The Worst Four Letter Word That Starts With “F”
I get emails all the time from readers of my blog, but something very interesting happened last week. I received 5 emails in a row all having the same theme: FEAR. Random people wrote to me saying: "I'm horrified of this market," "I'm scared that my stocks will collapse," "How do I overcome my fear?" etc. etc. I would like to discuss what creates this fear and how to possibly overcome it, but first I [...]
Cash is a Position
One concept many traders struggle with is that their ENTIRE account doesn't have to be invested at ALL times. There are times (like the correction we're going through now) when you should have at least some of your money in cash in order to protect capital and to protect confidence. 1) One of the main reasons I keep a larger than normal cash position during corrective markets is that 4 out of 5 stocks move [...]
No September Rate Hike
This Thursday, September 17th, the Federal Reserve will announce their decision on interest rates at 2PM EST. I don't think they will raise rates for the following reason: 1) Since the financial crisis of 2008-09, the Fed's number one priority is to see a strong recovery in the economy. They have done this by keeping interest rates low and pumping money into the system through various forms of accommodation. Has the economy recovered since 2009? [...]
More Negatives than Positives, but…
Part of my investment philosophy is to look at the positive and negative signs in the market and adjust my investment levels accordingly. It is important to keep an open mind when doing this. Don’t get too caught up in what “you think the market should be doing.” Flexibility is important but being stubborn gets you nowhere. Here are some observations: 1) All the major indexes are below their 10-week moving averages. This is important [...]
Paul Tudor Jones on Jesse Livermore
One of the greatest trading books ever written is Reminiscences of a Stock Operator. The original book was published in 1923, but in 2010, an Annotated Edition was produced by Jon Markman. This edition reveals the truth about Jesse Livermore and provides colorful, historically accurate commentary on the characters, places, and events that have made Reminiscences such an enjoyable and educational read for generations. The foreward to the Annotated Edition is written by legendary trader Paul [...]
It’s a terrible thing to live in fear
In my 19 years of trading, I’ve never seen so much bearishness, fear, and apathy, especially with the market at all-time highs. I’m not talking about the long-only, buy and hold crowd. Those people are always bullish and they NEVER sell. They just ride the market all the way up, and then all the way down during corrections. I’m mostly talking about the trading community, potential clients I talk to, and many of the sentiment [...]