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VWAP (Volume Weighted Average Price)
A measure of the price at which the majority of a given day's trading in a given security took place. Calculated by taking the weighted average of the prices of each trade.
This can be a fine trading strategy: catching the adjustments with VWAP.
handbelleditor: here's a good place to start.
http://stockcharts.com/help/doku.php?id=chart_school
I also suggest not merely studying stocks, but commodities also. The best plays in commodities come from breakouts of "channels." This also happens in stocks, but most TA players don't weigh the high value of a channel breakout.
Thanks for the reply...I may have to learn more about charts...
Have a good day...
handbelleditor: my entry and exit points are based on the charts. There's an adjustment to the exit point. Make it slightly lower than the charting point. My experience taught me not to be too cute, especially with penny stocks. Also, if I see saturation points coming, then I may exit earlier than planned.
I don't aim for a percentage. Any trade over five percent is a great trade. Pigs get fat, but hogs get slaughtered.
Nice board...a question: When you enter a trade do you always aim to make the same percentage increase? Do you plan to make 5% or 10% or does it vary with each trade. How do you determine where you plan to exit?
Thought I'd start with an easy question
Like your board and your # Numbered posts about investing. Well spoken.
Interesting resource: http://www.beearly.com/
There can never be enough stress to remove one's emotions from playing the market. This may sound easier said than done. Still the ability to quickly cut one's losses is the most vital trading skill that I know of. Whenever I have violated this principle, it has come back to bite my gluteus to the maximus.
Something For All of Us to Think About.........
By: stoneranger0
04 Dec 2006, 12:33 PM EST
Msg. 9426 of 9427
Jump to msg. #
Monday, December 04, 2006
Three Relentless Steps You Can Take Now Toward Becoming A Better Trader
One of the goals of my book Enhancing Trader Performance was to figure out what makes successful performers tick--in any field of endeavor. What I learned in researching the field was that talent--inborn abilities--are necessary for success, but not sufficient. It's how people channel their talents by structuring their learning processes (i.e., their building of skills) that ultimately determines whether or not they become elite performers. Here are three straightforward ways you can structure your learning to make the most of your talents:
1) Keep score. Relentlessly. When Lance Armstrong's performance team works with him, no aspect of performance is ignored. They measure his stance in the bike to minimize wind resistance; they measure his pedaling frequency to maximize his speed and minimize his effort; and they tweak the design of the bike to achieve every possible edge. His cycling performance may be art, but behind it is plenty of science. So it is in other performance domains, from NASCAR to chess to ballet: the greats study what they do to constantly improve. Take a look at the performance metrics that professional traders collect to figure out their strengths and weaknesses. They figure out how they perform in rising, falling, and flat markets; they evaluate their performance as a function of being long or short and as a function of time of day. Keeping score builds the motivation to continuously improve, but it also tells you which improvements to make. Track every trade you make: How much did it go against you while you were in the trade? How much did it go your way after you exited? How could you have recognized that it was a winner (so that you could have scaled in with more size) or a loser (so that you could have exited with minimal loss)? The really great performers make themselves a subject of study.
2) Study the market. Relentlessly. There's a reason why the great basketball and football coaches review game tapes obsessively with their teams. There's also a reason why chess grandmasters play and replay games from past tournaments. So much of performance--especially in trading--boils down to pattern recognition, and so much of pattern recognition boils down to multiple, high-quality exposures to the marketplace. A program that I use called Market Delta breaks down trades by their size and by whether they were transacted at the market bid or offer. That way, we can see if large traders are leaning to the buy or sell side. A replay feature in the program enables us to review each market day and see how the buying or selling unfolded. This provides us with many more of those high-quality market exposures than we could ever hope to get from simple live trading. In my book, I mention a learning technique used by many of the most successful traders I've known: they videotape their trading and then review the tapes after the close. It's a great way to review what the markets did--and how you responded. After a while, the patterns jump out at you.
