Born
in Dublin, Ireland, in 1856, George Bernard Shaw grew to become one of
Great Britain’s greatest and most controversial playwrights. Shaw’s
father, a corn merchant, was an alcoholic and therefore there was very
little money to spend on George’s education. George went to local
schools but never went to university and was largely self-taught.
He
was also a co-founder of the London School of Economics, won the Nobel
Prize in Literature in 1925 and an Academy Award for Best Adapted
Screenplay (Pygmalion) in 1938.
G. Bernard Shaw had quite a bit
to say during his lifetime, so here are 10 of his many quotes and what
we, as traders, can learn from
1. Beware of false knowledge; it is more dangerous than ignorance.
Don’t
believe everything you find on the Internet. There are thousands of
trading related websites out there and many of them are created by
people who know little or nothing about what they’re talking about or –
worse – what they want you to buy. Remember to always do your due
diligence. In trading, delusion costs you time and money.2. Everything happens to everybody sooner or later if there is time enough.
Patience
is very important. Don’t expect to achieve your goals in just a few
weeks or months. It takes time and dedication to learn what you need to
know in order to survive the market.
3. He who can, does. He who cannot, teaches.
It’s
no secret that most traders fail and quit trading relatively fast. We
should accept the fact that trading is not for everyone. Kind of like
politics, burglary, pest control, high-rise window washing, surgery,
quantitative engineering etc. – just insert other dangerous, high skill
requiring or even disgusting jobs that only a few people are able to do.Will
you be one of those to quit trading someday? Here is a good exit plan
for those who eventually accept the fact that trading is not for them:
Did you learn a lot of things about trading, although it didn't work
out, but can be helpful for some people? – Then write a book or a
trading course and sell it :)
4. Man can climb to the highest summits, but he cannot dwell there long
There
are cycles everywhere. Being successful is a cycle which, sooner or
later – or on a long enough timeline – always comes to an end. Enjoy it
and do good things while it lasts.
5. People who say it cannot be done should not interrupt those who are doing it.
If
you finally find something that works for you and you enjoy what you
do, don’t let other people tell you that you are doing it wrong.
6. Success does not consist in never making mistakes but in never making the same one a second time.
What
are your biggest trading mistakes? Do you remember them? It’s always a
good idea to write them down on a list and check that list on a regular
basis. Try to find patterns as there’s often a tight relation between
smaller mistakes – resulting in trading mistakes of greater magnitude.
7. The minority is sometimes right; the majority always wrong.
More
than 90% of traders lose and that’s a fact. Do you believe that doing
exactly the same things they do, trading exactly the same way they
trade, expecting the same thing they expect – will make you one of the
few that are successful? Then you are most likely wrong.
8. We must always think about things, and we must think about things as they are, not as they are said to be.
Details
matter, but try to see the forest for the trees. Don’t let the gigantic
river of news, opinions, rumours influence your beliefs, plans and
strategies.
9. If you have an apple and I have an apple and we
exchange these apples then you and I will still each have one apple.
But if you have an idea and I have an idea and we exchange these ideas,
then each of us will have two ideas.
Unless you found the “holy
grail of trading”, it’s a good idea to share information with others.
Sometimes many small ideas equal a big one.
10. Progress is impossible without change, and those who cannot change their minds cannot change anything
Always adapt: understand new market dynamics and be ready to go with the flow.Source: http://www.innerfx.com/
Stock Statistics
Tuesday, April 15, 2014
Monday, April 14, 2014
Are you interested in investing in an IPO?
The Colombo Stock Exchange (CSE) witnessed an increase in Initial Public
Offerings (IPOs) since the beginning of the year as a result of the
incentives given by the budget for the year 2014 and the prudent
measures taken by market stakeholders.
The current trend attracts many investors to the market. These investors will be able to maximize opportunities only if they make informed decisions. They should refrain from making unwise decisions as done in the past. Hence, this article will give out some useful tips when investing.
Seek — and secure — objective research
It’s not as easy as you might think to find good objective information or research on a private company on the cusp of going public, yet doing so is absolutely essential.
Start by scouring the web for information on the company — particularly any details regarding financing as well as past and current press releases. They can inform you of any news, research or analysis of your IPO, the anticipated price for the offering and perhaps even how the company’s major executives and shareholders have been buying and selling their stocks.
There are still other firms that specialize in performing in-depth IPO researching and reporting. They may charge a nominal fee for this extra information but ensuring you’re well-informed on your prospective IPO is often worth the extra expense. By performing good research, you’ll be able to determine whether your IPO is a stable company, or if it’s just being over-hyped.
