you where the Nasdaq closed last week.
These people, many of them college educated and extremely affluent, play the stock market as you play the lottery: Buy a ticket and hope for the best. The market interests them only up to the point that they actually have to put in some effort. And for such people, “buy and hold” has become “buy and blame.” After all…it isn’t their fault they lost money. It’s the hedge funds’, the analysts’ or Alan Greenspan’s.
As we’ve written before, trading, or “active investing” as it’s now called within politically correct circles, is first and foremost an exercise in observation. In order to see the truth, you must first be willing to open your eyes. Despite the misconception that traders pull the trigger from bell to bell, I spend most of my time watching, not making transactions. (more…)
On October 22, 2009, In Thought of the Day, by ElfLord
Invest your money, not your ego. Even the most carefully-crafted system is going to lead you astray eventually. Conditions change. Markets change. And even a system which is working just fine may have to be altered because of a new data point. Always be willing to adapt. Unwillingness to change your mind can cost you more than you’d believe. Never let a trade become an “investment” merely because you failed to listen to the market.
– StoryTeller, TMF Boards