Stock Market Wisdom

Simon Gordon

Active member
Fund Managers follow fashions - hug benchmarks.

Fund Managers also underperform because they invest in too many shares.

They now market the FOCUS fund which has fifty stocks in it - unf******believable.

How can one know, indepth, so many stocks and not to forget the transaction costs.

It is the whole system that is screwed.

Occasionally you get a Maverick who does very well.

The academic research in the book clearly shows a Contrarian approach is very profitable.
 
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dbphoenix

Legendary member
The briefer the aphorism, the more likely it is to be so laden with invisible qualifications that it becomes useless. Note, for example, that the book was published in 1998. If one had jumped into stocks that had fallen 50% in 2000 and 2001, he would have found himself in a great deal of trouble.

Yes, stocks that have been pummeled CAN be great buys IF there is a solid fundamental component. But expecting to profit from anything at all simply because it's down, as the aphorism implies, is hopeful, to say the least.

You may also want to look at Neil's book on contrarianism.
 

Simon Gordon

Active member
Your encounters with the marketplace can be exhausting, both mentally and physically. To remain on top of things, you should regularly take time off, get away, or "vacate." Discovering how to rest and refresh your financial mindset in the midst of the clutter of the modern marketplace is more difficult than it may seem.

From: The Psychology of Smart Investing
 

Simon Gordon

Active member
'For an astute investor, the worst situation is an "efficient market," in which all information is known and understood by all players and in which prices reflect the information. Not to worry - none of us will ever see that.'

From: The Mind of Wall Street by Leon Levy.
 

Simon Gordon

Active member
Research gives you the knowledge you need to form opinions.

Contrarians can never spend enough time looking at risk. Since risk can't be eliminated if higher returns are sought, minimizing the effects of risk becomes central to successful investing.

If you're in love with a stock, try making the bear case for it.

Investors should be able to recognise the risk of an investment as easily as the potential return. If they can't, they should not make the investment.

Cash flow is raw power. Cash flow is king.

There are more fools among buyers than among sellers.

Many times, a perfectly good company or reasonably healthy industry sector will become "oversold."

Succeeding as a contrarian demands discipline, requiring us to seek opportunities not being trumpeted by the crowd.

Research shows that people selectively read newspapers and magazines or watch TV, looking for those commentators or programs that reinforce attitudes they already hold - and shun those that might change their opinion.

Each of us is a cauldron of fears and anxieties. So we find comfort when we're in agreement with others.

The essence of contrarian investing is buying when others won't.

Contrarians buy on bad news, and sell on good news.

From: Contrarian Investing by A.M. Gallea
 

wobbles

Junior member
Here's two more quotes for the pot!

Keynes - The market can remain irrational much longer than the rational investor can remain solvent.

Warren Buffett: "It's only when the tide goes out that you learn who's been swimming naked."
 

Simon Gordon

Active member
Stocks are a voting mechanism, pure and simple. They are a collective vote of expectations of each company's future fundamentals. If investors think business will improve, that earnings estimates rise, then the stock is going up. If investors think the end is near, a company is about to roll over, a stock will go down. It doesn't mean that those fundamentals ever happen.

From: Running Money by Andy Kessler
 

Simon Gordon

Active member
‘It is an immutable law in business that words are words, explanations are
explanations, promises are promises – but only performance is reality.’

Harold Geneen, US entrepreneur
 

neil

Legendary member
Safety

:idea: If at first you don't succeed, open a building society savings account. ( Anon )
 

Anonymous

Established member
Wise men say: "Only fools rush in." The stock market is no place to make money.

A miracle is a miracle but fools believe it's a temporary divergence. And idiots think that's risk-free?

Smart Alec, the one many believe, tells you you can "Make money in your sleep (or dreams) by cutting profit and ride the losses.

"Run! Run! Run away from the stock market!" say the wise ones, "There is no such skill that can let you make a living from the stock market like selling bolts and nuts."
 

Simon Gordon

Active member
The more I learned about the market, the more I saw it was really about psychology. In fact, psychology is probably the best major for this business.
Susan Suvall

From: The Market Masters by Kirk Kazanjian
 

Simon Gordon

Active member
Trading is not about buying into companies. Trading is about making money.

One of the biggest mistakes most investors make is believeing they've always got to be doing something....the trick in investing is not to lose money....the losses will kill you. They ruin your compounding rate; and compounding is the magic of investing.

The more you learn about the markets and yourself, the more confident you become. The more confident you become, the more effective you are as a trader.

Trends become more apparent as you step further away from the chart.

Longevity in this business - I have seen it again and again - is measured by discipline.

The harsh reality of the markets is that, if you are a trader or investor, ultimately, you have only yourself to blame for the decisions you make with regard to your money. You can make losing decisions or winning decisions. It's your choice.

The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will.

Risk no more than you can afford to lose, and also risk enough so that a win is meaningful.

From: Trend Following by Michael Covel
 

Simon Gordon

Active member
If you are unsure about position, just get out.

I have to believe a trade has at least a 75 per cent chance of being right or else I won't put it on.

You need to select a market that fits your personality because a market is a reflection of the people who trade it.

It is not return that matters but rather return relative to risk.

We can't control when acceptable opportunities appear, but we can certainly try to preserve our capital until those opportunities arrive.

Different market participants will do research of varying quality. The market price will reflect the average assessment of all investors. If you can do research that most other people do not, you might be able to discover something that most of the rest of the market doesn't know and benefit from that knowledge. There are a lot of things that I know about my companies that most other investors don't. Therefore, my evaluation of these companies is not going to be the same as theirs. Why then should a stock always trade at the right price level?

You have to be very decisive, extremely disciplined, relatively smart, and above all, totally independent.

One characteristic that I have repeatedly noticed in winning traders - and that is probably true of winners in any field - is that they are extremely confident.

If his system tells him to liquidate, he's out - no questions, no second-guessing, no qualifications.

The essence of discipline is that there are no exceptions.

The more variables you have, the greater the number of statistical artifacts that you're likely to find, and the more difficult it will generally be to tell whether a pattern you uncover actually has any predictive value.

Promising the result commits you to doing it and leaves you no alternative but to do it if you are going to live by your word. Letting others know that you have set a goal and are committed to achieving it makes it more likely you will acieve that goal, whether it is in the realm of athletics, trading, or something else.

From: Stock Market Wizards by Jack D. Schwager
 
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