It’s also a good idea to take a look at the health of the overall sector in which the company you’re interested in belongs to (e.g., manufacturing, information technology, health care, bank finance and insurance, hotels and travels, etc.). For example, if you’re considering an IPO in the manufacturing sector but that particular sector hasn’t been faring well, you may want to reconsider.
Read and understand the prospectus
For most people, thoroughly reading their investment prospectus can seem nothing more than a tedious — if not entirely soporific — endeavour they’d rather not undertake. Investing in stocks, however, and particularly investing in IPOs, requires that you do more than just skim the prospectus — you must read it from cover to cover. While the material may be a bit dry, the information contained within the prospectus such as the company’s opportunities/risks and how the funds the IPO raises are proposed to be used is invaluable.
Highlighted below are some of the sections of an IPO prospectus that an investor should consider.
Watch out for lock-up period
Lock-up agreements are legally binding documents that prevent existing shareholders from selling any shares of stock for a specified period of time. The problem is, when lockups expire all the insiders are permitted to sell their stock. The result is a rush of people trying to sell their stock to realize their profit. This excess supply can put severe downward pressure on the stock price.
Evaluate the offering price
The company and the investment bank make the decision on where to set the offering price. It is important to understand that the offering price is determined by a mix of market conditions, analysis and the company’s performance. Competing interests affect the determination of the offering price.
From the perspective of the company offering its shares in the IPO, the higher the offering price, the more capital the company can raise.
Under-pricing an IPO creates a discount for the initial investors and increase the quantity of shares applied for. This in turn could once again generate more capital to the company. Under-pricing may also affect how much, if at all, the stock’s price rises on its first trading day. If there is a large increase, or ‘bump’, from the offering price during the initial trading, the underwriter’s client-investors may be satisfied because the value of their investment will have increased. However, the company may be unsatisfied in that case, as it might have been able to sell its shares at a higher initial offering price and thereby raise more capital.
All of the foregoing factor into the determination of the offering price. Whether you have an opportunity to participate directly in an IPO or are buying shares in the open market, it is important to realize that the offering price reflects a negotiated estimate as to the value of the company. The offering price may bear little relationship to the trading price of the securities and it is not uncommon for the closing price of the shares shortly after the IPO to be well above or below the offering price.
Bottom line
Successful companies go public but it is difficult to sift through and find the investments with the most potential. Just keep in mind that when it comes to dealing with the IPO market an informed investor is likely to perform much better than one who is not.
www.dailymirror.lk
The current trend attracts many investors to the market. These investors will be able to maximize opportunities only if they make informed decisions. They should refrain from making unwise decisions as done in the past. Hence, this article will give out some useful tips when investing.
Seek — and secure — objective research
It’s not as easy as you might think to find good objective information or research on a private company on the cusp of going public, yet doing so is absolutely essential.
Start by scouring the web for information on the company — particularly any details regarding financing as well as past and current press releases. They can inform you of any news, research or analysis of your IPO, the anticipated price for the offering and perhaps even how the company’s major executives and shareholders have been buying and selling their stocks.
There are still other firms that specialize in performing in-depth IPO researching and reporting. They may charge a nominal fee for this extra information but ensuring you’re well-informed on your prospective IPO is often worth the extra expense. By performing good research, you’ll be able to determine whether your IPO is a stable company, or if it’s just being over-hyped.
It’s also a good idea to take a look at the health of the overall sector in which the company you’re interested in belongs to (e.g., manufacturing, information technology, health care, bank finance and insurance, hotels and travels, etc.). For example, if you’re considering an IPO in the manufacturing sector but that particular sector hasn’t been faring well, you may want to reconsider.
Read and understand the prospectus
For most people, thoroughly reading their investment prospectus can seem nothing more than a tedious — if not entirely soporific — endeavour they’d rather not undertake. Investing in stocks, however, and particularly investing in IPOs, requires that you do more than just skim the prospectus — you must read it from cover to cover. While the material may be a bit dry, the information contained within the prospectus such as the company’s opportunities/risks and how the funds the IPO raises are proposed to be used is invaluable.
Highlighted below are some of the sections of an IPO prospectus that an investor should consider.
-
Legal proceedings disclose the significant litigation involving the company.
-
Management’s discussion and analysis gives the management an
opportunity to discuss in narrative form the management’s perspective on
the company’s financial condition, changes in financial condition and
results of operations. This narrative section should provide investors
with information to help them understand how and why the company’s
financial results have changed over the time period covered by the
financial statements and factors that management thinks might affect the
company’s future financial condition or operating results.
