Don’t ever try to stand in front of a fire hydrant to quench your thirst – you’ll hurt yourself! The same holds true if you try to trade the stock market without a clear methodology. Global internet stock markets offer 24/7 temptations to those investors with no control.... READ MORE
The average investor would be totally discombobulated if they witnessed the effortless manner in which money sometimes just flows into the accounts of exceptional traders. The fact is that these consistently profitable investors are different from most people. The good news is that modern behavioral finance can tell us with... READ MORE
We investors are always searching for extra “probability points” which will increase the likelihood of us trading for profits. Stage #2 is where you have big leverage and garner lots of points. I’ve scraped my knees on your behalf as an investor, so there is no need for you... READ MORE
Money management is the first step to becoming a consistently profitable investor. It’s all about working wisely and moving the odds in your favor. Succinctly put, it’s about: 1. knowing what you’ve got 2. knowing how to protect it 3. knowing how to grow it 4. writing... READ MORE
I just spent a couple of days in Utah at Ford’s Performance Racing School being tutored by four highly accomplished professional race car drivers. I enjoyed the role reversal – the teacher becomes the student. In the introductory classroom session, I asked what seemed on the surfaced to be a... READ MORE
The last trading hour in the markets is like “The Hour of Power” television show. It matters! The last hour has a lot going for it. It is when the big institutions (a.k.a. the smart money) show their hand, so to speak, and individual investors are able to... READ MORE
Some battles you stay and fight. Others you best walk away from. This is the part of my day when I decide which is most appropriate. I love a steroidal stock chart as much as the next guy, but one can’t minimize the importance of context and the total... READ MORE
Inevitably, there comes a time during the trading day or the trading week that I ask myself, “why am I doing this?” If you’ve already given this critical query serious thought before you encounter the questioning pit, any momentary uneasiness simply creates a brief pause that’s but a... READ MORE
I actually wear my office during the trading hours. “All work is social,” claims Larry Prusak, director of IBM’s research labs, and that is how I see my work as a stock market trader. My downtown office offers face time with the markets in a manner that working at... READ MORE
Some people meticulously prepare and perfectly execute a mountain ascent, catching the significance of both the experience and the view from the top. Others just catch a cold. Last week’s blog produced a record number of comments which made it clear to me that I should amplify and elaborate... READ MORE
I’ve known a lot of great traders. Yes, they are out there. Some eventually became money managers, and then their careers evolved into more client hand-holding and less real trading. Clients can kill an exceptional trader. That’s the qualifier. A day in my life is a day with... READ MORE
To make a broad generalization, European cars lust after curvy roads. American cars are more about the power, rumble and straight line 0 – 60 speed. There are key parallels between investors and car buffs, but clearly there exist cars for every possible taste, just as there are limitless options of... READ MORE
I’m sure you’ve heard the expression, “the more things change, the more they stay the same.” Gerald Loeb used this phrase frequently. I’ve always had great respect for Mr. Loeb. True, he was an extraordinary investor and a best-selling author. But what I most respected him for... READ MORE
Over decades of training and teaching, it’s been my experience that the majority of both investors and traders are data driven, first and foremost. Their mantra seems to be “better living through numbers” or a hundred variations on this theme. But I’ve always wondered: with so much data... READ MORE
Peter Lynch started managing the Fidelity Magellan Fund in 1978 with $20 Million in assets. When he retired in 1990, the fund had ballooned to $14 Billion largely as a result of his 29.2% average annualized return. Peter Lynch’s mantra was to “invest in what you know” and... READ MORE
It’s spring and the baseball season is upon the Kingdom. The Mariners are playing at Safeco Field again, and I happen to be watching the first season of HBO’s medieval fantasy series, GAME OF THRONES. Is it just me or are both of these pastimes bursting at the... READ MORE
You watch your equity position tear away on a 200% parabolic run and then you allow your greed and fantasies to kick in, hoping that it will go up 300% just as it turns down and erases half of your gain. That’s how you make 100% return on what... READ MORE
Albert Einstein famously said, “If I had one hour to save the world, I would spend 55 minutes defining the problem and five minutes implementing the solution.” If you were in a life threatening situation and had only one hour before it proved fatal, what would you do? Einstein said... READ MORE
I have found that if you offer the market your sincere attention – presented on a platter of organized checklists – it will reciprocate by talking to you about its true intentions. Warren Buffett would claim that this offers you a cleaner windshield, albeit one never as clean as the rearview mirror.... READ MORE
Wrong is now right. What I once considered unreasonable is now considered reasonable (and I don’t mean just stock markets). On YouTube, you can watch American Eskimo dogs playing with their natural predators, the polar bear (check it out). Nature and civilization as I’ve known them have changed!... READ MORE