3) Read. Relentlessly. Particularly for the independent trader, trading can be an extremely isolating activity. It's easy to get locked in your own head, your own ideas. If you look at the life histories of expert performers in various fields, you find that most of them have not been isolated. They have had mentors at various points in their careers to help them learn and grow. How can you pick the brains of the world's greatest traders and investors? Books and blogs offer one important avenue. True, there are many fluff books and self-absorbed blogs, but there are a few written by the pros that are worth their weight in gold. Right now, I'm reading Inside the House of Money by Steven Drobny. It's a wonderful collection of interviews that gets inside the heads of global macro traders. I'm also reading Ken Fisher's new text, The Only Three Questions That Count. He explodes a number of market myths and models a way of thinking about markets that has led him to consistent success as a money manager. Take a look at blogs written by Barry Ritholtz and Bill Cara; read the extensive Q&A sessions posted by Charles Kirk in his Members section. You may not agree with all their conclusions, but you'll learn how they think about markets. That is mentorship-by-observation.
It takes a relentless pursuit of excellence to become excellent: that is what I learned from my performance research. You can only sustain such a pursuit if you truly love what you're doing; if it captivates your very being. If you're not relentless in your pursuit of trading success, perhaps it's not that you need discipline or motivation. Perhaps trading is not the domain in which you were meant to excel. What my daughter Devon taught me is that somehow, somewhere there is a kind of productive activity you were meant to do. And when you find it, you will be relentless, because you want to be doing nothing else.
posted by Brett Steenbarger, Ph.D.
The jury is still out on this, however it could be of quite a bit of help for new and small traders.
http://www.zecco.com/Default.aspx
Would you buy this book, used? http://www.amazon.com/CBS-Marketwatch-Stories-Behind-Numbers/dp/0028642619
hey eagle..idcc sure came out ahead..
Great info Eagle. I appreciate it.
spintex: when one goes in with a trade mentality, then severe DD is not an issue. Still, one needs to know the share structure. If one gets a speedy reply from the transfer agent, fine, but the latest SEC filings should suffice for trading. The accumulation/distribution chart is quite helpful, along with Williams% and Bollinger Bands. One does not need to analyze them in great depth, but certainly use them as a check off. Also, be up on the news.
Start off with ten or less stocks on a watch list and/or streamer. The others can go on a minor league watch system. As a trader, one wants movement. Forget trying to hit bottoms; let them happen by default.
One on the watch list just had a string of buys with the bid and ask going up: that's decision time. It's quite common to increase one's portfolio value 5-20% intraday on a play like that, IF one will take the profits ruthlessly. No one has ever lost money from a winning trade. Compare this thinking to a baseball team that seldom hits home runs, but scratches out a lot of walks and singles and even some doubles. They will win a lot of games.
If a trade goes against the plan, be ready to cut any potential losses. By cutting losses quickly, one will find that a good single will still cover five quick cuts. With experience the percentages get better. Yet, those early good habits will serve for many years.
For trades that one might look to hold for more than a week, then an exit point is in order. As these type of trades go up in share price start putting in stops, even if only mental.
Eagle
If you have any valuable info or advice for trading issues 1.00-4.99 please feel free to post it here so as a newbie I can take advantage of your experience. Thanks a lot. you are good at what you do.keep it up.
Just wanted you to know that your posts are very educative, so please keep them coming.
Beware the Nano Lawyers
By Jack Uldrich
August 8, 2006
Through 2005, the number of nanotechnology patents issued increased to a total of almost 5,000 -- up from 1,300 just five years earlier. Surprisingly, the number of nanotechnology-related lawsuits did not keep pace. Three recent events, however, suggest that the dam might be about to burst. If they're not careful, investors could get caught in the deluge.
There's a simple explanation for why nanotech's lawsuit-free days are coming to an end: The technology is now making companies real money. From a business perspective, it now makes sense for the holders of certain nanotech patents to send in their army of lawyers, because they might be able to encourage would-be competitors to either agree to potentially lucrative licensing agreements or, alternatively, force them out of a promising market.
