| Author |
Message |
     holycow
Member
Username: holycow
Post Number: 113
Registered: 08-2004Rating: N/A
Votes: 0
|
| | Saturday, October 02, 2004 - 09:49 am: |  
|
I bought my first stock as an investor after the '87 crash and have been in and out of the market since. Quite a bit of history there... but let me emphasise this to you - age or longevity, as in the market or in everyday living does not automatically make you a wise person. The experience and knowledge that you have acquired all these while do not automatically translate into wisdom if you fail to grasp or understand, learn and grow from it. Your mistakes are your best teacher!
And how often do we forget our lessons?
Back in 2000/2001, at the height of the tech bubble, someone cautioned me of my exuberance and its cousin, complacency in my trading activity. I was on a winning stretch and I had no time for him. I simply brushed off his advice.
After all these years I have not learned a thing! So here I am writing this to make sure it stares back at me and reminds of my own folly. This is the only way to make it stick!
Exuberance is an emotional word. I believe many use this word without really thinking much about it. You see, exuberance is relative - it carries different meaning and induces different emotional response to different individual. If you have lived through the tech hypes (which in a way ASX was "lucky" to have avoided somewhat), you probably know how "they" can make you "drunk".
Hype induces exuberance induces complacency and brings out the worst in you (your greed) and eventually you lose your perspective, proportion, scope and scale of things.
Let me give you an example: how'd you feel if you have invested 200,000 in CTX back in '03 and today you know your 200K initial investment is worth 900K? If this is not enough, you acquire this "gain" or "wealth" within two weeks? And that you are working/earning an income of 70K?
I can tell you what'd be your "attitude" - you will lose interest in your day job; you will spend carelessly, you will laugh at those who have to put in the hard yards over $20 an hour; you believe you are a genius; you believe you can fly!
Yes, it can happen to you if you are riding a bubble. But I can assure you back in 2000, no one would ever consider or believe they were living in the bubble. Not those who were caught anyway.
So what am I saying here?
Watch your exuberance! Because if you are in a bubble, you won't know it. It will be some kind of experience that you have never come across before. And because it is totally new to you, drunk as you are, you will never realise the danger you are in. Keep this in mind and if one day someone comes along and taps you on your shoulder and cautions you on your exuberance...
ps: I have also learned since - in stock market it's not how much you can make that matters, it's how much you can keep that counts! This lesson, will be for some other times...
HC
"... if you've got a chart, I have an opinion!"
|
colin_twiggs
Member
Username: colin_twiggs
Post Number: 1325
Registered: 09-2002Rating: N/A
Votes: 0
|
| | Saturday, October 02, 2004 - 10:08 am: |
|
It's not how much you can make that matters, it's how much you can keep that counts!
I like that. Is this a quote from someone or an HC original? I would like to use it in the Trading Diary.
Regards
Colin
|
holycow
Member
Username: holycow
Post Number: 114
Registered: 08-2004Rating: N/A
Votes: 0
|
| | Saturday, October 02, 2004 - 10:30 am: |
|
Hi Colin,
I think it's from someone who has made himself a multi-millionaire through stock investing (not trading) - a very humble man and a great teacher.
By all means use it. Just use "unknown" as the source.
HC
"... if you've got a chart, I have an opinion!"
|
holycow
Member
Username: holycow
Post Number: 115
Registered: 08-2004Rating: N/A
Votes: 0
|
| | Saturday, October 02, 2004 - 12:41 pm: |
|
Sense and sensibility…
YAHOO Weekly
1) The Yahoo weekly chart back in the 2000 hay days, the price is adjusted, so use price multiple (PM) to visualise what kind of profit one could be making – 118/5= 23.6X – for every dollar you put in, you make 23.6 dollars. A $50,000 investment will net you 1.18millions.
2) Note the “vertical” expansion of the price bar – in 8 weeks the price jumped from 50 to 118, about 137% gain. Note the price has been adjusted, in unadjusted value I think it went up to about 400 (could be wrong here, but definitely above 300).