Warren Buffett’s partner, Charles Munger, once said “All I want to know is where I’m going to die so I’ll never go there.” There’s a parallel here with stocks. The year in which certain equities top the performance charts more often than not precedes the year... READ MORE
I attend investment seminars as half-monk, half-hit man. My time is a precious commodity, so if you are a speaker and see me in the audience, be prepared. My hot button is when speakers show a few elaborate slides, “share” their four favorite tenets to successful investing and then launch... READ MORE
Picture this: I am at a cocktail party chatting with three people about investing. The first person says, “I could be a really successful investor if only I could emotionally tolerate a bit more risk.” The second person claims, “I could be a world-class investor too if I had access... READ MORE
I attended a lecture last week given by Dr. Anthony Greenwald, a psychology professor at the University of Washington. Professor Greenwald was presenting findings from his new book, Blindspot, and as he spoke, I found myself thinking that he was addressing his comments directly to me. As is so often... READ MORE
Groucho Marx first said it and Woody Allen repeated the famous line “I’d never join a club that would allow a person like me to become a member.” As an independent trader, I’m part of an informal loose-knit group of investors who do what I do, tend to... READ MORE
Have you heard the famous cliché about discipline? “You’ve got to do what you have to do before you can do what you want to do.” Every stock market investor seems to be spring-loaded to his or her favorite news service, blog, website or shall I politely call it... READ MORE
The stock market is always one step ahead of you. The sooner you accept this fact, the better for your trading results. It helps to think of the market like the rabbit on the rail at the greyhound racetrack. As an investor, you should never mistake yourself for the rabbit... READ MORE
I stumbled into a gift shop full of tchotchkes today. It was one of those retailers with endless trinkets and specialty items that encourage you to revisit your youth and marvel at someone else’s creativity. I became fascinated by one of those intricately detailed Russian “Matryoshka” – the wooden nesting... READ MORE
In his Market Wizards books, Jack Swagger interviews an outstanding collection of renowned investors, traders and money managers. The single most common thread that each mentions as being a major contributor to their success is their money management skills. The challenge is to understand what they mean by money management.... READ MORE
No, the pyramids are not a range of mountains between France and Spain. Yes, there are over 80 pyramids in Egypt. There are also triangular, pentagonal and oblique pyramids in math. No doubt you’ve also come across ecological, nutritional and even income pyramids. This blog is about my pyramid.... READ MORE
Mark Twain once commented on the celebration of New Year’s and said something to this effect: Last week everybody smoked his last cigar, took his last drink and swore his last oath. This week we are a pious and exemplary community of investors. Cheers to another new year as... READ MORE
Think of the new year as a promotion for you. The exercise is simple in its execution and somewhat more challenging in its implementation. You’ve been promoted and are moving upstairs to Suite #2013 which has an improved view and is much more spacious for all your investment activities.... READ MORE
It’s hard to improve upon the short and pithy advice from my favorite founding father, Benjamin Franklin. “Be at war with your vices, at peace with your neighbors, and let every new year find you a better man.” In 2013, promise yourself to embrace your goals, your dreams and... READ MORE
I’ll confess that my students have referred to me as tough, irreverent and leathery – and those are the kind comments said to my face. Guilty as charged, with the caveat that perhaps some of these comments are by students with objectives that are not on the same page as... READ MORE
Whether it’s golf or trading, it’s all about stress control. If you were sitting across the table from me and I booked a $10,000 loss, and then in the next hour I closed out a trade for a $10,000 profit, I would wager you even money... READ MORE
Over the many years that I’ve taught new investors, a single common denominator stands out amongst those who grow into consistently profitable investors. It’s rather simple. They are patient investors who are willing to take a longer view and therefore deliberately and slowly build a solid foundation upon... READ MORE
I’d like to paraphrase a fishing analogy. Show someone how to invest by following a winning trading methodology and he/she will be happy for awhile. Teach someone how to think effectively about trading and he/she will be profitable for a lifetime. All too often as investors, our... READ MORE
The stock market has always attracted a disproportionate number of exceptional intellectuals and uniquely independent souls. By their nature, they are reluctant to live by the lessons of others and tend to be rule breakers instead of rule keepers. In his book Trading Rules: Strategies for Success, William Eng talks... READ MORE
This phrase is most often heard in reference to lawmakers and bureaucrats in Washington, DC, but I think it’s an appropriate reflection of what many investors struggle with as well. As an investor, you’ll seldom be destroyed by outside forces. If you falter and lose your assets, more... READ MORE
History matters because markets do indeed repeat themselves. John Kenneth Galbraith was interviewed in the PBS documentary, The Crash of 1929, and he observed that every 30 years or so we predictably have a major market correction because that seems to be the length of time it takes each generation... READ MORE