Big markets at stake
Last week, I wrote about NVE's (Nasdaq: NVEC) recent price run-up, suggesting that it could be attributed to the company's technology being employed in a new hearing-aid device. While this explanation still holds water, an equally plausible explanation could be found in recent comments made by NVE's CEO, Dan Baker, who suggested in a recent press conference that he felt that Freescale Semiconductor's (Nasdaq: FSL) new MRAM device had "come within the scope of claims in a number of NVE's patents." (MRAM is similar to flash memory, but it holds on to its data even when the device is off. MRAM's advent suggests that "always on" computers are a distinct possibility in the not-so-distant future.)
For NVE, it only makes economic sense to contemplate a lawsuit because the market for MRAM has been estimated to be as high as $50 billion. Even a small slice of such a sizeable market could result in a big payoff for NVE and its investors.
A similar story is now playing out between Elan (NYSE: ELN) and Abraxis Biosciences (Nasdaq: ABBI) over a proprietary nanoparticle technology that has led to $134 million in sales of Abraxane, Abraxis' breast-cancer treatment.
The tip of the iceberg...
Elan's lawsuit and NVE's potential lawsuit are only the tip of the proverbial iceberg. Last Friday, Tokyo-based NEC, whose researcher Sumio Iijima discovered carbon nanotubes back in 1991, announced that it had come to terms on a patenting licensing agreement with SouthWest Nanotechnologies, a private manufacturer of carbon nanotubes.
The deal makes good on NEC's announcement in 2005 that it would aggressively enforce its carbon nanotube patents. This is important, because scores of companies, including IBM (NYSE: IBM), have also filed patents on carbon nanotubes -- and these patents cover everything from single-walled and multiwalled nanotubes to using carbon nanotubes as drug-delivery devices.
Sorting out these competing patents claims will be no easy task, because of two related factors: overlapping and overly broad patents.
Both problems have been exacerbated by a serious shortage of patent examiners trained in the nanosciences at the United States Patent and Trade Office (USPTO). In essence, because of the field's complexity, patents covering the same space have been issued. This lack of knowledge has also caused patent examiners to issue overly broad patents. In one of the more egregious examples, IBM was awarded a patent for single-walled nanotubes, which "Big Blue" defined as "a hollow carbon fiber having a wall consisting of a single layer of carbon atoms."
To the untrained eye, the definition might seem descriptive, but to an army of highly paid, well-trained lawyers, the definition is so vague that they and their law firms can drive a cash-filled armored car around, over, and through it.
... and the ships in its path
Because carbon nanotubes are a core material for nanotechnology and they have a bevy of applications, these overlapping and ill-defined patents could snare a number of companies -- and their investors -- in numerous costly lawsuits.
For instance, IBM is well down the road in employing carbon nanotubes in next-generation transistors. Motorola (NYSE: MOT) is employing carbon nanotubes to construct flat-panel displays. Plug Power is experimenting with them to improve the effectiveness of fuel-cell membranes, and DuPont and others intend to use them in a variety of coatings. Carbon nanotubes are so useful, in fact, that they're being used for applications as broad as water desalination, bike frames, and NASA space craft.
The problem, however, transcends these nanotubes. Invitrogen (Nasdaq: IVTN) is using quantum dots for diagnostic applications, BASF (NYSE: BF) is utilizing new nanomaterials, and SurroMed is experimenting with nanoparticles as imaging agents. A number of other patents have also been filed in the areas of dendrimers, fullerenes, aerogels, and nanowires. (Don't worry, there won't be a quiz on this.)
As soon as any of these applications begin making money, some company will inevitably claim that its intellectual property has been infringed. These claims may or may not be valid, but because the stakes will be so high, there is often little downside to the filer of the lawsuit.
This unfortunate reality will only grow more pronounced in the years ahead. In addition to the money at stake, according to leading nanotechnology research firm Lux Research, there is a growing bottleneck of nanotechnology patents pending at the USPTO. It now takes nearly four years between the average filing and issuance of a nanotech patent. As these patents work their way out of the system, more lawsuits are likely.
What should individual investors do?
First, investors must recognize that the legal playing field is not equal. Smaller companies such as NVE may be at a competitive disadvantage against their larger competitors. They often lack the financial resources and the time to compete against bigger firms' deep pockets. The larger companies, because of their diversity, can easily survive as the lawsuits drag out for years. Smaller companies may find their resources dwindling far more quickly.
