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Hi Robert,
Yeah, that's the way:). From a buy sell buy sell person, I am now a long term investor:)
The stock market is therefore not the place to 'make money'. (Some very experienced people may even say it is the surest place to lose money).
Those I believe are experienced punters and supeculators who have bad experience with the stock market. Only the value investors like Philip Fisher to name one of the many many, makes investing in stocks look so simple, no shortings...no warrents....no options.....no futures..... no TA no blar blar blar, just simply investing.
I just find that some members take extremely high risk in the way they trade. Money is not easy to earn and it is hard earned.With such high risks, it can easily be "game over" if you are not careful........
Truly I don't know as much as some of you here. But it is good to know more. It really boils down in managing once's risk profile. You might know a lot but if you don't manage your risk profile well, you can lose a lot too. I just try to know some of the important points. I know nuts about TA.
Actually I am not so knowledgeable like some of you here:). I don't calculate what beta.I check what is my paper profit now and what is my current share positions. If there is a market crash tomorrow, will I survive?
Diversification is really up to individual. But obviously if you over diversify, you don't make much. As I trade in margin, I have to be careful when I over diversify as it can mean over exposure if I am not careful. One thing good about margin trading as I mentioned before is I am no longer in dileama when I decide what to buy. Before I use margin, I had a hard time deciding which stocks buy if I had 3 in mind as I did want to place bets in all 3. Now with margin trading, I have the option of placing small bets in all 3 in their consolidation phases. Then I watch which one starts to move. Once I find one that "takes off", I leverage up. If no stock "takes off", most of the time, I am not in "borrowed phase" at all.
It is ok being in borrowed phase for long term investment. The interest will be paid up. Do your own calculation.
The stock market is therefore not the place to 'make money'. (Some very experienced people may even say it is the surest place to lose money).
This can be explained by the simple fact that the stock market is not just a marketplace but a place of big risk.
Since many people do not readily see it as a place of risk, they see it as a place to make money quickly. So when they treat it as a place to make money quickly, they inevitably lose out right from the start.
This is because when they make money initially, they will invariably think they have betted too small initially. This invariably leads to bigger and bigger bets (read lot size). And the result is rather predictable as the game progresses further.
I used to have problems managing my risk profile despite my constant reminders. So now I try to discipline myself not to buy too many counters. The tendency when I bought too many counters is I can easily lose control of my risk profile and over expose myself. So now sometimes if I wish to buy share A, I make sure I get rid of share B first
Buy today's Sunday Newpaper and read of the student who lost
$700 000 in stock market.
Earlier I mentioned about managing one's risk profile. Give an example. If you have made $10k, it might not be wise to buy 200 lots of a share at one price. If share price drops by 10c, you have lost all your profits.......
My humble opinion.
U can photocopy the article,paste it in ur toilet,read one million times,cuddle it in ur sleep,etc.............
u will still make the same mistake or mistakes.
Fear and Greed.
just my opinion.
PS>
This is because they have experience in losing money, too.
This is because they have experience in losing money, too.
| Robert
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Posted: 10-Mar-2007 15:01 |
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I like the one about IPOs especially.
Keep these posts coming!
Keep these posts coming!
I always make sure I am able to "cover my positions" if things don't go well when I margin trade. It also applies even if you don't margin trade. I go for safety first. These are two real scenarios when I started making my buys at the share price's consolidation phase
Case 1
I averaged up ASL Marine with the following buys : 90c (10 lots), 93.5c (15 lots), 99c (10 lots), $1.01(10 lots). Total - 45 lots. At $1.01 , I thought ASL Marine was going to "take off", but it went back to 95c. So I decided to get rid of 25 lots at 95c. In that way I have profit from those lots I bought earlier. The 25 lots I sold is meant for "cover" in case the share price drops even further. Some people hold and decide to buy more if the price goes below 90c. Yes, you can do that but what if the price does not rebound, and goes all the way to 80c? So I go for safety first. I discipline myself in sticking to the lots I had initially and don't add more after I have established my buys and the price come down (this is different from the initial buy phase when I do average down a bit). But if the share price had taken off from $1, I would have bought even more at say $1.05 or $1.10. Why? Because my earlier lots are all in profit.
Case 2
I averaged up this warrant at 11.5c (20 lots), 13c (15 lots), 16c (10 lots), 18c (15 lots). When it came to 20c, it did not "take off" but due to the recent market crash it went all the way back to 12c. I decided to get rid of 30 lots to give myself "cover"again should things go bad and it goes to 2c. Again others might not sell and decide to hold and buy more as the price goes does further. But I prefer to stick to the lots I had earlier and not buy more should price come down. But if the price had "taken off" from 20c, I might have bought more at say 25c.
But there is one share that has really "taken off":). Once it has "taken off" I just let it ride and don't think about it any more unless a major correction starts then I might use "corrective action in a correction" which I posted earlier.
yep lg_6273, excellent post. thanks! :)
agree absolutely that the most impt thing is cutting loss, and not listening to gurus.
gotta disagree with the diversification thing tho. Think it all depends on how much funds you have. of course, can't be so silly as to put everything into internet stocks alone for instance. but yea, overdiversification reduces profit. and not all mutual funds make. most underperform the index.
I always make sure I am able to "cover my positions" if things don't go well. I go for safety first. Initially I had 60 lots of one warrant but when it dropped to 12c, I decided to let go 30 lots at break even price. If another major correction happens, and my warrant goes to near 2c, I could lose more than $6k. So the 30 lots I released is to make sure I have this 30 lots to "cover my postitions" in case the warrant price come down.
Some might just hold and think of buying more if the price goes lower. But I refuse to do that. I disciple myself by sticking to the lots I had initially. But only if the warrant price goes above all my purchase prices and becomes bull, then I can consider buying a bit more.......
Trading mistakes by Nick Profit sounds like an angry person who have tried beating the market.
I used to be buy sell buy sell person, but not any more.So in that sense I am different from Jesse Livermore:).
Here is an article from today's business times, "Short Term Versus Long Term Investing"
Those who have done their fair share of reading up on the art of investing will know that long term investing beats short term investing. All those who are legendary in the stock market have a few common traits : Their ability to block out the short term noises, the confidence to stand out in the crowd, and patience. Think Warren Buffet, John Neff, John Templeton, John Maynard Keynee. Few short term traders managed to amass the kind of wealth anywhere near these investment greats. What matters to Buffet is the underlying economic fate of the business he owns. Buffet said,"Charlie and I let our marketable equities tell us by their operating results - not by their daily or even yearly, price quotations - whether our investments are successful. The market may ignore business success for a while, but it eventually will confirm it." Indeed a study has shown that the relationship between earnings and share gets strong the longer the time frame.
End of Business Times article
Personally I feel it is important to keep abreast of what's happening in the world and read as much as you can. You can get an idea of the future business environment of the stock you are investing. It might not always be a good idea to keep a stock for the long term if conditions turn bad. One case is TPV as it went up from 50c to $1.80, and it has now come down to now 89c. If you think conditions going forward is good for the company and the company will continue to grow, then continue to hold
gd post, this guy probably learned from famous jesse livermore...
wonderful article. thks
good posts! thanks!=)