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Tradecraft – Staying in the Winner’s Circle

On July 12, 2010, In Good Articles, by ElfLord

YOU CAN’T SPEND KUDOS or deposit a victory lap into your IRA. So forget status, reputation and bragging rights. The only reason to invest in anything is to make money. Bows are for little people with big egos. Profits are the only acknowledgement I need.

And although I’ve bought my share of sour stocks, once in a while I’m fortunate enough to come up with a few winners as well. While I’d love every investment to show a profit, you only need a handful of smart ideas each year to put together a respectable return.

So far this year, one of my best-performing trades has been in utilities, a sector that’s shown exceptional strength since I started pounding the table last fall. As regular readers, along with those who watch me on Fox News Channel’s “Cashin’ In”, can attest, this has long been a favored sector, one in which I’ve been able to experience the best kind of success — that which you can spend. (more…)

Tradecraft – Impulse Control

On June 4, 2010, In Good Articles, by ElfLord

WE’VE ALL SEEN A baby scream and cry when he wants a toy or a piece of candy. Without hesitation, he prepares to throw a full-scale temper tantrum in the aisle of the store in order to get it. A baby doesn’t care if the candy will spoil his appetite, or if his parents can actually afford the toy he so desperately desires. A baby wants what he wants.

You can’t blame him, of course, because children haven’t yet learned to look beyond the scope of immediate gratification and consider the future. Grown-ups, however, do comprehend that life exists beyond the here and now. While the future can’t be predicted, most mature adults understand the need to delay gratification at times. They accept that with a bit of foresight, an even higher level of happiness can be found than by simply giving into immediate whims.

This ability to delay instant gratification and stick with a longer-term focus is especially important when it comes to the markets. As human beings, we operate on a relatively short time frame. But the market, whether it’s bullish, bearish or trending nowhere at all, has all the time in the world. An astute investor needs the patience to think ahead, learning to operate on the market’s schedule instead of attempting to cram it into his own. (more…)

Tagged with: instant decisions • long term focus • managing winners

Tradecraft – A Mind Is a Terrible Thing to Lose

On March 10, 2010, In Good Articles, by ElfLord

WATCH RUKEYSER, CAVUTO or any other investing-related television show, and you’ll notice that most prognosticators aren’t merely confident — they’re downright cocky. No matter how volatile the market might be, their forecasts are always infallible.

Although I’m usually opinionated, I’m never overconfident. In fact, I sometimes feel so completely out of touch with the market that I don’t know what to think. Sorry to disappoint you folks looking for a quick tip, but when it comes to the next move in the market, I often don’t have a clue. Considering the wild swings we’ve seen this year, perhaps in your weakest moments you can admit to the same.

As we often point out, a trader’s biggest strength isn’t necessarily finding winners, but dealing with losers. Still, feeling lost and unsure about an investment approach can be extraordinarily frustrating — and mighty expensive.

It usually starts innocently enough. A few favorite trades fall apart. Then sectors you had previously dismissed seem to spring to life virtually overnight. Your buy list gets smaller, more erratic. And the trading strategy that only a few weeks back seemed foolproof now seems foolhardy. You’re not just losing you’re lost. We’ve all been there at one point or another. (more…)

Tagged with: managing winners • watching the markets

Tradecraft – A Rite of Spring

On February 24, 2010, In Good Articles, by ElfLord

FOR MANY PUNDITS, investment tips exist in a fantasy world with no capital constraints, margin limits or time horizons. Because pundits focus on stocks picks, and not portfolio management, most of their work centers on where to put new money rather than how to deal with existing positions.

So while in a perfect world we’d always have a clean slate to work with, in the real world most of us travel with baggage. And in your portfolio, that boils down to existing positions. As we’ve written before, that’s always the starting point for smart financial decisions. More than anything else, your existing positions should influence how you invest. Since it’s always preferable to maximize an existing position rather than open a new one, I suggest looking at what’s already happening within a portfolio instead of focusing on what might happen in the market.

The best way to begin evaluating a position is to determine whether you own it as a gain or a loss. But use caution: It’s at this initial step that many investors’ discipline goes horribly awry. Why? Because people tend to get rid of stocks that have made money, yet hold on to shares that have gone down the drain. (more…)

Tagged with: managing losers • managing winners

ZF Capital

Tradecraft – Staying in the Winner’s Circle

Tradecraft – Impulse Control

Tradecraft – A Mind Is a Terrible Thing to Lose

Tradecraft – A Rite of Spring

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