Investing & trading: July - September 2010 articles archive home
Assuming prices are unpredictable
Burton Malkiel, who wrote A Random Walk Down Wall Street and Charles Ellis, author of Winning the Loser’s Game, have co-written a new book titled The Elements of Investing, in which they claim to have boiled down everything they’ve learnt about investing. It can be summed up in four lines: save early and often; get your asset allocation right; diversify across and within asset classes; and keep your investing costs low.
Tuesday, September 28, 2010 ... more
Klarman's advice
Seth Klarman is inaccessible even to the well-heeled: The hugely successful Baupost Group, which he founded in 1983, turns away new investors. When it was still accepting clients, you needed a referral from an existing client before it would take your money.
Tuesday, September 21, 2010 ... more
Advice from the Bombay market
Hope is an easy crutch to lean on. Pressure or no pressure, there's always a tendency to stay invested when the going is good in the hope of making a little more money. Similarly, if an investment is showing a loss, people refrain from selling thinking the stock is bound to rebound. The bottom line: base your investment decision solely on fundamentals.
Tuesday, September 14, 2010 ... more
Buying what most don’t understand.
"You win serious points for talking Klarman," says a newly minted MBA who got his hands on a copy prior to a late-round interview with a top mutual fund firm. "It's pretty much assumed that you've read Graham and Dodd and Warren Buffett."
Thursday, August 26, 2010 ... more
Market delusions explained – pt2.
Chapter Twelve: Once in a Lifetime Events. You have to factor in once in a lifetime events, because they happen twice a week. Go to lunch in the belief that the NYSE could be blown up by a nuclear bomb and you’ll never be taken by surprise.
Wednesday, August 25, 2010 ... more
All it takes is the willingness to measure yourself every day, for 30 years.
There were few investment instruments over which Michael Steinhardt did not wield some mastery. And while he had a long-term investor's perspective, for the most part, he invested as a short-term strategic trader.
Tuesday, August 24, 2010 ... more
Market delusions explained for Dummies
The truth is that the closest anyone who relies on a few Warren Buffett quotes is ever likely to come to the Warren Buffett Way is wearing a cardigan and living in the same crappy house for the rest of your life.

Thursday, August 19, 2010 ... more
All true wisdom can be found on T-shirts
Wall Street's favourite scam is pretending that luck is skill. - Ron Ross.
Returns are what you expect, consequences are what you get. - Anon.
Tuesday, August 17, 2010 ... more
Attributes of a great trader, that apply elsewhere in life.
Over the course of my many years in the trading arena, certain inalienable qualities seem to resonate in those exhibiting consistent success,” says John Netto, the Founder and President of M3 Capital. “These attributes transcend the world of trading and investing."
Wednesday, August 4, 2010 ... more
The difference between discipline and flexibility.
There is a seeming discrepancy behind the notion of sticking to a trading plan and staying mentally flexible and adjusting that plan as needed. How do you know when you’re being mentally flexible as opposed to rationalizing an emotional, reactive trade as an informed discretionary decision?
Tuesday, August 3, 2010 ... more
Jim Chanos explains the four themes of short-selling.
Sources of ideas for short sells: 1) experience; 2) accounting related 3rd party research; 3) screens (not such a good source since management learnt how to trick them); 4) other fund managers - although “there are very few original ideas in investing”; 5) partners/investors in the fund.
Wednesday, July 28, 2010 ... more
Don't bank on making it.
Salespeople will regale you with fascinating stories about how certain exotic investments such as hedge funds, commodities, private equity, or venture capital can make you rich, even quickly. Do not listen. - Burton Malkiel and Charles Ellis.
Tuesday, July 27, 2010 ... more
Not so much about, as how.
When positive or negative things happen in life, we tend to attribute them to causes. This helps us make sense of the world. Research over the last two decades suggests that how we attribute causes plays an important role in our moods and behaviour.
Tuesday, July 20, 2010 ... more
We are who we are and we start from where we start.
There’s a big difference between loving to win and hating to lose. Someone who loves to win is willing to take a lot of risks because the euphoria of winning outweighs the bad outcomes. If you hate to lose, though, any bad outcome is not acceptable. To be a great investor, I think you really have to hate to lose.
Wednesday, July 14, 2010 ... more
To outsmart the market, emphasize discipline over daring.
The one thing I can think of that most affects both trading and investing has to be self-discipline,” says Joe Ross of Trading Educators Inc. “Being disciplined is fully 50% of the job of trading or of investing. I don't care how good your trading system is, without the discipline needed to follow the system you don't have much of a chance for success.
Wednesday, July 7, 2010 ... more
The importance of finding your own approach
Koch’s investment rules are included in The Global-Investor Book of Investing Rules, edited by Philip Jenks and Stephen Ecket. What is most evident is his belief that an individual approach to the market is a prerequisite for success. “Do it your way.” He says in rule 1. “Follow an investment approach that matches your personality and psyche.”
Tuesday, July 6, 2010 ... more
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