If you find you can't reconcile major differences - especially in values - consider wether the relationship is worth preserving.
There are all kinds of different people in the world, many of whom value different kinds of things. If you find you can’t get in sync with some-one on shared values, you should consider whether that person is worth keeping in your life.
"Two
self-destructive behaviors come to mind
immediately the first I would call
trading addiction people can be addicted
to trading just like they can be
addicted to gambling and for much of the
same reason not everyone trades to make
money some people are trading for
thrills and excitement and those people
do get in their own way."
"The other self-destructive behavior I would call impulsivity. When people make impulsive decisions because of frustration. They lose some money, the markets are not moving very much and they become frustrated and out of that frustration they feel a need to trade. In fact, traders call it overtrading. They make those impulsive decisions where they don't really have an edge in the trade and they end up
01:38
losing money as a result."
You can find Dr. Steenbarger's books on Amazon.com:
Short Bio: Charlie Munger is a 95 years old investor and the Vice Chairman of Berkshire Hathaway.
Video duration: 23m51s
Charlie Munger on the merits of long-term investing:
"If you invest the way people gamble in
casinos you're not gonna do very well. So ,it's the long-term investment that works
best. But if you like the action of
investing and sometimes winning, sometimes losing, just like people like
the action when they gamble in a casino, those people are not my people. I like the long-term investors who
figure out something that's going to
work over the long term and buy that."
Charlie Munger highlights a paradox in Chinese behavior when it comes to investing in the markets and the desire to gamble:
"The Chinese do have a long attention
span and that is a hugely desirable
quality because you you're more likely
to get the right answer if you think
deeply and hard about a subject for a
long time and it's odd there's a group
of people who are so good at having a
long attention span like to gamble so
much which is quite counterproductive."
Interestingly, Munger considers the short-term market players as "gamblers":
"We have a view as to what
the intrinsic value is of what is being
traded and we only buy it when we think
it's worth more than we're paying so
we're trying to make a long-term
investment by waiting for something to
be under priced and then buying it
and we don't give a damn about all these
gamblers in the market."
Jim Simmons is a mathematician and a hedge fund manager (founded Renaissance Technologies in 1982). He is considered by many to have the best investment track record in the whole industry.
In this interview Jim explained how he got started in trading in his late thirties when he got tired of mathematics (who can blame him?):
"When I started
doing trading, I had gotten a little
tired of mathematics. I was in my late
30s I had a little money I started
trading and it went very well
I made quite a lot of money how it with
pure luck I mean I think it was pure
luck. simply wasn't mathematical modeling."
And how starting that venture ended up in forming one of the world's biggest hedge funds:
"But in looking at the data after a while
I realized hey this looks like there's
some structure here and I hired a few
mathematicians and we started trying to
make some models just the kind of thing
we did back at eye-dea
you design an algorithm you test it out
on a computer does it work doesn't it
work
and so on.
"
Simmons also stated how commodities and currencies used to show trending characteristics back in the day but that is. not the case any longer:
"(in) the old days commodities or
currencies had a tendency to trend."
"The
trend-following would have been great in
the 60s and it was sort of okay in the
70s by the 80s it wasn't such."
Jim stressed the importance of staying ahead of the competition by looking for shorter term approaches to trading and hiring very smart individuals:
"We stayed ahead of the
pack by finding by finding other other
approaches and shorter term approaches
to some extent. But the the real thing
was to gather a tremendous amount of
data and and we had to get it by hand in
the early days. We went down to the
Federal Reserve and copied interest rate
histories and stuff like that because it
didn't exist on computers. We got a lot
of data, very smart people and that
was the that was the key."
"In a certain sense what we
did was machine learning you you you
look at a lot of data and you try to
simulate different predictive schemes
until you get better and better at it it
doesn't doesn't necessarily feed back on
itself the way we did things but it
worked."
Mark D. Cook was one of the few day traders interviewed by Jack Schwager on his Market Wizards books (Stock Market Wizards, Mark D. Cook: Harvesting S&P Profits). In this presentation Mark stresses out the importance of treating trading as a business.
"In my own experience as I
started with the business training plan
in 1991 and I have been doing it every
year since. It added to my bottom line
because I had scenarios covered of what
to do, when to do it and how to go about
it before as I said before the emotions
came on to it."
A few of the best quotes from his interview on the Stock market Wizards book are:
"The best trades work the quickest."
"If you decide to trade for a living, you have to treat it just like any other business endeavor and go into it with a plan."
"You need to have a solid business plan. The trouble is that most people start trading without any definitive plan."
Jack Schwager has written four excellent book on his Market Wizards series (Market Wizards, The New Market Wizards, Stock Market Wizards and Hedge Fund Market Wizards). When asked on how these new traders differ from the ones interviewed in the first book he answered:
"Every person is a
different personality, different story, different lessons and different way of
trading. Even within this book (Hedge Fund Market Wizards) everybody
I interviewed is completely different
on how they make money in the markets. (That's) amazing, I mean, I couldn't even make up
as many various ways of trading markets
as these people are using."