One potential strategy is for smaller companies to partner with larger companies, as Dendritic Nanotechnologies has with Dow Chemical (NYSE: DOW) in the field of dendrimers.
I'd also encourage investors to consider the strength of a company's intellectual property (IP) portfolio. This can be a time-consuming task, but investors can make some educated guesses. For instance, because of its resources and its rich history, IBM's IP portfolio should be relatively strong.
Similarly, it's worth considering which companies are making strategic moves to bolster their IP positions. Last year, Invitrogen acquired Quantum Dot Corporation and all of its IP; while Arrowhead Research (Nasdaq: ARWR) has publicly stated that a large part of its business plan is to acquire the most promising IP coming out of universities around the country.
Be careful out there
Lawsuits are a reality, and sometimes bad lawsuits hurt good people. The field of nanotechnology will begin experiencing increasing numbers of players, and the best thing you can do is keep your eyes open to the possibility of costly legal wrangling -- and stay away from smaller companies hanging out in overcrowded neighborhoods where the big boys are playing.
Fool contributor Jack Uldrich is the author of two books on nanotechnology, including Investing in Nanotechnology: Think Small, Win Big. He owns stock in Elan, Freescale, and IBM. Dow Chemical is a Motley Fool Income Investor pick. The Fool has a disclosure policy.
http://www.fool.com/news/commentary/2006/commentary06080817.htm
The greatest problem of stock specific boards for gathering truth is a factor of groupthink. Robert B. Cialdini pointed out five key factors of influence. One of them is "liking." People like people that are like them and do things like them. They don't like mavericks. Then people want to be liked by others. Now, this may be obvious, but it is rooted by unsuccessful people NOT being able to deal with criticism. Hey, no one likes to be criticized. However, the way that successful folks deal with it is on the other end of the spectrum of the losers.
Thus, the saying: don't confuse me with the truth. Jesus said that people hate the truth because their own deeds are evil.
Therefore, to step out and post truth, different than the accepted board groupthink, will automatically result in being the recipient of hate posts.
Thanks a lot for the info and advice.
spintex: here's an IHub board run by some folks with their heads screwed on okay. They'll do some good birddogging for you. http://www.investorshub.com/boards/board.asp?board_id=3251
spintex: most subpennies end up being on the grey and pinks. If one lacks the 25K to more easily trade, the cost of trading them cuts into potential profits, as one must be ready to cut losses quickly. I recommend building your pot on issues between 1.00 and 4.99.
Let me give you an example. OTD is on my short watch list. It just filled the last unfilled gap today. I'm ready to pull the trigger any moment. It could still go lower, but this is what I have been waiting for in this stock. The trade could turn against me. In that case, I have to, unemotionally, take my quick loss. Most brokerage accounts will charge a little extra commission for it being under a buck. No real biggie, but you will want to start with good money management habits. I say this, because it is at .95 right now. I see little downside, from here, given my DD on the entity. There's both a decent short-term upside and a reasonably strong intermediate and long-term forecast. I'm only trading, but I still try to eliminate most of the risks.
Look at this link: http://stockcharts.com/education/IndicatorAnalysis/indic_AccumDistLine.html Accumulation/distribution and Williams% and Bollinger Bands are my key guides for charting pennies. Also remember that if the share structure has recently changed, you have to start from the change. Many sites like Bigcharts (http://bigcharts.marketwatch.com), let you have some pretty useful charts that you can customize to your own desires, for free.
For now I am interested in trading sub-pennies, I understand they are very risky but can also make some good money. I will therefore appreciate it if you can post any helpful links here for trading pennies.charts etc. Thanks
spinex: you are quite welcome. If you do not have a lot of money to play with, then focus on one entity at a time. This is not to negate a good watch list. If you are not familiar with screeners, here's a pretty decent tool: http://www2.barchart.com/sigtop.asp
Thanks eaglesurvivor for your insightful response. I am new to trading and will take advantage of all the info here to acquire the necessary skills needed to make profits in trading.
