The tape never lies.
– Jesse Livermore
On November 6, 2009, In Thought of the Day, by ElfLord
On November 5, 2009, In Thought of the Day, by ElfLord
Strong people make as many mistakes as weak people. Difference is that strong people admit their mistakes, laugh at them, learn from them. That is how they become strong.
– Richard Needham
On November 4, 2009, In Thought of the Day, by ElfLord
A compulsive desire to be rich may indeed drive you to learn about the markets and make money, but only at tremendous personal cost. A driving desire for fame usually has at its root a fundamental lack of self-confidence and self-respect, and any fame achieved on that basis will be empty and meaningless. The extent to which you are motivated solely by the desire for money and fame is the extent that you will fail as a person, and usually as a businessperson as well.
– Victor Sperandeo, Methods of a Wall Street Master
On November 4, 2009, In Good Articles, by ElfLord
WHETHER YOU’RE MANAGING hundreds of millions or just hundreds, at the end of the day, investing is about making money. And too often we forget that the majority of a portfolio’s return comes not from market timing or security selection, but asset allocation. So for a moment — just a moment — put down your price/earnings ratios, chuck the charts and forget Fibonacci. Don’t think like a prognosticator, but a portfolio manager. As the past few months have demonstrated, consistent returns that outpace inflation are an achievement that only a well-diversified portfolio can provide.
Stocks are one asset class most people are familiar with. And as a result of the recent run-up, more investors are now getting into bonds as well. But there’s another major asset class that’s routinely overlooked even by most financial professionals. Hard assets not only increase diversification, but can boost returns as well.
According to a 1999 study by Ibbotson Associates, adding hard assets to a diversified portfolio has historically increased returns while reducing risk. That’s largely because hard assets are noncorrelated with the stock market. In other words, when the Dow zigs, hard assets tend to zag. And although hard assets are traditionally seen as suitable only for high rollers, the research demonstrates they can benefit both low- and high-risk portfolios alike. (more…)
On November 3, 2009, In Thought of the Day, by ElfLord
Long term survival depends much more on personal discipline than on market knowledge.
– Alan Farley, The Master Swing Trader
On November 2, 2009, In Good Articles, by ElfLord
DESPITE HOURS OF THOUGHT, scrutiny and research, I’m humbled to report that the majority of my trades are losers. It’s frustrating…but true. Some trades go against me. Others just go nowhere at all. But either way, my losing trades outnumber my winners.
What saves me, however, is that the profits from my winning trades are bigger than the losses from my losing ones.
Simply put, you don’t have to win more often than you lose. You do, however, need to win bigger than you lose. I have found that when it comes to allocating a portfolio, the old “80-20″ rule tends to apply: 80% of your profits tend to come from 20% of your trades. To that end, the point isn’t to search for trades with a high probability of winning, but with a high probability of a large return. (more…)