Monday, 31 October 2011
Sunday, 30 October 2011
Happy Halloween!
Posted on 22:43 by Unknown
I publish this link on my blogs every year at Halloween time, it's pretty cool:
http://ak.imgag.com/imgag/product/preview/flash/bws8Shell.swf?ihost=http%3A%2F%2Fak.imgag.com%2Fimgag&brandldrPath=%2Fproduct%2Ffull%2Fel%2F&cardNum=%2Fproduct%2Ffull%2Fap%2F3125133%2Fgraphic1
http://ak.imgag.com/imgag/product/preview/flash/bws8Shell.swf?ihost=http%3A%2F%2Fak.imgag.com%2Fimgag&brandldrPath=%2Fproduct%2Ffull%2Fel%2F&cardNum=%2Fproduct%2Ffull%2Fap%2F3125133%2Fgraphic1
Wednesday, 12 October 2011
Learn To Relax and Not Panic In Volatile Stock Markets
Posted on 21:56 by Unknown
In a wild, see-saw market like we've seen in the last few weeks, it is common for regular people to become worried and confused. In fact, even many professional traders are probably stressed out.
The thing is, there is never any reason to really worry - as long as you don't have to cash out the whole account in the next 5 years and you aren't trading with leverage.
Instead, there are only two things to know: stocks fluctuate, and fluctuations allow you to boost your return by buying low and selling high. When a stock you own goes down, buy some more. If a stock you own goes up, sell into the rise to generate your return.
In fact, buying into declines and selling into rises is the best way to trade - it does not require hindsight, luck, special knowledge or hours of research.
My book stock trading riches gives a complete trading system that follows this strategy. It also provides information on portfolio building, diversification, and choosing stocks and funds.
The thing is, there is never any reason to really worry - as long as you don't have to cash out the whole account in the next 5 years and you aren't trading with leverage.
Instead, there are only two things to know: stocks fluctuate, and fluctuations allow you to boost your return by buying low and selling high. When a stock you own goes down, buy some more. If a stock you own goes up, sell into the rise to generate your return.
In fact, buying into declines and selling into rises is the best way to trade - it does not require hindsight, luck, special knowledge or hours of research.
My book stock trading riches gives a complete trading system that follows this strategy. It also provides information on portfolio building, diversification, and choosing stocks and funds.
Tuesday, 13 September 2011
Why Do I Write About Simplicity, Zen, and Taoism on A Financial Blog?
Posted on 21:48 by Unknown
It might seem strange that someone who likes simplicity and Eastern philosophy would write about them on a business/financial blog.
After all, doesn't business have to do with serious, bottom line math? Isn't Zen and Taoism associated with '60's style hippies and non-capitalist, non profit peace and love?
Actually, Eastern philosophy and thought is rooted in the everyday world - in mundane matters such as commerce. Eastern religions such as Buddhism do not see worship as something you only do once a week in a church or temple. Instead, you "worship" and server the Universe through your daily life and work.
Personally, I feel that any success I have achieved has been because of my passion for simplicity, minimalism, zen, and Taoism. Incorporating elements from each of them into my way of thinking was as valuable (if not more) than any computer, mathematical, or financial training I've ever had.
I've learned the power of "The Middle Way" (rather than sticking to an extreme viewpoint), analog thinking (as opposed to win/lose zero sum games), present moment awareness, the power of concentration, and "resetting" or letting go.
After all, doesn't business have to do with serious, bottom line math? Isn't Zen and Taoism associated with '60's style hippies and non-capitalist, non profit peace and love?
Actually, Eastern philosophy and thought is rooted in the everyday world - in mundane matters such as commerce. Eastern religions such as Buddhism do not see worship as something you only do once a week in a church or temple. Instead, you "worship" and server the Universe through your daily life and work.
Personally, I feel that any success I have achieved has been because of my passion for simplicity, minimalism, zen, and Taoism. Incorporating elements from each of them into my way of thinking was as valuable (if not more) than any computer, mathematical, or financial training I've ever had.
I've learned the power of "The Middle Way" (rather than sticking to an extreme viewpoint), analog thinking (as opposed to win/lose zero sum games), present moment awareness, the power of concentration, and "resetting" or letting go.
Saturday, 10 September 2011
Gambler's Fallacy Part 1 - Casinos
Posted on 22:14 by Unknown
The "gambler's fallacy" occurs in games of chance when a streak of one type of result happens, and the gambler then bets on the reverse. For example, supposed you were betting on coin flips and you waited until 10 heads in a row came up. You then bet on tails, because it's "due" to come up.
This is a fallacy because each flip in independent of one another. The chance of a tail coming up after 10 heads is still 50%. This same line of thinking is false in casino games such as baccarat or roulette. If a long string of black occurs, red is not more likely to come up.
Some gamblers will argue that, if there is no regression to the mean, how can the long term odds (50% in a coin toss) be so stable? In other words, say 100 tails in a row come up, how can the results regress back to 50/50 without a long streak of heads?
But you don't need a run of the other result. Suppose 100 tails in a row came up. If, as an example, the next 1000 flips alternate between head and tail, then the results become 600 tails, 500 heads. The odds have regressed toward the normal 50-50 without a corresponding run of heads.