A question was asked about how and why prices fall and rise in its relationship to volume. Interestingly, it is not pure market, as in both directions, volume does not directly effect price. Volume causes liquidity and tighter spreads, which in turn, induces better volume. A good example of this would be in an entity which I hold, CTT, an AMEX issue and dictated by a specialist. http://www.amex.com/?href=/atamex/aboutAmex/mktStructure/at_mktStructure.html
Even though the specialist has all trades in front of him, orders come in from different markets and some are merely bluffs. Thus any activity in mainly one direction will cause the price to go that way rather sharply. This is less pronounced with MMs (such as on the OTCBB). Share structure is another factor. A low floater, like CTT moves on almost any trade. Entities, with several billion shares, need a lot to move it.
yes eagle..
an interesting exercise..
just as in the medical or legal fields..
a professional practice, experts as you will..
some just practice thier trade better than others..
Thanks eaglesurvivor..
Eagle1,
A potentially fun exercise, months from now, comparing the market to these experts. http://articles.moneycentral.msn.com/Investing/CNBC/Dispatch/060703scouter.aspx?GT1=8380
thought this was a good one..
warren buffett's wisdom on investing, on markets, and on life..
Highlights from the 2006 Berkshire Hathaway Annual Meeting
by Kaushal B. Majmudar, CFA
Every May, thousands made a pilgrimage to Omaha, Nebraska in America's heartland to attend a meeting that is unique in global business. On Saturday May 6, 2006 this year, Berkshire Hathaway's Chairman and CEO Warren E. Buffett (the second richest man in the world after Bill Gates of Microsoft) and Vice-Chairman Charles T. Munger (his long-time friend and partner) welcomed 24,000 devotees to the Quest Center in downtown Omaha for an event that has been dubbed a "Woodstock for Capitalists."
Attending the Berkshire annual meeting is a transformational experience - those who attend receive priceless lessons in business, investing, and life. Long time shareholders have also profited handsomely a share of Berkshire Hathaway could have been purchased for $70 per share in 1971 and now sells for over $90000 a compound return of more than 23% per year (With characteristic cautiousness, Buffett warns attendees each year that Berkshire's current size virtually guarantees that future price appreciation will not approach the levels of the past).
The meeting attracts attendees from all 50 states and around the world. More than 500 of the attendees this year flew to Omaha from India, Australia, Europe, and other parts of Asia to attend. There were captains of industry in attendance, including Bill Gates (who sits on Berkshire Hathaway's board of directors) and Bob Iger (the CEO of the Walt Disney Company) in attendance. Many of the CEOs and managers of the Berkshire family of companies also attended, including Chuck Higgins of See's Candies, who has turned over the reins at See's to a successor.
The Berkshire meeting is both a social and an educational gathering. Most participants arrive prior to the meeting. While a number of professional investors and investment firms, including The Ridgewood Group, were represented in the audience, the most meaningful participation comes from the tens of thousands of "ordinary" fans who come to ask questions and learn from Buffett and Munger's generous insights and wisdom delivered with their trademark candor and humor.
Most participants arrive the day before, so on the Friday prior to the annual meeting, participants get acclimated to their new surroundings and renew their ties with past attendees and friends. On Saturday morning, the official meeting starts with a humorous hour-long movie and this year's movie did not disappoint. In addition to Buffett and Munger (as well as animated renditions of the duo), the movie included cameo appearances by celebrities and friends like Tiger Woods (with Warren Buffett as his caddy), Bono (the musician and activist during a photo shoot with Bill and Melinda Gates), Jimmy Buffett (the singer who is apparently a distant cousin of Warren's and was an early investor in Berkshire Hathaway stock), Jamie Lee Curtis (the actress playing a skit with Warren and Charlie), Governor Arnold Schwazenneger, Bill Gates (playing himself), and the cast of the Desperate Housewives (Disney's hit Sunday night show).
After the lighthearted movie, Buffett and Munger (who sit on a dais at the front of the arena) field questions from the audience for almost five hours (with a one hour lunch break in between the morning and afternoon). There is no restriction on the subject matter of the questions, so Buffett and Munger display intellectual breadth as they respond to inquiries in fields as wide ranging as terrorism, social security, the financial performance of Berkshire or one or more of its subsidiaries, and advice for students and aspiring investors. Although Buffett just celebrated his 75 birthday, he appeared to be in great health and displayed tremendous energy and mental acuity as he fielded questions with wit and humility.
