Investing & trading: April - June 2009 articles archive home
Get rich slowly and don’t risk more than two percent
An amateur trying to get rick quick is like a monkey out on a thin branch. He reaches for a ripe fruit but crashes when the branch breaks under his weight. Institutional traders as a group tend to be more successful than private traders. They owe it to their bosses who enforce discipline.
Tuesday, June 30, 2009 ... more
 
 
The endowment effect: Why Johnny can’t sell
A loser cannot cut his losses quickly. When a trade starts going sour he hopes and hangs on. He feels that he cannot afford to get out, he meets his margin calls and keeps hoping for a reversal. His paper loss grows until what seems like a bad loss starts looking like a bargain Finally his broker forces him to bite the bullet and take his punishment.
Tuesday, June 23, 2009 ... more
 
As a result of the increasing popularity of Behavioural Finance …
… there is a growing awareness of the human flaws that play havoc with our investment decisions and explain certain market anomalies. The outperformance of value investing, for example, is now being ascribed to investor's’ irrational overconfidence in exciting growth companies and the pleasure and pride they derive from owning growth stocks.
Wednesday, June 17, 2009 ... more
 
 
Those who say it cannot be done should try not to interrupt those doing it
In summary, people trade for both cognitive and emotional reasons. They trade because they think they have information when they have nothing but noise, and they trade because trading can bring the joy of pride.
Wednesday, June 10, 2009 ... more
 
 
Guidelines from Richard Bernstein on his last day at Merrill Lynch.
Merrill Lynch's best-known strategist - and best-known pessimist – Richard Bernstein left the firm a few weeks ago, the latest to depart since the Bank of America takeover in January. Not everyone would have been sorry to see him go. As Igor Greewald put it in an article at Smart Money, his unvarnished views couldn’t have made pleasant reading for Merrill's 16,000-plus private client financial advisors.
Wednesday, June 3, 2009 ... more
 
Five rules for success: Pat Dorsey’s guide to the markets.
Pat Dorsey, Morningstar’s director of equity research, has an old-fashioned approach to making money which he explains in his book. The Five Rules for Successful Stock Investing. In a nutshell:

Do your homework. “You should know what you’re buying,” says Dorcey. “You can’t just take someone else’s word that a company is an attractive investment ...
Thursday, May 28, 2009 ... more
 
 
If you have a plan, can keep your head and control your greed.
From Jack Schwager’s interview with Mark Ritchie, the co-founder of Chicago Research and Trading, in The New Market Wizards:

“… magnitude of losses and profits is purely a matter of position size. Controlling position size is indispensible to success. Of all the traits necessary to trade successfully, this factor is the most undervalued.
Wednesday, May 20, 2009 ... more
 
Moscowitz’s advice: limit your risk, maximize your upside
Earlier this year Ilan Moscovitz lambasted credit default swaps (CDSs) on U.S. government bonds - essentially insurance policies on U.S. Treasury defaults issued by Wall Street firms - as the dumbest investment he'd ever seen.
Tuesday, May 19, 2009 ... more
 
 
Don’t miss out, keep in touch with reality and don’t get sentimental
“If you make a bad trade and you have money management you are really not in much trouble. However, if you miss a good trade there is nowhere to turn. If you miss good trades with any regularity you’re finished.” - William Eckhardt
Tuesday, May 5, 2009 ... more
 
Investing Wisdom from Ken Fisher
Few money managers are more visible than Ken Fisher, Founder of Fisher Investments, Forbes columnist and author of the best selling book, The Only Three Questions That Count.
Thursday, April 16, 2009 ... more
 
 
How d'you learn something?
Investors often use distorted logic when buying stocks. They think that what goes up must come down.
Tuesday, April 7, 2009 ... more
 
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