3) Zooming into the “behaviour” of high PM stock’s correction –
YAHOO Daily
pt.1, the price dropped from 118.75 to 92.05, a drop of about 22%, but it subsequently recovered back to… surprise!… fibo 61.8% from the top;
pt2, the following week, the stock opened higher at 109.01 (this shows the punters saw this as an opportunity rather than a risky venture), not surprisingly, their bets ended in pain – the stock closed at 88.25 – a loss of 19% in that week. Together, in two weeks, the stock has lost a total of 118.75- 88.25= 26%;
Do you believe at that time, after dropping 26%, the punters were still behaving as if the sky was not falling down? They actually bought and chased the stock back up to a high of 100.38 as shown in pt.3!
But the writing was already on the wall, by the 15th week, the stock has plunged to a low of 58.00 as shown by pt.4, a total loss from the top – 51%.
And here is a very important consideration for all the trend riders – note the green line, it’s your 30 weeks WMA, your stop loss level – note how late it acts as a stop loss mechanism, and I am quite willing to bet not many would be able to pull the plug in the week where/when the line was crossed. More than likely most people would pull the plug in the week as indicated by pt.4 where you’d have lost close to anywhere between 40%-51% of your profit.
Think about this because you may be looking at substantial opportunity loss here. The KEY to remedy this problem is early recognition of market correction which is something much easier said than done.
And remember this – Weinstein’s Stage 3 IS the killer of your trend and profits! Learn to recognise it when you see one!
And finally, after 18 months of uptrend and making gain merrily for so long, you might have some unwanted guests, ala exuberance and its cousin complacency free loading in your psyche, you may want to take a good look at yourself in the mirror.
HC
"... if you've got a chart, I have an opinion!"
|
spider
Member
Username: spider
Post Number: 1743
Registered: 10-2002Rating: N/A
Votes: 0
|
| | Saturday, October 02, 2004 - 06:59 pm: |
|
Yo 'moo dude',
and anyone else who lived through this time,
count yourself as lucky.
As you say, you wont make the same mistakes twice.
The same goes for those of us that lived through the sustained down trend a couple of years back.
Very valuable experience.
The next time these patterns come around again, you will be one of the few who will be able to say "I've seen this before, and I know how to milk it big time".
Which brings me to this point.............
If you have only just recently (weeks to 3 years) joined this amazing world of trading, you probably think that in the short term (1 to 6years) you are here to make money, and heaps of it.
WRONG!!!!!!!!!!!!!!!!!!
Your goal is to SURVIVE!!
You need to be around long enough so that you start to see money making opportunities come cycling around again, and you hear yourself saying, on a regular basis, "I've seen this before and I know how to work it to my advantage.
Do whatever it takes to survive.
spider.
"Take all you can, and don't give anything back!"
Captain Jack Sparrow.
|
holycow
Member
Username: holycow
Post Number: 118
Registered: 08-2004Rating: N/A
Votes: 0
|
| | Saturday, October 02, 2004 - 07:11 pm: |
|
Hi Spider,
Yes, it is amazing sometimes it takes people so long to see the trading game as a game of "Survival". In fact I have deleted a large part of what I have written because it got too long... it's in the tune of saying "one needs to live through a full bull and bear cycle to really appreciate his/her trading ability. That is where one finds his/her self in facing up to the challenge of "greed" and "fear".
I think it won't be too long for everyone to get to live their days in "fear".
Cheers.
Just for interest, in general, a bull cycle last about 1.5times longer than the bear's.
HC
"... if you've got a chart, I have an opinion!"
|
greatdane
Member
Username: greatdane
Post Number: 127
Registered: 12-2002Rating: N/A
Votes: 0
|
| | Saturday, October 02, 2004 - 11:41 pm: |
|
“It's not how much you can make that matters, it's how much you can keep that counts!”
”I like that. Is this a quote from someone or an HC original? I would like to use it in the Trading Diary.”
