Invaluable Advice from Market Wizards : Part 2

Jay's Market Outlook for 26th May, 2006:

European markets are up strongly, and the US indices also finished with good gains. Asian markets are also doing well today morning, and the global short-term trend has finally turned up. This should help our stocks improve further today.

Todays Learning :

I used to try to will things to happen. My attitude was that I figured it out, therefore it can't be wrong. What is the ultimate rationalization of an investor in a losing position? "I’ll get out when I'm even." I became a winner when I was able to say, "To hell with my ego, making money is more important." -Marty Schwartz

My Marine training helps in investing. They teach you never to freeze when you are under attack. -Marty Schwartz

Generals always fight the last war. Portfolio managers always invest in the last bull market. -James B. Rogers, Jr.

I have lived through or studied hundreds, possibly even thousands, of bull and bear markets. In every bull market, whether IBM or oats, the bulls always seem to come up with reasons why it must go on, and on, and on. It’s always the same cycle. My mother calls me up and says, “Buy me XYZ stock.” I ask her, “Why?” “Because the stock has tripled.” The whole process repeats itself on the downside. -James B. Rogers, Jr.


The biggest public fallacy is that the market is always right. The market is nearly always wrong. I can assure you of that. -James B. Rogers, Jr.

Be aware of change. Buy change. You should be willing to buy or sell anything. So many people say, “I could never buy that kind of stock.” -James B. Rogers, Jr.

If you make 50% two years in a row and then lose 50% in the third year, you would actually be worse off than if you just put your money in a money market fund. Wait for something to come along that you know is right. Then take your profit, put it back in the money fund, and just wait again. You will come out way ahead of everybody else. -James B. Rogers, Jr

. The biggest mistake I made was having a specific target of what I wanted out of an investment. The target should be determined by market analysis, not by the amount of money you want to make. -Mark Weinstein

I don’t lose much on trades, because I wait for the exact right moment. Your strategy has to be flexible enough to change when the environment changes. The mistake most people make is they keep the same strategy all the time. They say, “Damn, the market didn’t behave the way I thought it would.” Why should it? Life and the markets just don’t work that way. -Mark Weinstein I learned that an opinion isn’t worth that much. It is more important to listen to the market. -Brian Gelber

Most traders who fail have large egos and can’t admit that they are wrong. Even those who are willing to admit that they are wrong early in their career can’t admit it later on! Also, some traders fail because they are too worried about losing. I’m not afraid to lose. When you start being afraid to lose, you’re finished. -Brian Gelber

The psychological factor for investing has 5 areas. These include a well-rounded personal life, a positive attitude, the motivation to make money, lack of conflict [such as psychological hang ups about success], and responsibility for results. -Dr. Van K. Tharp (a psychologist specializing in working with traders)

The composite of a losing trader would be someone who is highly stressed and has little protection from stress, has a negative outlook on life and expects the worst, has a lot of conflict in her/her personality, and blames others when things go wrong. Such a person would not have a set of rules to guide their behavior and would be more likely to be a crowd follower. In addition, losing traders tend to be disorganized and impatient. -Dr. Van K. Tharp

Many people actually want to lose on a subconscious level. -Dr. Van K. Tharp

The realization that you are responsible for your results is the key to successful investing. Winners know they are responsible for their results; losers think they are not. -Dr. Van K. Tharp