What have we learnt in 2001?

Riz

Experienced member
1,266 5
Thought it might be interesting and helpful if we share the lessons we've learnt this year and of course those we've never learnt or stubbornly refused to learn...

Me? still trying to figure out if I've ever learnt anything :)
Will be writing mine when I finish thinking about it...looking forward to hear from others in this respect...

Riz
 

sltsang

Junior member
15 0
Me, A lot.

Hi Riz,
Don't know if this apply's to me but I have learnt a lot, started spread betting this year, gained a lot of experence from you guys in the chatrooms.
1. Get a good real time charting software.
2. Developed a good trading system.
3. Set indicators to my trading style " Scalp mode :) ".
4. Getting used to real time chart candle movements, watching for patterns ect.
5. Could class as number 2 but I feel it is very important, apply a stop loss !!!, easy said than done I know, lost a lot not having a stop loss in the past :-(.
For next year I will carry on as normal but making sure I stick to my stop loss's.

Happy Trading All.
 

Riz

Experienced member
1,266 5
Well thanks, sai..at least you've learnt..looks like others like me havent learnt anything :)

That was a joke...

I think what I've not learnt but maybe enhanced most is applying stop losses and running profits more vigorously, mind you that helped me a lot to get through 2001, the toughest year...

One more thing, shares are neither good enough to love nor bad enough to hate...love them when they move in the direction you've anticipated, dump them when they dont do so...that's of course for short term trading, gave up long term at the beginning of this year...keeping in mind we'll all be dead in the long term :)

This 2 for now, we'll be adding more...

Rizz
 

RogerM

Established member
752 6
I think the most important lessons that I re-learned this year were :-

1. to think for myself and not to act on share tips from others

2. that you can make good money from seriously boring companies. e.g. Barclays, BAT, Royal Bank of Scotland - not sexy but with real earnings you can see, and a sensible rating.

3. when I got it wrong, a tight stoploss saved my skin on several occasions - e.g. selling Marconi at 372 in July!!

4. Don't buy when the price is a long way above an uptrend, and be prepared to buy when the price reverses close to an uptrend.

5. Buy close to support, and not close to resistance.

6. Tighten the stoploss when approaching strong potential resistance but be prepared to get back in if the resistance fails.

7. If you close a long when support fails, be prepared to go short rather than just treating it as a failed long position.

8. there is no "new paradigm" - earnings still matter!!

9. The difference between a share that has fallen 90% and one that has fallen 95% is that the share that has fallen 95% is one that first fell 90% and which then halved in value.

10. there are more ways to trade than I could possibly imagine
 

Sharky

Admin
5,540 288
Before I write my own personal list, heres someone elses I came across on another board:

Sharky
-----------

MARKET COMMENT
Investing Lessons of 2001

By Bruce Jackson (TMFGoogly)
December 27, 2001


It has been another tough year for stock market investors. The latest results of the poll linked to my article of Christmas Eve titled "Top Tips To Improve Your Investment Returns" indicates that 72% of voter's portfolios fell in 2001. Yikes! Here are some of the painful lessons we all leant in 2001.

1. Shares can fall 2 years in succession.

They've done it before and they will do it again. Many people, especially those who are relatively new to stock market investing and have been brought up on nothing but bull markets, thought that 2001 would be an up year for shares. Why they got that impression I'll never know. It's probably just a result of following the crowd. Although I haven't got the facts to hand, I'm guessing most pundits would also have predicted an up year for the market in 2001. How wrong they all were.

2. Technology shares can fall even further.

Many people thought the tech carnage would cease on December 31 2000. They were very wrong. Take a look at this table.

Company Name Loss in 2000 Loss in 2001


Marconi (LSE: MONI) 34% 95%
Colt Telecom (LSE: CTM) 55% 93%
Psion (LSE: PON) 47% 70%
Cable & Wireless (LSE: CW.) 14% 64%
ARM Holdings (LSE: ARM) 39% 33%

FTSE 100 index 10% 17%

Just because the above companies have fallen significantly for the past two years in a row doesn't mean they can't fall again in 2002. I'm not predicting they'll move one way of the other, but you should at least learn your lesson. There are no certainties in investing. You can put the odds in your favour, by doing things like buying cheap shares, and investing in companies with little or no debt, but nothing is guaranteed.


3. Fallen stars can bounce back.


The following table says it all.

Company Name Gain in 2001

Arcadia (LSE: AG.) 218%
Marks & Spencer (LSE: MKS) 94%
PizzaExpress (LSE: PIZ) 37%
Rentokil Initial (LSE: RTO) 21%

FTSE 100 index 17%

A dog can have its day - again. But beware! Not every dog bounces back. I refer you to the sorry table of technology companies above. Want one more sad case? Baltimore (LSE: BLM) is down 96% in 2001. Not nice.


4. There are no certainties in the stock market.


Need I say more than Independent Insurance and Railtrack? I now posses a useless share certificate in the former company. This point could also be headed "When it looks too good to be true, it usually is". Independent Insurance's reported profits were head and shoulders above industry standards. That's because those profits were illusionary, too good to be true. I should have known better. I will next time.


5. Debt can be very bad for your wealth.


The number of companies who are struggling under massive debt burdens is astounding. The simple lesson - avoid them.


6. The dividend is not dead.


With the market falling, those dividend cheques at least help ease part of the pain. But there's more to dividends than just the cheques. They can help put a floor under a company's share price. In the face of falling profits, companies are generally loathe to cut their dividend unless they really are in trouble. There are plenty of quite respectable companies out there who have little debt and dividend yields of 4% or greater who deserve your attention.

Conclusion

These are the main lessons of 2001. However, the lessons are generic, and can and should be applied to any year. Experience, discipline and patience are the keys to long term investing success.

The author holds shares in PizzaExpress. He is going to frame his useless Independent Insurance certificates as a permanent reminder of how stupid and gullible he was. Lesson leant!
 

madasafish

Well-known member
470 5
The lessons for 2001?

ALMOST ALL the professionals got 2001 VERY wrong .. I seem to recall a forecast from G Sucks of 1500 for S&P500. for Dec 2001..hmmm

Never fall in love with shares.

Tipsters are a waste of time.

Accounting arguments /fudges etc are really bad news - Cedar, Wiggins, Indpendent Insurance etc. As a former accountant I run when I hear of these things.

Above all, if you invest long term and do not understand Balance Sheets, don't bother.


Chartists rule OK.. the "efficient market" hypothesis is just that: a hypothesis.

Newspapers columnists are always right: after the event!
 

Naz

Experienced member
1,391 22
The best thing i've learnt in 2001 has been the psychology of the market,the players,the public,commentators,analysists, etc,etc.

Next has been the continuing use of a log to analiyze difficult trades to reflect on at a later date.

Re reading important sections in various books and private notes has also helped.

Looking at different trading concepts and styles in order to see if there is just one single thing that might give that extra edge.

Continuing to anticipate and manage trades, always looking behind that which looks obvious.

Keeping an open mind.
 
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