Secret #1: Contrarianism takes courage.
Everyone knows the
essential investment formula: “Buy low, sell high,” but it is so much easier
said than done, it might as well be a secret formula.
The way to really
make it work is to invest in an asset or commodity that people want and need but
that for reasons of market cyclicality or other temporary factors, no one else
is buying. When the vast majority thinks something necessary is a bad
investment, you want to be a buyer—that’s what it means to be a
contrarian.
Obviously, if this were easy, everyone would do it, and there
would be no such thing as a contrarian opportunity. But it is very hard for most
people to think independently enough to risk hard-won cash in ways others think
is mistaken or too dangerous. Hence, fortune favors the
bold.
Secret #2: Success takes discipline.
It’s not
just a matter of courage, of course; you can bravely follow a path right off a
cliff if you’re not careful. So you have to have a game plan for risk
mitigation. You have to expect market volatility and turn it to your advantage.
And you’ll need an exit strategy.
The ways a successful speculator needs
discipline are endless, but the most critical of all is to employ smart buying
and selling tactics, so you don’t get goaded into paying too much or spooked
into selling for too little.
Secret #3: Analysis over
emotion.
This may seem like an obvious corollary to the above,
but it’s a point well worth stressing on its own. To be a successful speculator
does not require being an emotionless robot, but it does require abiding by
reason at times when either fear or euphoria tempt us to veer from our game
plans.
When a substantial investment in a speculative pick tanks—for no
company-specific reason—the sense of gut-wrenching fear is very real. Panic
often causes investors to sell at the very time they should be backing up the
truck for more.
Similarly, when a stock is on a tear and friends are
congratulating you on what a genius you are, the temptation to remain fully
exposed—or even take on more risk in a play that is no longer undervalued—can be
irresistible. But to ignore the numbers because of how you feel is extremely
risky and leads to realizing unnecessary losses and letting terrific gains slip
through your fingers.
Secret #4: Trust your
gut.
Trusting a gut feeling sounds contradictory to the above,
but it’s really not. The point is not to put feelings over logic, but to listen
to what your feelings tell you—particularly about company people you meet and
their words in press releases.
“People” is the first of Doug Casey’s
famous Eight Ps of Resource Stock
Evaluation, and if a CEO comes across like a used-car salesman, that is
telling you something. If a press release omits critical numbers or seems to be
gilding the lily, that, too, tells you something.
The more experience you
accumulate in whatever sector you focus on, the more acute your intuitive
“radar” becomes: listen to it. There’s nothing more frustrating than to take a
chance on a story that looked good on paper but that your gut was warning you
about, and then the investment disappoints. Kicking yourself is bad for your
knees.
Secret #5: Assume Bulshytt.
As a speculator,
investor, or really anyone who buys anything, you have to assume that everyone
in business has an angle. Their interests may coincide with your own, but you
can’t assume that.
It’s vital to keep in mind whom you are speaking with
and what their interest might be. This applies to even the most honest people in
mining, which is such a difficult business, no mine would ever get built if
company CEOs put out a press release every time they ran into a
problem.
A mine, from exploration to production to reclamation, is a
nonstop flow of problems that need solving. But your brokers want to make
commissions, your conference organizers want excitement, your bullion dealers
want volume, etc. And, yes, your newsletter writers want to eat as well; ask
yourself who pays them and whether their interests are aligned with yours or the
companies they cover.
(Bulshytt is not a typo, but a reference to Neal
Stephenson's brilliant novel, Anathem, which defines the
term, briefly, as words, phrases, or even
entire books or speeches that are misleading or empty of
meaning.)
Secret #6: The trend is your
friend.
No one can predict the future, but anyone who applies
him- or herself diligently enough can identify trends in the world that will
have predictable consequences and outcomes.
If you identify a trend that
is real—or that at least has an overwhelming amount of evidence in its favor—it
can serve as both compass and chart, keeping you on course regardless of market
chaos, irrational investors, and the ever-present flood of
bulshytt.
Knowing that you are betting on a trend that makes great sense
and is backed by hard data also helps maintain your courage. Remember; prices
may fluctuate, but price and value are not the same thing. If you are right
about the trend, it will be your friend. Also, remember that it’s easier to be
right about the direction of a trend than its timing.