Some of the highlights of Buffett and Munger's comments on a variety of subjects are included below (Note: The highlights below are personal and subjective recollections of what was said, rather than word for word transcriptions. For this article, we have focused mainly on the more interesting investment or philosophical observations from the meeting. For a more comprehensive account of what was said and transcripts, visit www.valueinvesting.info):
Munger: It is a wise policy to trumpet your failures and to stay quiet about your successes (in response to a question about commodities, Warren admitted that he had made the mistake of buying a large stake in silver too early and then selling it too early if they still had the stake, they would have made many billions more on the investment)
Buffet: My desk has three boxes (ed. note: metaphorically speaking), IN, OUT, and TOO HARD. We put a lot of stuff in the TOO HARD basket. It is important to know and stick to your circles of competence and pass on things that don't fit squarely in your areas of expertise (later when a questioner asked about what they thought could be done to improve and fix some of the problems in the $2 trillion health care industry, Munger quipped that that one was definitely in the TOO HARD category).
Buffet: More than half the companies in America have executive compensation schemes that are grossly unfair to the owners in part because of management overreaching and in part because so many companies now rely on outside "compensation consultants" to set the incentives without proper oversight and accountability by the board of directors. A good compensation scheme should be long-term performance oriented and directly tied to the factors that the managers control (he gave the example that in an oil or energy company, a properly designed compensation system should not pay managers a lot more today because they are earning record profits based on oil prices hitting new highs a factor that has little to do with management's actions but should rather be tied to a long-term metric such as the company's recent average finding costs of oil a variable that is likely to more reflective of management's skill and performance and one that if low will also create significant value to shareholders in the long-term).
Buffet: The worst of the seven deadly sins must be ENVY, because it makes the person committing the sin suffer more than anyone else (there was much laughter when he quipped that at least GLUTTONY, which he could fault himself with at times, and possibly LUST had some upsides for the sinner).
Buffet: We don't participate in situations where businesses are being auctioned off to the highest bidder because we like to hear from people who care so much about their businesses that they consider it too important to be auctioned off. I can't recall ever buying a business at an auction. People who won't sell their business like it is a piece of meat and those who care deeply about the home in which their business ends up are the types of people that Berkshire wants to have as partners because it says that they care about their business and their customers and employees. Also, when companies are being auctioned, the investment bankers typically prepare projections that are just plain silly. I'd love to have a bet with the investment bankers running most auctions that the company won't achieve the projections they are selling and I think that would be a good bet most of the time. The calls we get (and like to get) are from people who care about their business and who for tax or family reasons want to sell to us. They want liquidity and a change in ownership structure, but not a change in the operating personality or culture of the company.
Munger: Warren asked an investment banker how they made money and he replied "Off the top, bottom, the sides and the middle" (laughter)
Buffet: In preparing our annual report, we strive to tell people what we would want to know if our positions were reversed. I try to tell you everything I would want to know if I had 100% of my net worth in the stock and try not to leave out anything. Also, we try to explain it the way we think about it. The annual report is the report I would be making to Charlie (or he would make to me), if one of us was running the business and the other was inactive.
Buffet: We succeed by evaluating businesses where we have confidence in making a judgment about how the business will look (generally like it does today) in five years, i.e. businesses where the fundamentals won't really change much. As Tom Watson (of IBM) observed, "I'm no genius, but I am smart in spots and I stay around those spots." Our managers and Charlie and I employ this approach as well.
Munger: Someone once remarked to me that "You don't seem smart enough to be so good at what you're doing." My explanation was that we know the edge of our competency better than most and that this is a very useful thing. It's not a competency if you don't know the edge of it.
Buffet: If we were starting out today with an investment partnership like the one we started with 50 years ago, we would be investing in securities around the world and buying the stocks of smaller companies. We wouldn't be buying entire businesses because we would have no reputation and only $1 million. Charlie [Munger] started out in real estate development with only a little capital because with application of brain power and energy, you would magnify the returns in real estate unlike in other sectors. I'd just build it up one foot in front of the other over time. If I had been running a little partnership 3 years ago, I would have been 100% in Korea [Because of the low single digit PE ratios at the time on otherwise decent companies as a result of macro problems/fears].
