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It is almost impossible to flip through the financial pages of any magazine or newspaper without coming across an advertisement romising instant wealth. This publicity typically features a comuterized System or an Investment advisor hotline that Claims to ave achieved spectacular results over the past few months or ven years. Normally, such Services specialize in the futures or ptions markets because these highly leveraged areas are in a lore obvious position to offer instant financial gratification. The uge leverage available to traders in the futures markets signifiantly reduces the time horizons available to customers. Conseuently, the number of transactions, (i.e., revenue for the brokers) > that much greater. Read the rest of this post »

An alternative to using a single guide is to follow a number of different experts simultaneously. This solution is even worse because experts äs a group are almost always wrong. Figure 1-2 compares Standard and Poor’s (S&P) Composite Index with the percentage of those writers of market letters who are bullish. The data were collected by Investors Intelligence* and have been adjusted to iron out week-to-week fluctuations. (A more up-todate version appears in Chapter 8.) Even a cursory glance at the chart demonstrates quite clearly that most advisors are bullish at major market peaks and bearish at troughs. If Read the rest of this post »

When we turn to stock market experts, there is even less to cheer about. Jesse Livermore was an extremely successful stock operator. In late 1929, he said, “To my mind this Situation should go no further,” meaning, of course, that the market had hit bottom. Inaccurate calls were not limited to traders. U.S. industrialist John D. Rockefeiler put his money where his mouth was: “In the past week (mid-October 1929) my son and I have been purchasing sound common Stocks/’ Other famous industrialists of the day agreed with him. One month later, in November 1929, Henry Ford is quoted äs saying, “Things are better today than they were yesterday.” Read the rest of this post »

All of us gain some degree of comfort from knowing that we are getting expert advice whenever we undertake a new task. This is because we feel somewhat insecure and need the reassurances that an expert—with his undoubted talents and years of experience— can provide. However, it is not generally recognized that experts, despite their training and knowledge, can be äs wrong äs the rest of us. Read the rest of this post »

From this example, we can see that while their needs are different, each player is likely to act in a fairly predictable way. Moreover, because the makeup of the company’s holdings will change over time, perhaps the short-term trader will seil to another person with a long-term outlook. Conversely, the long-term shareholder may decide to take a bigger stake in the Company, since he can buy at depressed prices. Although human nature is reasonably constant, its effect on the market price will fluctuate because people of different personality types will own different proportions of the Company at various times. Even though Read the rest of this post »

JLOU probably bought this book hoping that it would provide some easy answers in your quest to
get rieh quickly in the financial markets. If you did, you will be disappointed. There is no such Holy Grail. On the other hand, this book can certainly point you in the right direction if you are willing to recognize that hard work, common sense, patience, and discipline are valuable attributes to take with you on the road to smart investing. Read the rest of this post »

x”or most of us, the task of beating the market is not difficult, it is the job of beating ourselves that proves to be overwhelming. In this sense, “beating ourselves” means mastering our emotions and attempting to think independently, as well as not being swayed by those around us. Decisions based on our natural instincts invariably turn out to be the wrong course of action. All of us are comfortable buying stocks when prices are high and rising and selling when they are declining, but we need to develop an attitude that encourages us to do the opposite. Read the rest of this post »

Wouldn’t it be awful to see the hard earned money that you put to work in order to make more money go to waste? What if you lost your money because you foolishly ignored some of the basic principles of investing? That might be a heck of a disappointing experience.

This happens all of the time, and not just with amateur investors. The investing mistakes listed in this report are common among seasoned professional investors and amateurs. The money managers that Read the rest of this post »

Because the stock market is a result of company earnings and forecasts, investor psychology, and the institutional house’s ability to move markets in a particular direction with enormous positions, the stock market cannot be predicted accurately. You may be lucky and make an accurate prediction once in a while, but you can also hit black jack at any table in Las Vegas. Read the rest of this post »

Think about this: A friend has a tip from another friend who works for a company that is about to report a very strong earnings report. He urges you to jump on the stock in order to make a pile of money on a “sure thing.”

The recommendation sounds tempting. You toss and turn all night as you think about how much money you can make if your friend is right. In the morning you decide instead of just buying the stock, you’ll buy 100 call options and make 10 times the amount of money you would with a stock. Read the rest of this post »