Secret #7:
Only speculate with money you can afford to lose.
This is a
logical corollary to the above. If you bet the farm or gamble away your
children’s college tuition on risky speculations—and only relatively risky
investments have the potential to generate the extraordinary returns that
justify speculating in the first place—it will be almost impossible to maintain
your cool and discipline when you need it.
It’s
better to risk 10% of your capital shooting for 100% gains than to risk 100% of
your capital shooting for 10% gains.
Secret #8: Stack the odds in
your favor.
Given the risks inherent in speculating for
extraordinary gains, you have to stack the odds in your favor. If you can’t,
don’t play.
There are several ways to do this, including betting on
People with proven track records, buying when market corrections put companies
on sale way below any objective valuation, and participating in private
placements. The most critical may be to either conduct the due diligence most
investors are too busy to be bothered with, or find someone you can trust to do
it for you.
Secret #9: You can’t kiss all the
girls.
This is one of Doug’s favorite sayings, and though
seemingly obvious, it’s one of the main pitfalls for unwary
speculators.
When you encounter a fantastic story or a stock going
vertical and it feels like it’s getting away from you, it can be very, very
difficult to do all the things I mention above. I can tell you from firsthand
experience, it’s agonizing to identify a good bet, arrive too late, and see the
ship sail off to great fortune—without you.
But if you let that push you
into paying too much for your speculative picks, you can wipe out your own
gains, even if you’re betting on the right trends.
You can’t kiss all the
girls, and it only leads to trouble if you try. Fortunately, the universe of
possible speculations is so vast, it simply doesn’t matter if someone else beats
you to any particular one; there will always be another to ask for the next
dance. Bide your time, and make your move only when all of the above is on your
side.
Monday, March 17, 2014
Friday, October 7, 2011
40 Tips of A Wise Trader
All of the successful traders we know blew out their account at least once before becoming consistently profitable on an annual basis. (Or monthly, or weekly, depending on their goals and trading style). These "bits" are not meant to make you a conservative or hesitant trader. On the contrary, trading takes guts, and by following these "bits of wisdom" you are being given the key that will allow you to embrace risk and take the necessary chances required in the pursuit of capital gain. That is, you will feel more compelled to take a chance, because you know you are also going to fight to protect your capital. You won't freeze and lie helpless as it is whittled away.
This is the greatest business in the world. By following the “bits of wisdom” below we hope that you can stay in this business as long as you choose.
Here it is, 40 Tips Of A Wise Trader
1. Trading is simple, but it isn’t easy. If you want to stay in this business, leave "hope" at the door and stick to your stops.
2. When you get into a trade, start looking for signs right away that you are wrong. If you see them, then get out before your stop is hit.
3. Trading should be boring, like factory work. If there is one guarantee in trading, it is that "thrill seekers" get their accounts ground into parking meter money.
4. Amateur traders turn into professional traders when they stop looking for the "next great technical indicator" and start controlling their risk on each trade.
5. You are trading other traders, not the actual stock. You have to be aware of the psychology and emotions behind trading.
6. Be very aware of your own emotions. Irrational behavior is every trader's downfall. If you are yelling at your computer screen, imploring your stocks to move in your direction, you have to ask yourself, "Is this rational?" Ease in. Ease out. Keep your stops. No yelling.
7. Watch yourself if you get too excited—excitement increases risk because it clouds judgment.
8. Don’t overtrade—be patient and wait for 3-5 good trades.
9. If you come into trading with the idea of making “big money,” you are doomed. This mindset is responsible for most accounts being blown out.
10. Don’t focus on the money. Focus on executing trades well. If you are getting in and out of trades rationally, the money will take care of itself.
11. If you focus on the money, you will start to impose your will upon the market in order to meet your financial needs. There is only one outcome to this scenario: you will hand over all of your money to traders who are focused on protecting their risk and letting their winners run.
12. The best way to minimize risk is to not trade. This is especially true during the low-volume “chop and slop” found during the afternoon trading session between 11:30AM Eastern and 2:30PM Eastern. If your stocks are not acting right, then don't trade them. Just sit and watch them and try to learn something. By doing this you are being proactive in reducing your risk and protecting your capital.