This was most likely what Donald Trump said when Ivana took him to the N.Y. "settlement cleaner!" 
- but in reality it is the tittle of a book about “tax reduction”
http://www.anybook4less.com/detail/0970753829.html
Regards, GreatDane
|
colin_twiggs
Member
Username: colin_twiggs
Post Number: 1328
Registered: 09-2002Rating: N/A
Votes: 0
|
| | Sunday, October 03, 2004 - 05:13 am: |
|
Thanks Great Dane,
I thought it was from Bernard Baruch or someone in his era.
Regards
Colin
|
holycow
Member
Username: holycow
Post Number: 119
Registered: 08-2004Rating: N/A
Votes: 0
|
| | Sunday, October 03, 2004 - 09:03 am: |
|
Thanks Greatdane for that correction - I heard it from my friend and thought that was from him.
HC
"... if you've got a chart, I have an opinion!"
|
holycow
Member
Username: holycow
Post Number: 120
Registered: 08-2004Rating: N/A
Votes: 0
|
| | Sunday, October 03, 2004 - 11:09 am: |
|
Btw, he (my friend) was not talking about TAX. He was talking about wealth accumulation. In his eyes, being an investor who has made his money through long term FA approach, he viewed people like me who trade for thrill/fun/kick/adrenalin rush etc would inherently face this prerenial/cyclical issue of either making big money and blew it all, or lost it all due to a lack of planning and confidence.
A lot more were discussed but the bottom line is quite clear. If I were to draw a chart, his chart would be a long uptrending one and mine would be cyclical. I ceased teasing the FA folks ever since I had these discussions with him.
Incidentally I have also knew a young guy who has not lost money since he started investing in the market. A pure Warren Buffett wannabe. He would select his stock very carefully, thoroughly and completely before putting his money in. He would review his stock quarterly, checking up the company financials like revenue, profit margin, and the usual ratios like PE, ROE, etc; if any of the major number is not right, like a profit decline, or revenue decline, etc, depending on the % or severity of the drop, he would either sell the stock or wait for another quarter for improvement before dumping it.
On an annualised basis, his result makes me cry sometimes.
In my view, his type of "active investing" and my/our type of "long term trading" have a lot in common - the FA guys use financial numbers doing it on a quarterly basis, we the TA guys use chart/market data doing on a daily/weekly/mthly basis - it's the time frame and the consideration of market sentiment/emotions and forces of supply/demand that we drew apart.
They have the advantage/disadvantage of not being too bothered by the daily/weekly speculative swings while we have the disadvantage/advantage of trying to decipher everything that is going on in the market - who got a life at the end? 
The final analysis is these guys love to drive in the slow lane in a Benz and live long whilst people like us love the fast lane and die young - it's a choice thing.
...but then Nike's ad said it all "Life is short - just do it!"
Cheers.
ps: the greatest risk to the FA approach is when the companies they are investing in do an "Enron" or "HIH" on them, which in a way justifies/gratifies our choice?
HC
"... if you've got a chart, I have an opinion!"
|
maligas
Member
Username: maligas
Post Number: 95
Registered: 05-2004Rating: N/A
Votes: 0
|
| | Sunday, October 03, 2004 - 12:17 pm: |
|
Hi all, I think it was Russell Sage who said something along the lines of:
"Anyone can make a lot of money, but only a wise man can keep it."
Cheers,
Maligas
|
greatdane
Member
Username: greatdane
Post Number: 128
Registered: 12-2002Rating: N/A
Votes: 0
|
| | Sunday, October 03, 2004 - 02:55 pm: |
|
Thanks holycow – we need some light reading and a  on a Sunday afternoon.
I have been reading a few of your posts for the first time today – enjoyable.
Keep it up.
Regards, GreatDane
|
dogalog
Member
Username: dogalog
Post Number: 382
Registered: 03-2004Rating: N/A
Votes: 0
|
| | Tuesday, October 05, 2004 - 11:46 am: |
| | |
