Value, like beauty, is in the mind of the market. As a trader, the lesson is never to second-guess what value really is: it is what the market will pay….Price is king, it is what is. I learned long ago not to argue with what is.
– Larry Williams, Long-Term Secrets to Short-Term Trading
OVERCONFIDENCE DOESN’T LAST long in the markets. Cocky investors trade too big, too often and are usually too stubborn to take a loss. When the market is moving against them, it’s overconfidence that keeps them holding and hoping and doubling down, even when it’s painfully clear that it’s time to jump ship.
There’s a fine line between feeling confident and acting cocky. When I’m not at least a little concerned about a position, that’s generally the best time to think about getting out. Stocks climb a wall of worry, and healthy doses of skepticism, doubt and fear are actually a positive sign. When I feel butterflies in my stomach, I’m usually on the right track.
Research and due diligence are a must, but when you get right down to it, the market doesn’t know if you’re a warehouse worker or a Harvard grad. Although a fancy degree might look terrific on a resume, it means nothing when it comes to knowing how to trade. (more…)
Never assume that the unreasonable or the unexpected cannot happen. It can and it will.
– Peter Steidlmayer, Steidlmayer on Markets
There is no freedom from risk. There is no freedom from fear. There is no freedom from pain. There is no freedom from the possibility of failure. But there is freedom in acceptance of all of these as part of life, and moreover, as the least important part of life.
– Victor Sperandeo, Trader Vic — Methods of a Wall Street Master
I have two basic rules about winning in trading as well as in life:(1) If you don’t bet, you can’t win. (2) If you lose all your chips, you can’t bet.
– Larry Hite
WHEN IT COMES TO the Kentucky Derby, the Final Four and the stock market, everybody’s got a hot tip. Most portfolio managers still focus on what to trade, not on how to trade.
Yet when I lose money in the market, it’s poor technique, not bum stock picking, that’s always to blame. Despite all the emphasis on independent research and proper due diligence, I lose money not when I’m wrong in my analysis, but when I’m undisciplined in my approach.
For example, when a stock of mine is doing well, generally speaking, I get stupid. I scour the message boards looking for praise. I comb through the headlines. I daydream about potential acquirers. I browse the online company store. I look for favorable mentions in the business press. I fall in love.
And when the stock starts to sink, and my profit begins to disappear, I foolishly listen to everything else but the market itself — despite my years of experience as a hedge-fund manager. (more…)
Use the form below to search the site:
Still not finding what you're looking for? Drop a comment on a post or contact us so we can take care of it!
A few highly recommended friends...
All entries, chronologically...