13. There is no need to trade 5 days per week. Trade 4 days per week and you will be sharper during the actual time you are trading.
14. Refuse to damage your capital. This means sticking to your stops and sometimes staying out of the market.
15. Stay relaxed. Place a trade and set a stop. If you get stopped out, who really cares? You are doing your job. You are actively protecting your capital. Professional traders actively take small losses. Amateurs resort to hope and sometimes prayer to save their trade. In life, hope is a powerful and positive thing. In executing a trade, hope is a virus that can infect and destroy.
16. Be right on day one or get out. Don’t take a “red” position home overnight.
17. Keep winners as long as they are moving your way. Let the market take you out on a trailed stop.
18. Money management is the secret to success. Don’t overweight your trades. The more you overweight a trade, the more “hope” comes into play when it goes against you. Hope is to trading as acid is to skin. The longer you leave it in place, the more painful the outcome will be.
19. There is no logical reason to hesitate in taking a stop. Reentry is only a commission away.
20. Professional traders take losses. Being wrong and not taking a loss does damage to your wallet, mind, and soul.
21. Once you take a loss you forget about the trade and move on. Especially if it is a small one. Do yourself a favor and take advantage of any opportunity to clear your head by taking a small loss.
22. You should never let one position go against you by more than 2% of your account equity. This means if you have a $50,000 trading account, you should never let one stock turn into a loss of more than $1,000. This means if you max out your 2 to 1 margin account and buy 2000 shares of a $50 stock, you must have a stop loss of 50 cents. That is tight and bound to get hit. Do yourself a favor and buy 400 shares of this $50 stock and use a $2.00 stop to start. That is only an $800 dollar loss and gives you room to trail your stop up to break-even before you are taken out on a wiggle. Is there ever a time when it is okay to take more than a 2% portfolio loss on a position? NO! Never means exactly that. This is a maximum loss by the way. Setting up your plays for losses of 1% of your equity is even better.
23. Use daily charts to get an idea of the 30-day trend, hourly charts to get an idea of the 1-day trend, and 5-minute charts to establish your entry points.
24. If you are hesitating to take a position, that indicates a lack of confidence that is not necessary. Just get into the position and PLACE A STOP. Traders lose money in positions everyday. Keep them small. The confidence you need is not in whether or not you are right, the confidence you need is in knowing you will stick to your stop no matter what. Therefore you can actually alleviate this hesitancy to “pull the trigger” by continually sticking to your stops and reinforcing this behavior.
25. Averaging down on a position is like a sinking ship deliberately taking on more water.
26. Build up to a full position as it goes your way.
27. Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment. Realize this and immediately tighten your stop considerably to preserve profits or exit your position.
28. Look for opportunities NOT to trade.
29. You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy it back below the breakout point—which is typically where you will set your stop when you buy a breakout. (In case you ever wondered why you get stopped out on a lot of “failed” breakouts).
30. Embracing your opinion leads to financial ruin. When you find yourself rationalizing or justifying a decline by saying things like, “They are just shaking out weak hands here,” or “The market makers are just dropping the bid here,” then you are embracing your opinion. Don’t hang onto a loser. You can always get back in.
31. Unfortunately, discipline is typically not learned until you have wiped out a trading account. Until you have wiped out an account, you typically think it cannot happen to you. It is precisely that attitude that makes you hold onto losers and rationalize them all the way into the ground. If you find yourself saying things like, “My stock in EXDS is still a good investment,” then it is time to start following the basic principals all professional traders follow. (That would be protecting your capital, aggressively cutting your losses, and letting your profits run by not giving in to the temptation to sell just because you have a quarter profit).
32. Siphoning out your trading profits each month and sticking them in a money market account is a good practice. This action helps to focus your attitude that this is a business and not a place to seek thrills. If you want an adventure, go live in Minnesota for a winter. If you want excitement, deliberately forget your anniversary. Just don’t trade.
33. Professional traders only place a small portion of their assets into 1 position. Or if they take on a large position, then they strictly limit their risk to 1-2% of their current equity. Amateurs typically place a large portion of their assets into 1 position, and they give it "room to move" in case they are actually right. This type of situation creates emotions that ruin accounts, while professionals are able to make decisions and cut losses because they strictly define their risk.