-
Dilution illustrates the usually significant disparity between the
price that investors are paying for shares in the company’s IPO to both
the book value of such shares and the average price paid by the existing
shareholders that include founders, officers and early investors.
-
Use of proceeds specifies what the company plans to do with the money it raises in the offering.
-
Prospectus summary briefly summarizes information that is disclosed in
greater detail throughout the prospectus, including the company’s
business, strategy, plans for using the funds raised in the IPO,
financial condition and as well as the terms of the IPO itself.
-
Risk factors identify risks that the company’s management feels could
significantly impact the company’s business, operations or performance
or an investment in the securities being offered.
-
Dividend policy describes the company’s history of paying and possibly its plans to pay, dividends to shareholders.
-
Selected financial data discloses certain key financial and other data
in a summarized column format. The information and presentation can
highlight significant trends in the company’s financial condition and
results of operations. Companies are generally required to disclose
selected financial data for the past years. You should also study the
projected accounting figures in the prospectus carefully. If the IPO’s
future earnings projections look too good to be true, well, that just
might be the case. This is perhaps one of the biggest red flags you
should look for when performing your research.
-
Business describes the company’s lines of business, its principal
products or services and their markets, any significant suppliers and
customers on whom the company’s business depends and its competitive
landscape and principal methods of competition. This section may also
provide information regarding the relative contribution to the company’s
financial results from different significant lines of business or
operations in foreign countries.
- The management offers biographical information regarding the directors and executive officers of the company.
Watch out for lock-up period
Lock-up agreements are legally binding documents that prevent existing shareholders from selling any shares of stock for a specified period of time. The problem is, when lockups expire all the insiders are permitted to sell their stock. The result is a rush of people trying to sell their stock to realize their profit. This excess supply can put severe downward pressure on the stock price.
Evaluate the offering price
The company and the investment bank make the decision on where to set the offering price. It is important to understand that the offering price is determined by a mix of market conditions, analysis and the company’s performance. Competing interests affect the determination of the offering price.
From the perspective of the company offering its shares in the IPO, the higher the offering price, the more capital the company can raise.
Under-pricing an IPO creates a discount for the initial investors and increase the quantity of shares applied for. This in turn could once again generate more capital to the company. Under-pricing may also affect how much, if at all, the stock’s price rises on its first trading day. If there is a large increase, or ‘bump’, from the offering price during the initial trading, the underwriter’s client-investors may be satisfied because the value of their investment will have increased. However, the company may be unsatisfied in that case, as it might have been able to sell its shares at a higher initial offering price and thereby raise more capital.
All of the foregoing factor into the determination of the offering price. Whether you have an opportunity to participate directly in an IPO or are buying shares in the open market, it is important to realize that the offering price reflects a negotiated estimate as to the value of the company. The offering price may bear little relationship to the trading price of the securities and it is not uncommon for the closing price of the shares shortly after the IPO to be well above or below the offering price.
Bottom line
Successful companies go public but it is difficult to sift through and find the investments with the most potential. Just keep in mind that when it comes to dealing with the IPO market an informed investor is likely to perform much better than one who is not.
www.dailymirror.lk
Thursday, April 3, 2014
CEAT invests Rs. 600 million more on radials
CEAT Kelani Holdings (Pvt) Ltd.
which produces almost half of Sri Lanka’s tyre requirements invested Rs.
600 million to establish a new factory for producing radial tyres.
This new factory is adjoining the existing CEAT Kelani manufacturing complex in Kelaniya. The company says that this would enable it to develop its tyres with the CEAT brand name for the local as well as export markets.
With production in this factory beginning from April 2014, the capacity of CEAT Kelani Holdings to produce CEAT radial tyres would increase by 70 percent, from 23,000 tyres per month to 39,000 per month.
CEAT which is the leader in Sri Lanka’s radial and commercial tyre market, produces nearly 50 percent of Sri Lanka’s tyre requirements from the second quarter of 2013-14. From the nearly 1450 metric tons of tyres produced by CEAT Kelani Holdings, some 500 metric tons are exported to markets in many countries including South Asia, the Middle East, Africa etc.
www.adaderanabiz.lk
This new factory is adjoining the existing CEAT Kelani manufacturing complex in Kelaniya. The company says that this would enable it to develop its tyres with the CEAT brand name for the local as well as export markets.
With production in this factory beginning from April 2014, the capacity of CEAT Kelani Holdings to produce CEAT radial tyres would increase by 70 percent, from 23,000 tyres per month to 39,000 per month.
