Invaluable Advice From Market Wizards :Part 1

Jay's Market Outlook : 25th May, 2006 : European markets declined yesterday, while the US indices finished with modest gains. However, Asian markets are down sharply this morning, and the global short-term trend is down again. This is likely to lead bit of recovery in Indian Markets today. But this cant be seen as another leg of move in upward direction.

Todays Learning :

Some Invaluable Advice From Market Wizards :

Good investing is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake. -Michael Steinhardt

I advise you to always use stops. I mean actually put them in, because that commits you to get out at a certain point. Another thing is that if a position doesn't feel right as soon as you put it on, don't be embarrassed to change your mind and get right out. -Michael Marcus

I think the leading cause of financial disablement is the belief that you can rely on the experts to help you. Investing requires an intense personal involvement. -Michael Marcus

Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he’s not going to take a patient’s temperature. -Bruce Kovner

In a bear market, you have to use sharp countertrend rallies to sell. -Bruce Kovner

Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount you are willing to lose. -Bruce Kovner

The most important rule of investing is to play great defense, not great offense. Every day I assume every position I have is wrong. Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead. Always maintain your sense of confidence, but keep it in check. -Paul Tudor Jones

You need discipline, patience, and courage. You must have a willingness to lose, but a strong desire to win. -Gary Biefeldt

Investing is like poker. You should only play the good hands, and drop out of the poor hands, forfeiting the ante. -Gary Biefeldt

Fundamentals that you read about are typically useless as the market has already discounted the price. -I call them "funny-mentals." However, if you catch on early, before others believe, then you might have valuable "surprise-a-mentals"” -Ed Seykota

Pride is a great banana peel—as are hope, fear, and greed. My biggest slip-ups occurred shortly after I got emotionally involved with positions. -Ed Seykota

I tend to cut bad trades as soon as possible, forget them, and then move on to new opportunities. The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you follow these three rules, you may have a chance. -Ed Seykota

I have a cousin who turned $5,000 into $100,000 in the option market. One day I asked him, “How did you do it?” He answered, “It is very easy. I buy an option and if it goes up, I stay in, but if it goes down, I don't get out until I am at least even.” I told him, "Look, I trade for a living, and I can tell you that strategy is just not going to work in the long run." In his next trade he put his money in Merrill Lynch options, only this time, it goes down, and down, and down. It wiped him out. -Larry Hite