34. Professional traders focus on limiting risk and protecting capital. Amateur traders focus on how much money they can make on each trade. Professionals always take money away from amateurs.
35. In the stock market, heroes get crushed. Averaging down on a losing position is a “heroic move” that is akin to Superman taking a spoonful of Kryptonite. The stock market is not about blind courage. It is about finesse. Don't be a hero.
36. Sadly, traders never learn the importance of “the rules” until they have blown their account out of the water. Until you “lose it all” it never seems that important to have to follow the basics of professional trading. (Cut your losses, let your profits run, etc).
37. The market reinforces bad habits. If early on you held onto a loser that went against you by 20%, and you were able to get out for break-even, you are doomed. The market has reinforced a bad habit. The next time you let a stock go against you by 20%, you will hang on because you have been taught that you can get out for break-even if you just be patient and hang on long enough. Tell that to the folks who bought VERT at $145. When’s it going to get back to break-even? Well, if your timeframe is “never,” then you have nothing to worry about. Control your risk by sticking to your stops.
38. This next “bit” is brutal, but true. The true mark of an amateur trader who is never going to make it in this business is one who continually blames everything but his or herself for the outcome of a bad trade. This includes, but is not limited to, saying things like:
1. The analysts are crooks.
2. The market makers were fishing for stops.
3. I was on the phone and it collapsed on me.
4. My neighbor gave me a bad tip.
5. The message boards caused this one to pump and dump.
6. The specialists are playing games.
The mark of a professional, however, sounds like this:
•It is my fault. I traded this position too large for my account size.
•It is my fault. I didn’t stick to my own risk parameters.
•It is my fault. I allowed my emotions to dictate my trades.
•It is my fault. I was not disciplined in my trades.
•It is my fault. I knew there was a risk in holding this trade into earnings, and I didn’t fully comprehend them when I took this trade.
The obvious difference here is accountability. For amateurs, everything having to do with the market is “outside their control.” That is not reasonable thinking, and really just points to an individual who has, probably for the first time, had to confront their “real self” as opposed to the perfect self or idealized self they have constructed in their mind. This is also known as “living in a fog.” A person can drift around through life in their own private world, where they are pretty special and can do no wrong. Unfortunately, trading rips off this mask, because you cannot dispute what has happened to your account. This is also known as “confronting reality.” For many people, when they start trading they are suddenly confronting reality for the first time in their lives. Just to see the world as it really is requires a lifetime of training, and for many people trading the stock market is their first real step in this journey. Some people say that traders are born, not made. Not so. If you choose to see the world as it is, then you can start trading successfully tomorrow.
39. Amateur traders always think, “How much money can I make on this trade!” Professional traders always think, “How much money can I lose on this trade?” The trader who controls his or her risk takes money from the trader whose head is in the clouds.
40. At some point traders realize that no one can tell you exactly what is going to happen next in the market, and that you can never know how much you are going to make on a trade. Thus the only thing left to do is to determine how much risk you are willing to take in order to find out if you are right or not. The key to trading success is to focus on how much money is at risk, not how much you can make.
This is the greatest business in the world. By following the “bits of wisdom” below we hope that you can stay in this business as long as you choose.
Here it is, 40 Tips Of A Wise Trader
1. Trading is simple, but it isn’t easy. If you want to stay in this business, leave "hope" at the door and stick to your stops.
2. When you get into a trade, start looking for signs right away that you are wrong. If you see them, then get out before your stop is hit.
3. Trading should be boring, like factory work. If there is one guarantee in trading, it is that "thrill seekers" get their accounts ground into parking meter money.
4. Amateur traders turn into professional traders when they stop looking for the "next great technical indicator" and start controlling their risk on each trade.
5. You are trading other traders, not the actual stock. You have to be aware of the psychology and emotions behind trading.
6. Be very aware of your own emotions. Irrational behavior is every trader's downfall. If you are yelling at your computer screen, imploring your stocks to move in your direction, you have to ask yourself, "Is this rational?" Ease in. Ease out. Keep your stops. No yelling.
7. Watch yourself if you get too excited—excitement increases risk because it clouds judgment.
8. Don’t overtrade—be patient and wait for 3-5 good trades.
9. If you come into trading with the idea of making “big money,” you are doomed. This mindset is responsible for most accounts being blown out.