CEAT which is the leader in Sri Lanka’s radial and commercial tyre market, produces nearly 50 percent of Sri Lanka’s tyre requirements from the second quarter of 2013-14. From the nearly 1450 metric tons of tyres produced by CEAT Kelani Holdings, some 500 metric tons are exported to markets in many countries including South Asia, the Middle East, Africa etc.
www.adaderanabiz.lk
Wednesday, April 2, 2014
විදේශීය බැල්ම වැඩිවේ. අද කොටස් පොළේ රැළි මෙන්න!
අද කොටස් වෙළඳ පොළ ගනුදෙනු පහළ
ගියද විශේෂයෙන්ම කැපී පෙනුනේ විදේශීය ආයෝජකයින් විසින් රුපියල් මිලියන 853
ක් වටිනා ශුද්ධ කොටස් මිලදීගැනීමක් කිරීමයි.
මේ අනුව, අද විදේශීය ආයෝජකයින් විසින් රුපියල් මිලියන 1033 ක් වටිනා කොටස් මිලදීගත් අතර රුපියල් මිලියන 180 ක් වටිනා කොටස් විකිණීම කළේය.
දිනයේ වෙළඳ පොළ ක්රියාකාරීත්වයට විදේශීය ආයෝජකයින්ගේ සහභාගීත්වය සියයට 31 කි.
අද සමස්ත මිල දර්ශකය ඒකක 2.95 කින් ඉහළ ගොස් ඒකක 6,004.78 ක් වෙද්දී එස් ඇන්ඩ් පී මිල දර්ශකය ඒකක 17.96 කින් පහළ ගොස් ඒකක 3,281.94 ක් විය. පිරිවැටුම රුපියල් මිලියන 1946.8 කි.
අද ගිවිසගත් කොටස් ගනුදෙනු හතරක් වාර්තා වූ අතර විශාලතම ගිවිසගත් කොටස් ගනුදෙනුව සිදුවූයේ සිට්රස් ලෙෂර් සමාගමේයි. මෙහිදී, එකක් රුපියල් 15.50 ක් වන කොටස් මිලියන 25.66 ක් ගනුදෙනු විය.
මීට අමතරව, චෙව්රන් ලුබ්රිකන්ට් සමාගමේ කොටස් මිලියන 0.11 ක් කොටසක් රුපියල් 272 ක් බැගින්ද, හැටන් නැෂනල් බැංකුවේ කොටස් මිලියන 0.3 ක් කොටසක් රුපියල් 152.50 ක් බැගින්ද, ජෝන් කීල්ස් හෝල්ඩින්ග්ස් කොටස් මිලියන 0.22 ක් කොටසක් රුපියල් 235 ක් බැගින්ද ගිවිසගත් ගනුදෙනු ලෙස හුවමාරු විය.
අද දිනයේදී ජෝන් කීල්ස් කොටසක් රුපියල් 1.20 කින් ඉහළ ගොස් රුපියල් 233.50 ක් වෙද්දී, ශ්රී ලංකා ටෙලිකොම් කොටසක් රුපියල් 1.60 කින් ඉහළ ගොස් රුපියල් 47.00 ක්ද, සොෆ්ට් ලොජික් හොල්ඩින්ග්ස් කොටසක් රුපියල් 1.30 කින් ඉහළ ගොස් රුපියල් 12.10 ක්ද වූ අතර වැඩිපුරම කොටස් ගනුදෙනුවීම සිදුවූයේ සිට්රස් ලෙෂර් සමාගමේයි. එම ප්රමාණය කොටස් මිලියන 25.7 කි. මේ අතර, සොෆ්ට් ලොජික් හෝල්ඩින්ග්ස් කොටස් මිලියන 20.4 ක්ද ගනුදෙනු වී තිබේ.
වැඩිම ශුද්ධ විදේශීය කොටස් මිලදී ගැනීමක් සිදුවූ සමාගම බවට පත් වෙමින් විදේශිකයින් විසින් ජෝන් කීල්ස් හෝල්ඩින්ග්ස් සමාගමේ රුපියල් මිලියන 802.7 ක කොටස් මිලදී ගෙන තිබෙන අතර හැටන් නැෂනල් බැංකුවේ විදේශිකයින් මිලදීගෙන තිබෙන කොටස් ප්රමාණයේ වටිනාකම රුපියල් මිලියන 47 කි.
විදේශිකයින් වැඩිපුර කොටස් විකුණා දැමූ සමාගමක් ලෙස හේමාස් හෝල්ඩින්ග්ස් සඳහන් කළ හැකි අතර එහි ශුද්ධ විකුණුම් ප්රමාණයේ වටිනාකම රුපියල් මිලියන 23.7 කි.