On the price action itself, Jack stresses that markets have changed a lot over the years but the main trading principles do not really change over time:
"Markets are
always changing and but certain
principles but the main principles don't
change."
While trend following worked very well in the eighties and nineties, in the modern markets they do not work well. One of the reasons for that is the proliferation of computerized trading systems and models:
"I think one
big change is the the big trend
following profits that were easy to take
in those earlier years no longer are
then you can still get big trends but
markets sent a much more false breakouts
you tend to have lots of choppier
conditions it's more difficult to make
money doing that type of approach you
can still do it but has to be a bit more
sophisticated."
Jesse Livermore is considered by many has the best speculator that has ever lived. His book, Reminiscences of a Stock Operator was the most recommended book among the market wizards interviewed by Jack Schwager in his books.
Inside Reminiscences of a Stock Operator you will find some of the most brilliant quotes about the stock market, trading and investing. Here's a few:
"Blunders by incompetent speculators cover a wide scale. I have warned against averaging losses. That is a most common practice." “I have long since learned, as all should learn, not to make excuses when wrong. Just admit it and try to profit by it. We all know when we are wrong. The market will tell the speculator when he is wrong, because he is losing money.” “Let me warn you that the fruits of your success will be in direct ratio to the honesty and sincerity of your own effort in keeping your own records, doing your own thinking, and reaching your own conclusions.” “The real money made in speculating has been in commitments showing in profit right from the start.” "Rome was not built in a day," and no real movement of importance ends in one day or in one week. It takes time for it to run its logical course. "Remember that stocks are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don’t make a second unless the first shows you a profit." "A speculator should make it a rule each time he closes out a successful deal to take one-half of his profits and lock this sum up in a safe deposit box." "Definitely is not safe to try to keep account of too many stocks at one time. You will become entangled and confused." “A speculator without cash is like a store owner with no inventory. Cash is your inventory, your lifeline, your best friend. Without cash you’re out of business.” “The market will tell the speculator when he is wrong, because he is losing money.”
Peter Brandt is a professional trader and he has been trading futures and forex for 42 years.
Video duration: 7m11s
Peter Brandt starts with a few pertinent questions to describe what trading is really all about.
"Have you ever had five straight
losing trades, ten straight losing trades?"
"Have you ever been in a situation where
you wonder whether you're ever gonna win
again?"
Peter Brandt considers that there are two dangerous periods in the life of the trader:
"The
two most dangerous periods that can
enter into the life of the trader and
how they affect you in slightly
different ways but important ways and
the two things are severe draw downs and
the second thing is a severely
profitable period of time because they
also can be very dangerous."
In this video Peter shares his worst drawdown experience:
"My year worst year as a trader was
2013 in which I lost 13 percent but that
was part of a drawdown that lasted 15
months. For 15 months I was in the
drawdown and it was agony."
Peter Brandt has written a great book. You can find it on Amazon:
Short Bio: Ray Dalio is an hedge fund manager, writer and philanthropist. Dalio founded Bridgewater Associates, currently one of the world's biggest hedge funds. His estimated net worth is around 18 billion dollars.
Video duration: 16m33s
In this video presentation at Ted Talks, Ray Dalio explained how he got started in trading the markets and how investors must act in order to become successful. Here are some of the highlights:
"When I was 12 years old
I hated school but I fell in love with
trading the markets."
"In order to be an
effective investor one has to bet
against the consensus and be right and
it's not easy to bet against the
census and be right when has the bet
against the consensus and be right
because the consensus is built into the
price."
"I made a
lot of painful mistakes and with time my
attitude about those mistakes began to
change I began to think of them as
puzzles that if I could solve the
puzzles they would give me gems and the
puzzles were what would I do differently
in the future so I wouldn't make that
painful mistake and the gems were
principles that I would then write down
so I would remember them that would help
me in the future."
Dr. Brett Steenbarger considers trading as a performance activity similar to sports or chess:
"What traders need to
focus on is that trading is a
performance activity no different from
sports no different from chess acting
and so in any performance activity it
requires practice it requires feedback
about how we're doing efforts at getting
better and better
and so we see successful traders going
through a certain kind of learning curve
where they're constantly learning from
their experience changing what they do
improving what they do redoing
relearning always evolving."
Brett also stresses the importance for traders to work in teams:
"One of the techniques that's worked very
well with the developing traders I've
worked with is to learn in teams (...) Traders
will team up and learn together. They will keep a journal of their
results, have a daily
report card that they keep about what
they've done well, what they need to
improve and they share that with each
other so that each trader is learning
from everybody else which doubles or triples the learning."
You can find Dr. Steenbarger's books on Amazon.com: