A10, Stock Trader Dude

It is the only investment guide you’ll ever need not because it will make you rich beyond any further need for money, which it won’t, but because most investment guides you don’t need. The ones that hold out the promise of riches are frauds. The ones that deal with strategies are too narrow. They tell you how you might play a particular game, but not whether to be playing the game at all. The ones that are encyclopedic, with a chapter on everything, have you where you started to begin with – surrounded by choices. Reading three good investment guides instead of one will not triple and probably not improve, your investment results. The odd thing about investing – the frustrating thing – it is not like anything else – trying hard, learning a lot, becoming intrigued – may be of little help, or work against you. With regard to investing in any cars, wines, autographs, stamps, coins, diamonds, art, in each case you are competing against experts. With stocks and real estate – at least they pay you. Things that involve a personal salesman who is full of enthusiasm at the prospect of making you rich don’t work. The author makes a comment about betting $5,000 on a number in roulette, and winning $175,000 although it wouldn’t be attractive from an investment standpoint due to the odds, his point being, stories obscure the odds.—Saving:Avoid variable life and wholelife.Rewards Network Inc. (benefits at restaurants, bars and clubs)Store brands are made on the same production line as name brands.Split pills—Chapter three:1. Tally your net worth2. Set goals3. Figure annual earnings4. First pass at reducing expenses5. Second pass6. Refine plan7. Spend $5 on a budget book8. Keep track of expenses in the budget book or use a different system9. Give yourself a break

Nothing matters – not me, not the investment, not the results, because if I don’t feel like I’m going for it all the time I feel exasperated, asphyxiated, as if I’m moving in slow-motion, underwater, too calculating – I want to experience the unexpected and find that it’s even better than I could have ever expected. There is always some risk, and I want to experience huge rewards; however, since gain and loss are linked in our minds, heavily weighted, I must take one to get the other, and find a way to love them both. If there is no big game to hunt, I can’t hear the music of life, so while it may not be practical to trade large, if I’m not working up to it, I don’t want to be practical. Losers fear almost everything, I just want to play the game better and better, to beat time, my false self, and false concerns, to do whatever it takes to lead to excessive profit. Maybe that’s trading like it’s the last week, month, year of inventory of fresh air to breathe… there’s nothing wrong with all the eggs in one basket if you are able to protect them from point A to B. I’d rather make less trips, I don’t want to think back later on and remember that I didn’t go beyond myself and heed my gut. Patience… winning and losing doesn’t exist, we carve out a limited experience of it looking for results, what matters are the decisions and we have only ourselves to fool.

Only a finite number of mistakes you can make:1.   We can sell too early2.   We can buy too late3.   We can hold too long4.   We can buy too soonResearch is not enough. We are human beings first and investors second. It goes against human nature to find some titillating information and do nothing. There’s room for all of us as long as we forge a strategy that’s consistent with whom we are. Acknowledge our limitations and make the most of what comes naturally.Bargain hunter – value investorThe Visionary – growth stocksContrarian – turnaroundsSentimentalist – enduring franchisesSkeptic – short-salesThe Trader (keep any short-term trades/short-term opportunities separate from long-term investments)The Adventurist – speculationsThe author stated that you can get surprisingly far simply by mastering the basics. What that says, in a roundabout way, is that you don’t need to know a whole lot about investments because your method of operation will determine the results, or heavily weight the results. His trading/investment record is missing, so I don’t think the author mastered the basics… like a lot of people that love to talk about stocks and investments but they can’t get their investments to provide for them. I’ll narrow down the field to what the author missed, your results are almost exclusively determined by how long you hold the stock, so that, if your objective is to buy and then sell at a higher price in the market, when you sell is of far greater importance than when you buy.

How to conquer your worst impulses and save your financial future? You probably won’t find any life-changing answers in a book that promises something substantial. But at least you don’t have to waste time reading the book. Here we go:Envy: To judge your success by the investments of others and try to keep pace, then resent when your investment falters.Vanity/Pride: You refuse to accept help because you know best.Lust: Overpowering attraction to some investments despite the facts.Avarice/Greed: Holding too long, convinced the investment will go up.Anger/Wrath: Sacrificing long-term growth for a quick hit.Gluttony: Filling up on stock with little regard for overall financial health.Sloth: Ignoring your financial future by putting off saving.It’s not particularly interesting. There is one example about a young lady in either the greed or gluttony section that keeps buying the same stock as it goes up. The stock continues to perform well over the years and she buys more, but the author warns that she shouldn’t and then mentions that even though the stock is still up as of the writing of the book he’s convinced the young lady is making a mistake. I think the author is making a mistake – buying the stock as it continually moves up means that it is showing a profit in the lady’s account, and while no one would say with a guarantee that holding it forever would be prudent – the important thing is that she’s profiting (all she has to do is protect her profit), so why should she waste time with buying stocks that are doing anything but going up?