අද බුකිට් ඩාරා කොටසක් රුපියල් මිලියන 39.80 කින් පහළ ගොස් රුපියල් 560 ක් වෙද්දී ලයන් බෘවරි කොටසක් රුපියල් 19 කින් පහළ ගොස් රුපියල් 362 ක්ද ලංකා දුම්කොළ සමාගමේ කොටසක් රුපියල් 7.90 කින් පහළ ගොස් රුපියල් 106.10 ක්ද වී ඇත.
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මේ අනුව, අද විදේශීය ආයෝජකයින් විසින් රුපියල් මිලියන 1033 ක් වටිනා කොටස් මිලදීගත් අතර රුපියල් මිලියන 180 ක් වටිනා කොටස් විකිණීම කළේය.
දිනයේ වෙළඳ පොළ ක්රියාකාරීත්වයට විදේශීය ආයෝජකයින්ගේ සහභාගීත්වය සියයට 31 කි.
අද සමස්ත මිල දර්ශකය ඒකක 2.95 කින් ඉහළ ගොස් ඒකක 6,004.78 ක් වෙද්දී එස් ඇන්ඩ් පී මිල දර්ශකය ඒකක 17.96 කින් පහළ ගොස් ඒකක 3,281.94 ක් විය. පිරිවැටුම රුපියල් මිලියන 1946.8 කි.
අද ගිවිසගත් කොටස් ගනුදෙනු හතරක් වාර්තා වූ අතර විශාලතම ගිවිසගත් කොටස් ගනුදෙනුව සිදුවූයේ සිට්රස් ලෙෂර් සමාගමේයි. මෙහිදී, එකක් රුපියල් 15.50 ක් වන කොටස් මිලියන 25.66 ක් ගනුදෙනු විය.
මීට අමතරව, චෙව්රන් ලුබ්රිකන්ට් සමාගමේ කොටස් මිලියන 0.11 ක් කොටසක් රුපියල් 272 ක් බැගින්ද, හැටන් නැෂනල් බැංකුවේ කොටස් මිලියන 0.3 ක් කොටසක් රුපියල් 152.50 ක් බැගින්ද, ජෝන් කීල්ස් හෝල්ඩින්ග්ස් කොටස් මිලියන 0.22 ක් කොටසක් රුපියල් 235 ක් බැගින්ද ගිවිසගත් ගනුදෙනු ලෙස හුවමාරු විය.
අද දිනයේදී ජෝන් කීල්ස් කොටසක් රුපියල් 1.20 කින් ඉහළ ගොස් රුපියල් 233.50 ක් වෙද්දී, ශ්රී ලංකා ටෙලිකොම් කොටසක් රුපියල් 1.60 කින් ඉහළ ගොස් රුපියල් 47.00 ක්ද, සොෆ්ට් ලොජික් හොල්ඩින්ග්ස් කොටසක් රුපියල් 1.30 කින් ඉහළ ගොස් රුපියල් 12.10 ක්ද වූ අතර වැඩිපුරම කොටස් ගනුදෙනුවීම සිදුවූයේ සිට්රස් ලෙෂර් සමාගමේයි. එම ප්රමාණය කොටස් මිලියන 25.7 කි. මේ අතර, සොෆ්ට් ලොජික් හෝල්ඩින්ග්ස් කොටස් මිලියන 20.4 ක්ද ගනුදෙනු වී තිබේ.
වැඩිම ශුද්ධ විදේශීය කොටස් මිලදී ගැනීමක් සිදුවූ සමාගම බවට පත් වෙමින් විදේශිකයින් විසින් ජෝන් කීල්ස් හෝල්ඩින්ග්ස් සමාගමේ රුපියල් මිලියන 802.7 ක කොටස් මිලදී ගෙන තිබෙන අතර හැටන් නැෂනල් බැංකුවේ විදේශිකයින් මිලදීගෙන තිබෙන කොටස් ප්රමාණයේ වටිනාකම රුපියල් මිලියන 47 කි.
විදේශිකයින් වැඩිපුර කොටස් විකුණා දැමූ සමාගමක් ලෙස හේමාස් හෝල්ඩින්ග්ස් සඳහන් කළ හැකි අතර එහි ශුද්ධ විකුණුම් ප්රමාණයේ වටිනාකම රුපියල් මිලියන 23.7 කි.