10. Don’t focus on the money. Focus on executing trades well. If you are getting in and out of trades rationally, the money will take care of itself.
11. If you focus on the money, you will start to impose your will upon the market in order to meet your financial needs. There is only one outcome to this scenario: you will hand over all of your money to traders who are focused on protecting their risk and letting their winners run.
12. The best way to minimize risk is to not trade. This is especially true during the low-volume “chop and slop” found during the afternoon trading session between 11:30AM Eastern and 2:30PM Eastern. If your stocks are not acting right, then don't trade them. Just sit and watch them and try to learn something. By doing this you are being proactive in reducing your risk and protecting your capital.
13. There is no need to trade 5 days per week. Trade 4 days per week and you will be sharper during the actual time you are trading.
14. Refuse to damage your capital. This means sticking to your stops and sometimes staying out of the market.
15. Stay relaxed. Place a trade and set a stop. If you get stopped out, who really cares? You are doing your job. You are actively protecting your capital. Professional traders actively take small losses. Amateurs resort to hope and sometimes prayer to save their trade. In life, hope is a powerful and positive thing. In executing a trade, hope is a virus that can infect and destroy.
16. Be right on day one or get out. Don’t take a “red” position home overnight.
17. Keep winners as long as they are moving your way. Let the market take you out on a trailed stop.
18. Money management is the secret to success. Don’t overweight your trades. The more you overweight a trade, the more “hope” comes into play when it goes against you. Hope is to trading as acid is to skin. The longer you leave it in place, the more painful the outcome will be.
19. There is no logical reason to hesitate in taking a stop. Reentry is only a commission away.
20. Professional traders take losses. Being wrong and not taking a loss does damage to your wallet, mind, and soul.
21. Once you take a loss you forget about the trade and move on. Especially if it is a small one. Do yourself a favor and take advantage of any opportunity to clear your head by taking a small loss.
22. You should never let one position go against you by more than 2% of your account equity. This means if you have a $50,000 trading account, you should never let one stock turn into a loss of more than $1,000. This means if you max out your 2 to 1 margin account and buy 2000 shares of a $50 stock, you must have a stop loss of 50 cents. That is tight and bound to get hit. Do yourself a favor and buy 400 shares of this $50 stock and use a $2.00 stop to start. That is only an $800 dollar loss and gives you room to trail your stop up to break-even before you are taken out on a wiggle. Is there ever a time when it is okay to take more than a 2% portfolio loss on a position? NO! Never means exactly that. This is a maximum loss by the way. Setting up your plays for losses of 1% of your equity is even better.
23. Use daily charts to get an idea of the 30-day trend, hourly charts to get an idea of the 1-day trend, and 5-minute charts to establish your entry points.
24. If you are hesitating to take a position, that indicates a lack of confidence that is not necessary. Just get into the position and PLACE A STOP. Traders lose money in positions everyday. Keep them small. The confidence you need is not in whether or not you are right, the confidence you need is in knowing you will stick to your stop no matter what. Therefore you can actually alleviate this hesitancy to “pull the trigger” by continually sticking to your stops and reinforcing this behavior.
25. Averaging down on a position is like a sinking ship deliberately taking on more water.
26. Build up to a full position as it goes your way.
27. Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment. Realize this and immediately tighten your stop considerably to preserve profits or exit your position.
28. Look for opportunities NOT to trade.
29. You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy it back below the breakout point—which is typically where you will set your stop when you buy a breakout. (In case you ever wondered why you get stopped out on a lot of “failed” breakouts).
30. Embracing your opinion leads to financial ruin. When you find yourself rationalizing or justifying a decline by saying things like, “They are just shaking out weak hands here,” or “The market makers are just dropping the bid here,” then you are embracing your opinion. Don’t hang onto a loser. You can always get back in.
31. Unfortunately, discipline is typically not learned until you have wiped out a trading account. Until you have wiped out an account, you typically think it cannot happen to you. It is precisely that attitude that makes you hold onto losers and rationalize them all the way into the ground. If you find yourself saying things like, “My stock in EXDS is still a good investment,” then it is time to start following the basic principals all professional traders follow. (That would be protecting your capital, aggressively cutting your losses, and letting your profits run by not giving in to the temptation to sell just because you have a quarter profit).