Munger: When making investments, you start by finding one really good thing to invest in and then compare everything else with that benchmark because that is your opportunity cost. This is a concept that is learned in basic economics that has not made its way into modern portfolio theory one of the obvious flaws in the theory. I'm not sure that Warren would have actually put 100% of his fund in Korea, but something close to it. You won't usually find a lot of great things to invest in, so you should look for a few things much better than anything else, and then act on those.
Buffet: It is important in investing to focus on what is IMPORTANT and KNOWABLE. There are many things that are IMPORTANT and UNKNOWABLE and you obviously can't focus on those. If the market does something silly it gives you a chance to take advantage of it, if not just go play bridge and come back the next day. The key (from Ben Graham) is that the market basically just sets prices so it exist to SERVE you, NOT instruct you
Buffet: You don't have to have a high IQ or be very smart in investing to take advantage of the occasional great opportunities that the market presents to you. But you do have to have the courage of your convictions and the willingness to act when everyone else is TERRIFIED and PARALYZED. The lesson is to strive to follow LOGIC rather than EMOTION some people can do this and others can't. When the opportunities do arise, you have to make sure that you can play out your hand under all conceivable circumstances, if you can and you have the right facts and you let the market serve you (not instruct you), you probably can't miss.
Buffet: The recent swing in property values has been huge in some markets. In our residential brokerage business, we are seeing a slowdown in almost every market, but most dramatically in the formerly hottest markets. High end properties where there were a lot of people buying for investment and for speculation are doing the worst. When you have someone living in a house as their primary residence, they are likely to stay there and continue making mortgage payments, even if the market price of the house falls, but when investors and speculators are holding a property effectively day traders in real estate then you can see big downward moves when it starts to correct. First, the buying and selling stops. In Miami and surrounding areas, about a year or so ago, there were 3000 condos listed and about 3000 transactions each month. Now, there are 30,000 condo's listed and only 2,000 per month are selling. The supply and demand equation has changed. We've had a really bubble in housing and I would be surprised if there weren't some significant downward adjustments, especially in the high end of the housing market.
Buffet: Related to the commodities markets today, I have observed that trends in investing and in markets often start out with some fundamental merit such as a legitimate supply and demand imbalance, but that there is usually a point at which speculators take over and begin to dominate the price movements. Speculation usually takes over once the positive price history and upward movement start to become clearer and establish a long enough history which attracts a much wider following. Certain commodity markets like copper and silver might be in such a speculative phase today. If you play during these times (which most people do), you are playing with fire and risking disaster when the party ends. My general advice would be to stay away because "What the wise man does in the beginning, the fool does in the end."
http://www.investorshub.com/boards/read_msg.asp?message_id=11232557
nice board eagle
great idea!
Let's clear some of the air about MMs. Part 2
A MM must sell short to make market, when they have no shares in inventory or don't have a matched seller. The problem with "naked shorting," is not so much the MMs themselves, as they are often required by regs to do so.
http://www.investrend.com/articles/frame.asp?sUrl=/link_redirect.asp?Url=http://www.sec.gov/spotligh...
The real problem with naked shorting is the lack of resolution via the DTC. If the DTC and especially the SEC did their duties, there wouldn't be a problem.
Let's clear some of the air about MMs. Part 1
Market Maker
A "market maker" is a firm that stands ready to buy and sell a particular stock on a regular and continuous basis at a publicly quoted price. You'll most often hear about market makers in the context of the Nasdaq or other "over the counter" (OTC) markets. Market makers that stand ready to buy and sell stocks listed on an exchange, such as the New York Stock Exchange, are called "third market makers." Many OTC stocks have more than one market-maker.
Market-makers generally must be ready to buy and sell at least 100 shares of a stock they make a market in. As a result, a large order from an investor may have to be filled by a number of market-makers at potentially different prices.