අද බුකිට් ඩාරා කොටසක් රුපියල් මිලියන 39.80 කින් පහළ ගොස් රුපියල් 560 ක් වෙද්දී ලයන් බෘවරි කොටසක් රුපියල් 19 කින් පහළ ගොස් රුපියල් 362 ක්ද ලංකා දුම්කොළ සමාගමේ කොටසක් රුපියල් 7.90 කින් පහළ ගොස් රුපියල් 106.10 ක්ද වී ඇත.
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Saturday, March 29, 2014
Nine Lessons From The Greatest Trader Who Ever Lived
The stock market has certainly produced its share of heroes and villains
over the years. And while villains have been many, the heroes have been
few.
One of the good guys (for me, at least) has always been Jesse L. Livermore. He's considered by many of today's top Wall Street traders to be the greatest trader who ever lived.
Leaving home at age 14 with no more than five bucks in his pocket, Livermore went on to earn millions on Wall Street back in the days when they still literally read the tape.
Long or short, it didn't matter to Jesse.
Instead, he was happy to take whatever the markets gave him because he knew what every good trader knows: Markets never go straight up or straight down.
In one of Livermore's more famous moves, he made a massive fortune betting against the markets in 1929, earning $100 million in short-selling profits during the crash. In today's dollars, that would be a cool $12.6 billion.
That's part of the reason why an earlier biography of his life, entitled Reminiscences of a Stock Operator, has been a must-read for experienced traders and beginners alike.
A gambler and speculator to the core, his insights into human nature and the markets have been widely quoted ever since.
Here are just a few of his market beating lessons:
On the school of hard knocks:
The game taught me the game. And it didn't spare me rod while teaching. It took me five years to learn to play the game intelligently enough to make big money when I was right.
On losing trades:
Losing money is the least of my troubles. A loss never troubles me after I take it. I forget it overnight. But being wrong - not taking the loss - that is what does the damage to the pocket book and to the soul.
On trading the trends:
Disregarding the big swing and trying to jump in and out was fatal to me. Nobody can catch all the fluctuations. In a bull market the game is to buy and hold until you believe the bull market is near its end.
On sticking to his plan:
What beat me was not having brains enough to stick to my own game - that is, to play the market only when I was satisfied that precedents favoured my play. There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time. No man can have adequate reasons for buying or selling stocks daily - or sufficient knowledge to make his play an intelligent play.
On speculation:
If somebody had told me my method would not work, I nevertheless would have tried it out to make sure for myself, for when I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money. That is speculating.
On respecting the tape:
A speculator must concern himself with making money out of the market and not with insisting that the tape must agree with him. Never argue with it or ask for reasons or explanations.
On human nature and trading:
The speculator's deadly enemies are: Ignorance, greed, fear and hope. All the statute books in the world and all the rule books on all the Exchanges of the earth cannot eliminate these from the human animal.
On riding the trend to the big money:
Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.
On the nature of Wall Street:
Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.
So, what ever happened to Jesse L. Livermore?
He didn't die a poor man - not by any stretch of the imagination.
But he did take his own life, believing he was "a failure," which proves once again that money can't buy happiness.
http://moneymorning.com/2013/01/04/nine-lessons-from-the-greatest-trader-who-ever-lived/#
One of the good guys (for me, at least) has always been Jesse L. Livermore. He's considered by many of today's top Wall Street traders to be the greatest trader who ever lived.
Leaving home at age 14 with no more than five bucks in his pocket, Livermore went on to earn millions on Wall Street back in the days when they still literally read the tape.
Long or short, it didn't matter to Jesse.
Instead, he was happy to take whatever the markets gave him because he knew what every good trader knows: Markets never go straight up or straight down.
In one of Livermore's more famous moves, he made a massive fortune betting against the markets in 1929, earning $100 million in short-selling profits during the crash. In today's dollars, that would be a cool $12.6 billion.
That's part of the reason why an earlier biography of his life, entitled Reminiscences of a Stock Operator, has been a must-read for experienced traders and beginners alike.
A gambler and speculator to the core, his insights into human nature and the markets have been widely quoted ever since.
Here are just a few of his market beating lessons:
On the school of hard knocks:
The game taught me the game. And it didn't spare me rod while teaching. It took me five years to learn to play the game intelligently enough to make big money when I was right.
On losing trades:
Losing money is the least of my troubles. A loss never troubles me after I take it. I forget it overnight. But being wrong - not taking the loss - that is what does the damage to the pocket book and to the soul.
On trading the trends:
Disregarding the big swing and trying to jump in and out was fatal to me. Nobody can catch all the fluctuations. In a bull market the game is to buy and hold until you believe the bull market is near its end.
