One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.
Trading gives you an incredibly intense feeling of what life is all about.
Nobody can predict interest rates, the future direction of the economy or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.
Just because you buy a stock and it goes up does not mean you are right. Just because you buy a stock and it goes down does not mean you are wrong.
When stocks are attractive, you buy them. Sure, they can go lower. I’ve bought stocks at $12 that went to $2, but then they later went to $30. You just don’t know when you can find the bottom.
The essence of investment management is the management of risks, not the management of returns.
The majority of short term trading results are just random. In the long term the money ends up with those that can trade and manage risk.
The best traders I know are also the most humble people I know, coincidence? Or has the market taught them some very valuable lessons?
The best traders are simply slaves to the market’s price action.
The ones who make it, are the ones who manage risk.
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.
A prudent speculator never argues with the tape. Markets are never wrong, opinions often are.
The stock market is never obvious. It is designed to fool most of the people, most of the time.
It is foolhardy to make a second trade, if your first trade shows you a loss. Never average losses. Let this thought be written indelibly upon your mind.
To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate.
The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think.
Professional traders have always had some system or other based upon their experience and governed either by their attitude towards speculation or by their desires.
Instead of hoping he must fear and instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit.
There are times when you should be completely out of the market, for emotional as well as economic reasons.
Never buy at the bottom, and always sell too soon.