To learn more about the basics of trade execution, you should read Trade Execution: What Every Investor Should Know.
http://www.sec.gov/answers/mktmaker.htm
The Fundamentals of Trading Stocks - #6
Have an entry price target AND and an exit point target, BEFORE you ever hit that button. To fail to have have this plan, first, is somewhat like jumping into a vehicle, without checking the fluids and not having a map and not knowing why one NEEDS to go to a particular destination. This is a candidate for being lost. It segues into losses.
There is great trading value in being able to understand charts. They are not a panacea, but they do a 95% effective job of keeping one off of a long and winding dirt road that ends with a grizzly looking character holding a scowl and a shotgun, at the same time.
The Fundamentals of Trading Stocks - #5
Beware of the naked man that offers to give you his shirt. Message boards are replete with short-and-distort, pump-and-dump, front-end-loader, etc. operators. If claims made seem too good to be true ... well, you know the rest.
If you don't know the saga of Jonathan Lebed, then check this out: http://www.cs.brown.edu/people/rbb/risd/Lebed.html Yet, in 3 years time, he is running a stock tout site and hundreds of people are spamming it on message boards. He learned his lesson: become a more sophisticated scammer.
The Fundamentals of Trading Stocks - #4
Do your homework. This known as doing your DD (due diligence). If you are ready to trade in a stock, have you read that company's SEC reports? We call these clues. Five years from now, if Ken Lay was the CEO of a publicly-traded company, would you know? If 500 million new shares just got issued and the BOD was selling, in mass, would you know?
The Fundamentals of Trading Stocks - #3
Never play with scared money. The stock market is like a giant poker game. It picks out the patsies quite quickly. As Warren Buffet was once remarked, "If you're in a poker game for more than 15 minutes and you do not know who the patsy is, then you're it." (I'm winging this one; look it for yourself.)
Playing with scared money violates principles laid out by Abraham Maslow's Hierarchy of Needs. Playing with scared money makes one subject to the twin monsters of greed and fear.
If you can't afford to lose it; don't put it in.
The Fundamentals of Trading Stocks - #2
Be different than the crowd. Groupthink is detrimental to human beings, in all factors of life. The late Earl Nightingale pointed out how the six major decisions in a person's life was usually made for them, by that individual's peers, who were usually there by default, rather than design.
To trade stocks, one has to be smarter than the crowd. For years, I have urged folks to read The Crowd by Gustave Le Bon. One can access it on line, for free.
The Fundamentals of Trading Stocks - #1
All stocks are scams. The issuing of stocks is really not any different than the U.S. Congress, in breach of fiduciary responsibilities, according to the U.S. Constitution, abrogating their duty to coin money, in favor of handing it over to the privately owned Federal Reserve System, which issues fiat currency.
Inflation is solely and originally derived from dilution of currency. Yes, I know that it is more complicated than that and many factors come into play these days. Still this truth remains. One can argue than market forces, such as various gold rushes, produced rampant inflation. This would be a sound point, except that these examples were localized.
The printing of shares to conduct mergers, etc. is as bogus or counterfeit of an excuse, as the shares themselves. There are the rare companies, such as MSFT, that brought exponential value to its shareholders, in lieu of committing them to becoming bagholders.
Therefore, the stock is driven by what is called: The Greater Fool Theory. Thus trading of stocks requires more knowledge than, at least, several other participants. Many traders will say, "Trade them; don't marry them." This little ditty is quite helpful to remember.
Mr MT: great to see you drop in just to see what condition my condition was in. ~ smirk ~
EagleSurvivor - the graphics grab ya !
Very appropriate - and a tribute to those that deserve respect.
TRADING - not investing. And lest anybody confuse the two - I'm sure the moderator will be able to sort out their mistake quickly.
To quote a source:
"Trade originated with the start of communication in prehistoric time. Trading was the main facility of prehistoric people, who bartered goods and services from each other. Peter Watson dates the history of long-distance commerce from circa 150,000 years ago.[1]"
Has it really changed much since then ? *w*
http://en.wikipedia.org/wiki/Trade
Welcome everyone to the world of trading, which is scary and fun, at the same time. Let's share ideas and information together, please.
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