On sticking to his plan:
What beat me was not having brains enough to stick to my own game - that is, to play the market only when I was satisfied that precedents favoured my play. There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time. No man can have adequate reasons for buying or selling stocks daily - or sufficient knowledge to make his play an intelligent play.
On speculation:
If somebody had told me my method would not work, I nevertheless would have tried it out to make sure for myself, for when I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money. That is speculating.
On respecting the tape:
A speculator must concern himself with making money out of the market and not with insisting that the tape must agree with him. Never argue with it or ask for reasons or explanations.
On human nature and trading:
The speculator's deadly enemies are: Ignorance, greed, fear and hope. All the statute books in the world and all the rule books on all the Exchanges of the earth cannot eliminate these from the human animal.
On riding the trend to the big money:
Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.
On the nature of Wall Street:
Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.
So, what ever happened to Jesse L. Livermore?
He didn't die a poor man - not by any stretch of the imagination.
But he did take his own life, believing he was "a failure," which proves once again that money can't buy happiness.
http://moneymorning.com/2013/01/04/nine-lessons-from-the-greatest-trader-who-ever-lived/#
If trading psychology is a issue for you
If you talk to many very successful traders they know the importance of trading psychology. But they are not consumed by it. In last 10 years I have interacted closely with many successful traders, few market wizards , and some hedge fund people, none of them had ever hired a trading psychologist. And most of those people are at top of their game. The key to their success is their belief system.
But if you talk to struggling traders they often think trading
psychology is important and some claim it is the most important thing.
If psychology is an issue for you and you think it is affecting your
trading , what concrete steps can you take to resolve it.
There is lot of talk of trading psychology , but what exactly are the 3 or 5 things you can do to improve your psychology.
If you want to increase your muscles you go and lift weight
If you want to improve your stamina, you go and run daily
If you want to reduce weight you eat less and exercise more
What exactly do you need to do to improve your psychology.
There is lot of talk of trading psychology , but what exactly are the 3 or 5 things you can do to improve your psychology.
If you want to increase your muscles you go and lift weight
If you want to improve your stamina, you go and run daily
If you want to reduce weight you eat less and exercise more
What exactly do you need to do to improve your psychology.
First starting point if you want to improve your psychology is by examining your beliefs
You can only trade what you believe in.
Your beliefs drive your behaviour.
If you believe only way to trade is using mechanical methods ( that is a
belief) and as a result all your behaviour will flow from it.
If you believe one should only trade triple ETF and not waste time on
individual stocks (that is a belief) and as a result all your behaviour
will flow from it.
If you believe that only way to trade is with big risk (that is a belief) and as a result all your behaviour will flow from it.
Every trade has deeply held beliefs. The bundle of deeply held beliefs
drive what kind of set-up they will trade, what kind of time frame they
will trade and also all elements of trade like entry, exit , risk, and
number of positions held.
Beliefs are not necessarily based on science or logic. In trading there
are many beliefs based on to others pseudo-science . Personally I would
never trade based on Elliott Waves , because it is not in line with my
belief system. I believe it is not scientific and hocus focus. But there
are traders who build their entire trading around it.
Your beliefs drive your trading actions. If you want better results in
your trading you start by examining your beliefs about market, how they
operate and about your trading and beliefs behind those trading
decisions. A critical study of them might show you where you need to fix
things.
It is difficult to change beliefs. Contrary to what self help books and
many motivational authors and speakers will tell you it is not easy to
change beliefs. Beliefs persist for lifetime in some people. So much of
human behaviour is driven by beliefs. Religion survives because people
are driven by beliefs.
When you are kid you have many simple beliefs, like monster exist or
eating sweets will lead to cavities, or my parents are going to be
forever, but as you grow and get exposed to science your beliefs change.
New knowledge and new discovery leads to change of beliefs. Same thing
with markets and and trading. More you educate yourself and expose
yourself to different beliefs you will re examine some of your deeply
held beliefs and start changing them. Your surroundings and people you
interact with also helps to change or reinforce your beliefs. If you
want to change beliefs change your surroundings, friends, family and
incentive structure.
For traders same thing applies. If you hang around with traders who all
the time whine and "believe" market is manipulated, you will also imbibe
same beliefs, you will get rewarded in that setting for those beliefs.
If you change that and say start interacting with a highly motivated
trader with 10 year plus track record and no negative years , your
beliefs will change. In that setting you will not be rewarded for your
beliefs about manipulation.
