Investing & trading: July - September 2009 articles archive home
The wisdom of nearly forty years in the game.
William Eckhart is a commodities and futures trader and fund manager who began trading in 1974 after dropping out of a doctoral research programme at the University of Chicago. In 1991 he launched Eckhardt Trading Company (ETC) an alternative investment management firm. He co-developed trading systems for the "Turtles" and is profiled in Jack Schwager's second book, The New Market Wizards.
Tuesday, September 29, 2009 ... more
Advice from top fund managers
Never let emotions rule your investment decisions. Always believe in mean-reversion and buy when no one else wants to. Be patient and set your time horizon appropriately. Be humble, there are many clever people trying to win this game. Be diversified, it’s the only free lunch you’ll ever get! - Simon Hudson-Peacock, Head of Specialist Equity, Cadiz African Harvest Asset Management.
Thursday, September 17, 2009 ... more
Money’s timeless money rules
Two years ago Carla Fried of Money Magazine collected what she considered “the best advice from the smartest investors (and other people) who have ever lived.” She put it in an article titled 20 timeless money rules.
Tuesday, September 15, 2009 ... more
Lessons from investment fables.
In the last chapter of his book, Investment Fables: Exposing the Myths of “Can’t Miss” Investment Strategies, Aswath Damodaran says there are “propositions about investing that apply across investment strategies.”
Tuesday, September 8, 2009 ... more
Is Joel Greenblatt’s Magic Formula still beating the market?
In his book, The Little Book that Beats the Market, Joel Greenblatt punts an investment strategy known as ‘the magic formula’. In effect limiting a portfolio to between 20 and 30 "good companies", consisting of cheap stocks, in companies above a certain size, with a high earnings yield and a high return on capital.
Wednesday, August 26, 2009 ... more
More one-liners, this time on speculating from Jesse Livermore
The game of speculation is the most fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor … it is a full-time job perhaps even more than a job. Perhaps it is a vocation, where many are called but few are singled out for success
Tuesday, August 25, 2009 ... more
The most important formula in investing?
In July, 1956, the Bell System Technical Journal published one of the oddest articles in the history of communications research - an equation-filled treatise on how to make money at the racetrack if you have inside information on which horse is likely to win. The article, by a young Texan physicist named John . Kelly Jr., prescribed how much of your bankroll to bet based on two things: how certain you are of betting right (your "edge") and your winnings if you are right (the odds).
Thursday, August 20, 2009 ... more
Heuristics: Why it's so simple for trend traders
Michael Covel, is a momentum trader and the author of Trend Following: How Great Traders Make Millions in Up or Down Markets, in which he profiles several successful trend-following traders. In a commentary at the Turtle Trader website he says he's often asked a recurring question: "Why is your method successful? Especially since there is so much fundamental information available to use in making decisions."
Wednesday, August 19, 2009 ... more
Everyone needs an edge, so what’s yours?
Everyone needs an ‘edge’ in trading the markets. Nor is a common approach, such as value investing, a competitive advantage. If that were the case, anyone could simply go out and buy Benjamin Graham’s book and become a great investor.
Tuesday, August 18, 2009 ... more
Trading volume: What separates bull markets from bear rallies
Whether it was William Peter Hamilton observing the trading activity of the 19th century, or Richard Russell who has studied volume for more than 50 years, or Russell Napier, each came to a similar conclusion: to confirm a change in market conditions, watch trading volume closely.
Thursday, August 13, 2009 ... more
Realists see things clearly, but most of us aren’t realists.
"Our study suggests that optimists, more than pessimists, maintain positive expectations and continue gambling after experiencing negative gaming outcomes. Despite optimism's many benefits, there are common situations in which the pessimistic tendency to disengage is beneficial."
Thursday, August 6, 2009 ... more
One-liners: Some of the best advice you'll ever come across
Nothing tells in the long run like a good judgement, and no sound judgement can remain with the man whose mind is disturbed by the mercurial changes of the stock exchange. It places him under an influence akin to intoxication. What is not, he sees, and what he sees, is not. - Andrew Carnegie
Tuesday, August 4, 2009 ... more
The truth be told - as unpalatable as that might be.
Can you really beat the markets? It’s unlikely, despite all the cheerleading from the securities industry and the financial media … you are more likely to trail the market’s return, because of costs, taxes, and investment mistakes.
Wednesday, July 29, 2009 ... more
The psychology of going against the crowd
“Let me start with an obvious statement: the simple act of being a contrarian will make no one rich. In fact, conforming generally makes the most strategic sense. If you’re in a theatre that catches on fire, you’re best served running out in contrast to the contrarian tack of running into the theatre.
Tuesday, July 28, 2009 ... more
Value Investing 101: from Prof Greenwald at Columbia
In 2004, Matt Logan interviewed Bruce Greenwald, who teaches value investing at Columbia University's Graduate School of Business. His first question was to ask: What is value investing?
Thursday, July 23, 2009 ... more
Beware the market-share and asset-growth trap.
Barron columnist Vito J. Racanelli warns that it would be a mistake to accept the widely held investing premise that firms gaining market share and expanding their asset base should see their stock prices rise.
Wednesday, July 22, 2009 ... more
More trading rules from great traders.
This time from Dennis Gartman, probably better known these days as the author of the influential Gartman Letter. (And while Gratman admits being wrong with two-thirds of his trades, he says his winners are big ones and make up for the losses.)
Tuesday, July 21, 2009 ... more
What’s great about it and why you need to stay detached.
There is a Buddhist principle that states that suffering comes from one’s attachment to the things of this world. As soon as you need something, or need something to occur, it gains control over you. For traders, that happens when they need their trading results to bolster their self-esteem.
Tuesday, July 7, 2009 ... more
Needed: a 20-year perspective and a reason why they'll go up Wednesday, July 1, 2009
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