32. Siphoning out your trading profits each month and sticking them in a money market account is a good practice. This action helps to focus your attitude that this is a business and not a place to seek thrills. If you want an adventure, go live in Minnesota for a winter. If you want excitement, deliberately forget your anniversary. Just don’t trade.
33. Professional traders only place a small portion of their assets into 1 position. Or if they take on a large position, then they strictly limit their risk to 1-2% of their current equity. Amateurs typically place a large portion of their assets into 1 position, and they give it "room to move" in case they are actually right. This type of situation creates emotions that ruin accounts, while professionals are able to make decisions and cut losses because they strictly define their risk.
34. Professional traders focus on limiting risk and protecting capital. Amateur traders focus on how much money they can make on each trade. Professionals always take money away from amateurs.
35. In the stock market, heroes get crushed. Averaging down on a losing position is a “heroic move” that is akin to Superman taking a spoonful of Kryptonite. The stock market is not about blind courage. It is about finesse. Don't be a hero.
36. Sadly, traders never learn the importance of “the rules” until they have blown their account out of the water. Until you “lose it all” it never seems that important to have to follow the basics of professional trading. (Cut your losses, let your profits run, etc).
37. The market reinforces bad habits. If early on you held onto a loser that went against you by 20%, and you were able to get out for break-even, you are doomed. The market has reinforced a bad habit. The next time you let a stock go against you by 20%, you will hang on because you have been taught that you can get out for break-even if you just be patient and hang on long enough. Tell that to the folks who bought VERT at $145. When’s it going to get back to break-even? Well, if your timeframe is “never,” then you have nothing to worry about. Control your risk by sticking to your stops.
38. This next “bit” is brutal, but true. The true mark of an amateur trader who is never going to make it in this business is one who continually blames everything but his or herself for the outcome of a bad trade. This includes, but is not limited to, saying things like:
1. The analysts are crooks.
2. The market makers were fishing for stops.
3. I was on the phone and it collapsed on me.
4. My neighbor gave me a bad tip.
5. The message boards caused this one to pump and dump.
6. The specialists are playing games.
The mark of a professional, however, sounds like this:
•It is my fault. I traded this position too large for my account size.
•It is my fault. I didn’t stick to my own risk parameters.
•It is my fault. I allowed my emotions to dictate my trades.
•It is my fault. I was not disciplined in my trades.
•It is my fault. I knew there was a risk in holding this trade into earnings, and I didn’t fully comprehend them when I took this trade.
The obvious difference here is accountability. For amateurs, everything having to do with the market is “outside their control.” That is not reasonable thinking, and really just points to an individual who has, probably for the first time, had to confront their “real self” as opposed to the perfect self or idealized self they have constructed in their mind. This is also known as “living in a fog.” A person can drift around through life in their own private world, where they are pretty special and can do no wrong. Unfortunately, trading rips off this mask, because you cannot dispute what has happened to your account. This is also known as “confronting reality.” For many people, when they start trading they are suddenly confronting reality for the first time in their lives. Just to see the world as it really is requires a lifetime of training, and for many people trading the stock market is their first real step in this journey. Some people say that traders are born, not made. Not so. If you choose to see the world as it is, then you can start trading successfully tomorrow.
39. Amateur traders always think, “How much money can I make on this trade!” Professional traders always think, “How much money can I lose on this trade?” The trader who controls his or her risk takes money from the trader whose head is in the clouds.
40. At some point traders realize that no one can tell you exactly what is going to happen next in the market, and that you can never know how much you are going to make on a trade. Thus the only thing left to do is to determine how much risk you are willing to take in order to find out if you are right or not. The key to trading success is to focus on how much money is at risk, not how much you can make.
Friday, June 24, 2011
How to calculate Intrinsic Value for Stocks.
In this article I will share some important resources for calculating intrinsic value. The actual formula is readily avalable on the internet, just key in the search engin "calculate intrinsic value" and you will have it. What I want to share is the sources of information required to calculate intricsic value. This required a bit of work.
Historical price : yahoo.finance.com
Historical P/E Average : multexinvestor.com
Key Ratios : smartmoney.com
Stock Chart : msn.money.com
Other usefull sites : quicken.com
Hope this help in getting the valuation of stock done and happy investing.