First starting point if you want to improve your psychology is by examining your beliefs
Align your beliefs with market structure by educating yourself about how
markets work. Align your belief with what has shown to have worked in
the market based on history and statistics. Align your belief with a
style of investing growth, value, contrarian investing. Align your
belief with time frame (day trade , swing, position). Align your belief
with right kind of market paradigm
(http://sharemarket-srilanka.blogspot.com/)
Friday, March 28, 2014
The 10 Secrets of Successful Investing
For Sir John Marks Templeton, the road not taken really did make all the difference in the world.
A true contrarian, the legendary investor became a billionaire by "avoiding the herd".
He bought low, sold high, and was always working against the grains of extreme bullish and bearish sentiment.
In fact, it is when the streets were the bloodiest that Templeton became the most eager to invest.
It was at these moments of what Templeton called "points of maximum pessimism" that he began to wade in snapping up rock bottom bargains along the way..
A true contrarian, the legendary investor became a billionaire by "avoiding the herd".
He bought low, sold high, and was always working against the grains of extreme bullish and bearish sentiment.
In fact, it is when the streets were the bloodiest that Templeton became the most eager to invest.
It was at these moments of what Templeton called "points of maximum pessimism" that he began to wade in snapping up rock bottom bargains along the way..
Going Long on Pessimism
To his credit, that included one of Templeton's most daring plays.As the U.S. was still mired in The Great Depression and the war drums in Europe began to beat, Templeton borrowed enough money to invest in U.S. markets during the dark days of 1939.
With a war chest of $10,000, Templeton bought 100 shares in every single company that was trading for less than a dollar a share on the New York Stock Exchange. When he was done, Templeton had bet on 104 companies, including 34 that were already in bankruptcy.
A short four years later, only four of them turned out to be worthless, while Templeton's initial investment grew 400% to $40,000.
That was the start of long and successful career. Not long after, he became a billionaire by pioneering the use of globally diversified mutual funds.
Established in 1954, his Templeton Growth Fund was the granddaddy of them all. It grew at an astonishing rate of nearly 16% a year until Templeton's retirement in 1992, handily beating the Standard & Poor's gains of 11.1%.
With dividends reinvested, each $10,000 invested in the Templeton Growth Fund at its inception would have grown to $2 million by 1992, before it was sold to the Franklin Group.
A fundamentalist by nature, Templeton's overall investment thesis was simple: it was to "search for companies around the world that offered low prices and an excellent long-term outlook."
That usually included areas of the world other investors had completely overlooked--most notably post-war Japan. Templeton was not only one of the first investors to place bets there, he was also one of the first investors to sell out as the Japanese bubble peaked in the mid-1980's.
Likewise, his timing couldn't have been better in the late 1990's.
At the height of the Internet bubble Templeton predicted 90% of the new Internet companies would be bankrupt within five years.
Confident in his prediction, Templeton went short dozens of technology companies, making himself over $80 million in a matter of weeks. He later called it "the easiest money I ever made."
After a long and profitable career, Money magazine dubbed him "arguably the greatest global stock picker of the century" in 1999.
Of course, along the way he also left behind a wealth of investment advice for stock pickers at every level.
Templeton's 10 Maxims
He called them Templeton's 10 Principles for Successful Investing. They included the following:- 1. Invest for real returns: "The true objective for any long-term investor is maximum total real return after taxes."
2. Keep an open mind: "Never adopt permanently any type of asset or any selection method. Try to stay flexible, open minded and skeptical. Long term top results are achieved only by changing from popular to unpopular the types of securities you favour and your methods of selection."
3. Never follow the crowd: "If you buy the same securities as other people, you will have the same results as other people. It is impossible to produce superior performance unless you do something different from the majority. Buying when others are despondently selling and selling when others are greedily buying requires the greatest fortitude and pays the greatest reward."
4. Everything changes: "Bear markets have always been temporary. And so have bull markets."
5. Avoid the popular: "When any method for selecting stocks becomes popular, you will need to switch to unpopular methods."
6. Learn from your mistakes: "'This time is different' are among the most costly four words in market history."
7. Buy during times of pessimism: "Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell."
8. Search worldwide: "To avoid having all your eggs in the wrong basket at the wrong time, you should diversify. When you search worldwide, you find more better bargains than when you monitor only one nation. You also benefit from more safety thanks to diversification."
9. Hunt for value and bargains: "Too many investors focus on outlook and trend. Therefore, more profit is made by focusing on value. In the stock market the only way to get a bargain is to buy what most investors are selling."
10. No-one knows everything: "An investor who has all of the answers doesn't even understand the questions."
Templeton passed away in July 2008 at the age of 95.
http://moneymorning.com/2013/04/26/the-10-secrets-of-successful-investing/
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