This is a fallacy because each flip in independent of one another. The chance of a tail coming up after 10 heads is still 50%. This same line of thinking is false in casino games such as baccarat or roulette. If a long string of black occurs, red is not more likely to come up.
Some gamblers will argue that, if there is no regression to the mean, how can the long term odds (50% in a coin toss) be so stable? In other words, say 100 tails in a row come up, how can the results regress back to 50/50 without a long streak of heads?
But you don't need a run of the other result. Suppose 100 tails in a row came up. If, as an example, the next 1000 flips alternate between head and tail, then the results become 600 tails, 500 heads. The odds have regressed toward the normal 50-50 without a corresponding run of heads.
Saturday, 3 September 2011
The 401k Backlash
Posted on 20:09 by Unknown
In the last year or so, I have seen a lot of articles bashing the 401k.
This is interesting because the 401k seemed to be sacrosanct. All through the 1990's and into the 2000's, financial planners and the financial media drilled into our heads about how important it was to save for retirement, and a 401k was great because you "paid yourself first", got the power of tax deferral and, perhaps, got a company match.
But, many 401k plans have drawbacks - the main ones being that the fund choices tend to be poor. This is because the funds don't have to sell themselves to the individual investors. Instead, they just have to sell themselves to the investors' employers.
For the employers, their money and retirement are not on the line, and administering the company's 401k plan is not a core function of the business.
Personally, I think that you should only use a 401k plan if your company matches - and then only put in enough to get the maximum match.
You are better off putting the rest of your investments into Roth IRAs and/or taxable accounts where you can get long term capital gains - which can be canceled through capital loss harvesting (which is explained on page 28 of my book Stock Trading Riches).
This is interesting because the 401k seemed to be sacrosanct. All through the 1990's and into the 2000's, financial planners and the financial media drilled into our heads about how important it was to save for retirement, and a 401k was great because you "paid yourself first", got the power of tax deferral and, perhaps, got a company match.
But, many 401k plans have drawbacks - the main ones being that the fund choices tend to be poor. This is because the funds don't have to sell themselves to the individual investors. Instead, they just have to sell themselves to the investors' employers.
For the employers, their money and retirement are not on the line, and administering the company's 401k plan is not a core function of the business.
Personally, I think that you should only use a 401k plan if your company matches - and then only put in enough to get the maximum match.
You are better off putting the rest of your investments into Roth IRAs and/or taxable accounts where you can get long term capital gains - which can be canceled through capital loss harvesting (which is explained on page 28 of my book Stock Trading Riches).
Friday, 2 September 2011
Steve Jobs Stepping Down From Apple - Sad End of an Era
Posted on 21:27 by Unknown
Last week, Steve Jobs announced that he was stepping down as CEO of Apple Computer.
I felt sad when I heard the news because of his recent history of pancreatic cancer and having a liver transplant. If he stays alive, and can contribute as chairman of Apple, then it is ok. But, I'm worried that he might be terminal. I hope I'm wrong.
Apple ran into trouble after Jobs left the first time. But, because of that experience, I have heard that Jobs has gone out of his way to imprint his philosophy into the company.
I really admire Steve Jobs - he has two great qualities for success:
1. He can anticipate what people will want.
2. He practices zen minimalist design - The key isn't what the device does, it's what it doesn't do.
This last quality is especially at risk, now that Jobs has stepped down. It's hard to consistently exercise restraint, and push back on engineers, sales people, and marketers who want to cram in the latest and greatest features found in competitor's products.
Apple under Jobs didn't invent the mp3 music player or the smart phone - but they conquered these markets by concentrating on a few essential requirements and perfected them. These self-imposed limits benefited the consumer by making the devices simple and robust to operate.
Apple's products compared to the competitors' are like haiku vs. serious prose. They touch you like a light breeze and then leave you free, instead of enveloping you.
There's no straining or effort required to integrate Apple's products into your life.
I felt sad when I heard the news because of his recent history of pancreatic cancer and having a liver transplant. If he stays alive, and can contribute as chairman of Apple, then it is ok. But, I'm worried that he might be terminal. I hope I'm wrong.
Apple ran into trouble after Jobs left the first time. But, because of that experience, I have heard that Jobs has gone out of his way to imprint his philosophy into the company.
I really admire Steve Jobs - he has two great qualities for success:
1. He can anticipate what people will want.
2. He practices zen minimalist design - The key isn't what the device does, it's what it doesn't do.
This last quality is especially at risk, now that Jobs has stepped down. It's hard to consistently exercise restraint, and push back on engineers, sales people, and marketers who want to cram in the latest and greatest features found in competitor's products.
Apple under Jobs didn't invent the mp3 music player or the smart phone - but they conquered these markets by concentrating on a few essential requirements and perfected them. These self-imposed limits benefited the consumer by making the devices simple and robust to operate.
Apple's products compared to the competitors' are like haiku vs. serious prose. They touch you like a light breeze and then leave you free, instead of enveloping you.
There's no straining or effort required to integrate Apple's products into your life.
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