Historical price : yahoo.finance.com
Historical P/E Average : multexinvestor.com
Key Ratios : smartmoney.com
Stock Chart : msn.money.com
Other usefull sites : quicken.com
Hope this help in getting the valuation of stock done and happy investing.
Friday, April 29, 2011
38 Secrets of Unlimited Wealth By Warren Buffet
The following is an excerpt of Warren Buffet Investment Diary. It contains 38 Golden Rules to investments that he lives by and these are the very same rules containes in the all time classic investment book "The Intelligent Investor" written by his mentor Benjamin Graham.
Here are the rules!
1. Never Lose Money.
2. Never forget rule No. 1.
3. Never invest in a business you cannot understand.
4. Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in stock market.
5. Critical Factor - Determine the intrinsic value of business and pay a fair bargain price.
6. Risk - assuming you know what you are doing,you can reduce your risk by concentrating on only a few holdings.
7. An Investor should hold a small piece of business with the same tenacity that an owner would exhibit if he owned all of the business.
8. Buy a business, don't rent stocks.
9. Ask yourself : Does the business have a consistent operating history?
10. An investor needs to do very few things as long as he/she avoids big mistakes.
11. "Turn-arounds" seldom turns.
12. Focus on Return on Equity(ROE) not on Earning per share(EPS).
13. Look for company with high profit margin.
14. Always invest for the long term.
15. Ask yourself : Does the business have favorable long term prospects.
16. Remember! Stocks market is manic depressive.
17. It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
18. The dumest reason in the world to buy stock is because it's going up.
19. Most people get interested in stocks when everyone is. The time to get interested is when no one else is. You can't buy what is popular and do well.
20. I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out.
21. Our favourite holding period is forever.
22. Risk comes from not knowing what you're doing.
23. If you don't know jewellery, know the jeweller.
24. If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes.
25. If a business does well, the stock eventually follows.
26. A public opinion poll is not substitute for thought.
27. The most important quality for an investor is temperment, not intellect...You need a temprement that nither derives great pleasure from being with the crowd nor against the crowd.
28. When asked how to become successful in investing, Buffet answered : "We read hundred and hundreds of annual reports every year.
29. I never buy anything unless I can fill out on a piece of paper my reasons...
30. I will tell you how to become rich. Close the door. "Be fearful when others are greedy. Be greedy when others are fearful.
31. If you understood a business perfectly and the future of the business, you would need very little in way of a margine of safety.
32. So, the more vanurable the business is, assuming you still want to invest, the larger merine of safety you need.
33. The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all the durability of that advantage.
34. Investor should remember that excitment and expenses are their enemies.
35. The most common cause of low prices is pessimism, sometimes pervasive, sometimes specific to a company or industry. It's optimism that is the enemy of a rational buyer.
36. Diversification is a protection against ignorance. It makes very little sense for thoes who know what their doing.
37. A low cost index fund is the most sensible equity investment for the great majority of investors. My mentor Ben Graham took this position many years ago and everyting I have seen since convinces me of it's truth.
38. By periodically investing in an index fund the know nothing investor can actually out perform most investment professionals.
Here are the rules!
1. Never Lose Money.
2. Never forget rule No. 1.
3. Never invest in a business you cannot understand.
4. Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in stock market.
5. Critical Factor - Determine the intrinsic value of business and pay a fair bargain price.
6. Risk - assuming you know what you are doing,you can reduce your risk by concentrating on only a few holdings.
7. An Investor should hold a small piece of business with the same tenacity that an owner would exhibit if he owned all of the business.
8. Buy a business, don't rent stocks.
9. Ask yourself : Does the business have a consistent operating history?
10. An investor needs to do very few things as long as he/she avoids big mistakes.
11. "Turn-arounds" seldom turns.
12. Focus on Return on Equity(ROE) not on Earning per share(EPS).
13. Look for company with high profit margin.
14. Always invest for the long term.
15. Ask yourself : Does the business have favorable long term prospects.
16. Remember! Stocks market is manic depressive.
17. It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
18. The dumest reason in the world to buy stock is because it's going up.
19. Most people get interested in stocks when everyone is. The time to get interested is when no one else is. You can't buy what is popular and do well.
