Investing lesson: greed and patience

There are two things investors or traders must learn. One is to control the greed instinct and the other is to be patient.

"You know, a professional gambler is not looking for long shots, but for sure money. Of course long shots are fine when they come in. In the stock market Pat wasn't after tips or playing to catch twenty-points-a-week advances, but sure money in sufficient quantity to provide him with a good living." - Quote from Reminiscences of a Stock Operator

This is particularly true for full-time traders who solely depends on speculating the market for a living. It is extremely important to preserve the capital. Cutting losses fast and letting the profit run is the basic rule that all traders must follow. Failing to keep to these rules are the main reason for the failure of many traders.

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Spanish Debt Issues

There is a lot of talk about Spanish sovereign debts recently. I came across a research paper which I think is very useful for me and wish to share it here. This is taken from www.fundsupermart.com, an online fund broker where you can purchase funds form various fund managers. This portal provides some research and comparisons and it is essentially a self service portal. From the chart provided, we can see that there is a problem for Spain to service their debts for the next 4-5 years if the debts are not re-structured. With this kind of risk, no sane investors would want to risk their money to buy Spanish bonds. They can only turn to European central bank for bail out. The blue arrow is a fictitious line I draw assuming re-structuring is going to happen. Essentially, they have to move the payment of capitals into next 5-20 years to be affordable. In addition to that, they can't make additional loans. This is just taking a very simplistic view of the situation. To have that hap...

Always Do Your Own Analysis

I would like to share a great article that I had just read with all investors. Many gurus, seasoned investors always warn new investors to do their own analysis and research. Reading and referencing other people's work is fine, but, one must always know his own position and do complete analysis. As in the case of people who blindly follow Warren Buffett into Goldman Sachs and General Electrics in the 2008 crisis. Taken to Task: The Cult of Warren Buffett By Aaron Task | Daily Ticker – 9 hours ago Bank of America stock jumped over 9% Thursday on news that Warren Buffett is making a $5 billion investment in the bank. But, at $7.65, the stock closed more than a $1 below its high of the session and BofA shares were falling anew Friday morning, trading as low as $7.45 before stabilizing... ....... ....... ....... Moreover, investors who've followed Buffett into investments like Goldman Sachs and GE got burned, assuming they adhered to Buffett's dictum about ...

Think Like a Turtle Trader

Dos and Don’ts for Thinking Like a Turtle 1. Trade in the present : Do not dwell on the past or try to predict the future.The former is counterproductive, and the latter is impossible. 2. Think in terms of probabilities, not prediction : Instead of trying to be right by predicting the market, focus on methods in which the probabilities are in your favor for a successful outcome over the long run. 3. Take responsibility for your own trades : Don’t blame your mistakes and failures on others, the markets, your broker, and so forth.Take responsibility for your mistakes and learn from them.

Good Investing Lessons

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