The one characteristic most important for success in speculation is self-esteem. Perhaps the most important rule for speculators: Don’t get in over your head. Lesson: Information that seems to be completely fresh is often very stale. The book is filled with interesting bits of wisdom and told in a way that expresses an interesting life experience. According to the author: I quickly ran a $40,000 initial stake into $22 million. My technique was simple… I pyramided and added to my holdings with my profits. To give the goddess of losses her due, however, she managed to take back an additional 45 percent of my winnings, leaving me with just 5 percent of my previous high to continue on my discovery.

I wanted to find something to like about this book… but there isn’t much of anything to grab on to. At the end of the book there are five pages that discuss turtle trading, none of it is particularly interesting, and the big reveal… the turtle traders were using 20 day and 55 day moving averages to identify entry and exit points for trades. While the author does have an odd life story, none of it seems to be told in way that will add value after the book is closed.

The book doesn’t offer much in terms of useful information. A lot of pages are filler, such as basic investment guidelines and the author’s reminder to diversify. But that’s exactly what’s wrong with the premise of the book – there aren’t 100 best stocks to invest in for 2008. There aren’t 100 best stocks because there is only one best stock or a few best stocks. When you buy 100 stocks what you are saying is I don’t believe in any one of them strongly enough and I don’t believe in my research. The point of research is to narrow the field to spot the one or handful of compelling companies that will have superior performance in the marketplace. The only good point the book offers is not to invest in mutual funds due to losing 1.5 percent a year in fees. I say, the value of a good stock is limited to how much more someone else will pay… so ultimately it doesn’t matter if it is real gold or fool’s gold as long as you can sell it for more than you paid. What matters is how good your information is, and your timing, in order to focus on one outstanding investment, not 100 with mixed results of 99 that aren’t outstanding.Here is a partial listing of what the book offered:Abbott LaboratoriesAir ProductsAlcoaApache CorporationBard, C.R.Becton, DickinsonBemis CorporationBlack and DeckerBoeing CompanyBrinker InternationalCampbell SoupCanadian NationalCarnival CorpCash America InternationalCaterpillar, Inc.Chevron CorporationCintasCloroxCoachColgate-PalmoliveConocoPhillipsCostco WholesaleCVS Corporation

There’s nothing compelling about books like this. The book spends a lot of time discussing the history of China, then attempts to get the reader interested in the wonders of potential profits in Chinese stocks, but most of the book is filled with non-essential general information. I looked in the back and there is only one direct comment about how to invest… by using ETFs, FXI and EWH. Wow, so that’s all it takes to be a guru on this topic? FXI and EWH peaked in October 2007. While FXI had experienced a steady rise since January 2006, EWH has mostly floundered for eleven years under $15. I say, for those that can directly buy Hong Kong stocks, perhaps TVB would be interesting… except that it’s heading down, closing at $41.35 with the 52 week low at $40.10. I don’t want to own it if it drops, but if you limit your risk to a point and a half or less… you’ll lose a point and change. If you want to be an exceptional China investor, go there, otherwise you’re not going to effectively observe anything meaningful or manage your investments from abroad. Invest in moving overseas… there are great investments in Asia that will arise, but you’re not going to find them at home. That’s like attempting to be a part of the gold rush while staying in your living room or wildcatting for oil in your backyard. As Asia is perceived to be the next gold rush the money to be made is selling the picks and shovels to the eager gold seekers, fools, and less initiated.

Taken from an article on a 40 year-old Olympic champion swimmer: Here’s why she can…and how you can improve in your sport as well.

Assemble a compelling team

Focus on form

Perfect your technique

Build 3-D strength and an ability to generate sudden power

Learn to recover faster

It seems like it matches up with high-performance trading as well.

Rich dad’s guide to financial freedom. Every book is preaching financial freedom. When will we be free from it? This book tries to hook you but doesn’t deliver on anything compelling or out of the ordinary. The author takes a limited view of economic advancement by introducing a concept of quadrants, such as employee, self-employed, business owner, or investor… which is the best quadrant for you? Don’t waste your time with the book; there is very little worthwhile information. But if you are curious, here you are:

Part one: Differences among people in the quadrants.

Part two: About personal change. It is more about “who” you have to be instead of what you have to do.

Part three: Seven steps you can take on your path to the right side of the quadrant. One interesting thought presented is maybe you can cook a better burger than McDonald’s but can you build a better business system than McDonald’s?

The author can’t do it either… but that’s not important, the important thing to consider is that when Ray Kroc got McDonald’s going he didn’t need any guru business advice from crummy books like this or spend his time going to business seminars on creating wealth.

The book, like lots of other books will mention OPT and OPM, other people’s time and other people’s money as a key business component.

And there are those seven steps:It’s time to mind your own business

Take control of your cash flow

Know the difference between risk and risky

Decide what kind of investor you want to beSeek mentors

Make disappointment your strength

The power of faith