20. I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out.
21. Our favourite holding period is forever.
22. Risk comes from not knowing what you're doing.
23. If you don't know jewellery, know the jeweller.
24. If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes.
25. If a business does well, the stock eventually follows.
26. A public opinion poll is not substitute for thought.
27. The most important quality for an investor is temperment, not intellect...You need a temprement that nither derives great pleasure from being with the crowd nor against the crowd.
28. When asked how to become successful in investing, Buffet answered : "We read hundred and hundreds of annual reports every year.
29. I never buy anything unless I can fill out on a piece of paper my reasons...
30. I will tell you how to become rich. Close the door. "Be fearful when others are greedy. Be greedy when others are fearful.
31. If you understood a business perfectly and the future of the business, you would need very little in way of a margine of safety.
32. So, the more vanurable the business is, assuming you still want to invest, the larger merine of safety you need.
33. The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all the durability of that advantage.
34. Investor should remember that excitment and expenses are their enemies.
35. The most common cause of low prices is pessimism, sometimes pervasive, sometimes specific to a company or industry. It's optimism that is the enemy of a rational buyer.
36. Diversification is a protection against ignorance. It makes very little sense for thoes who know what their doing.
37. A low cost index fund is the most sensible equity investment for the great majority of investors. My mentor Ben Graham took this position many years ago and everyting I have seen since convinces me of it's truth.
38. By periodically investing in an index fund the know nothing investor can actually out perform most investment professionals.
Saturday, January 23, 2010
Money is what ever you think it is.
"Perception created reality"
*Remember this quotation! In fact commit it to your mind. If possible repeat it to yourself 3 times a day.
What do I hope to achieve by doing this? Well...it might just give you an idea of why you are where you are in your life.
The truth is, all of us are having exactly what we want in our lives right now.........Let this idea sink in. And the answer will be revealed. Ask yourself honestly what were your desires and what did you do to achieve them?
After an honest self assessment(which might take 1 minute to several years)ask yourself this question.
"What else that I want that is still not achieved?" and
"How do I move around my obstacles to achieve my goals?"
Tips : If the answer comes out incoherent, repeat the process until it makes sense.
*Remember this quotation! In fact commit it to your mind. If possible repeat it to yourself 3 times a day.
What do I hope to achieve by doing this? Well...it might just give you an idea of why you are where you are in your life.
The truth is, all of us are having exactly what we want in our lives right now.........Let this idea sink in. And the answer will be revealed. Ask yourself honestly what were your desires and what did you do to achieve them?
After an honest self assessment(which might take 1 minute to several years)ask yourself this question.
"What else that I want that is still not achieved?" and
"How do I move around my obstacles to achieve my goals?"
Tips : If the answer comes out incoherent, repeat the process until it makes sense.
The Truth about Wealth!
Question 1. Do you need a lot of money to be wealthy?
Answer. NO
Question 2. Do you need luck to have what you want?
Answer. NO
Question 3. Working hard is the only way to be wealthy?
Answer. NO
These are the three question answered after attending a seminar that I paid $5000 for recently. If these three question does not surprise you in any way, then you should not be reading this article. But if these questions about wealth shakes your believes about money and wealth, then this might be a revelation.
In the following article I will be talking about some very important topics that, if understood correctly will give you a new perspective on where you are and where you could go.
Answer. NO
Question 2. Do you need luck to have what you want?
Answer. NO
Question 3. Working hard is the only way to be wealthy?
Answer. NO
These are the three question answered after attending a seminar that I paid $5000 for recently. If these three question does not surprise you in any way, then you should not be reading this article. But if these questions about wealth shakes your believes about money and wealth, then this might be a revelation.
In the following article I will be talking about some very important topics that, if understood correctly will give you a new perspective on where you are and where you could go.
Thursday, December 10, 2009
The Youngest Millionair In The World
The Youngest Millionaire who started his company in his bedroom at the age of 16 and went on to sell his first company for 40 million to Yahoo. That was not all. He started another company and went on to sell it for 300 million.
Listen to words of wisdom from this young enterpruner. The definition of "preception created reality".
Listen to words of wisdom from this young enterpruner. The definition of "preception created reality".
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