Here is the full book online if you have Acrobat...Reminiscences of a Stock Operator. Truly one of my top 5 books about trading and life in general. http://www.stock-market-seminars.com/downloads/ Chris
liltrdr- I think volatility and volume drying up in a real bear market is certainly a possibility. The thing is the money has to go somewhere. If it stays in cash then your right we are screwed. The thing is I don't think that will happen, because if things get really bad cash is not safe either. Cash in our case means the "Almighty Dollar" for the most part and if that starts to fall then there is really only one place for it to go, into the solids. If the market really turns to shite and the dollar starts to crumble then Gold and Silver will be the only safe place for investors. You can see the effect that Sept 11 had on Gold prices and if you take a note from probably the best book on trading there is " reminiscence of a Stock Operator" quoted by ChrisRt earlier, namely to follow the big money "the insiders" then just have a look at a one year chart of Gold or pick your favorite mining stock. What you'll see is that not only have gold mining stocks and gold itself been rising in the last six months but major accumulation seems to be going on. I know that Tony mentioned in one of his books that he puts a portion of his surplus cash in long terms accounts. I wouldn't put it past Tony to also be a great long term stock picker but I personally don't want to be long long term in this market. I have no qualms putting some of my money in long term bear funds or market neutral positions. Anyway just my two cents. Trav
I hadn't thought about it before but these low interest rates must be wreaking havoc on retirees. Low interest rates mean low returns on CD's and money market funds, places long considered safe havens for retirement capital. The low rates will have a tendency to force money out of these instruments and into others like bonds, precious metals (not), real estate (not), and maybe the stock market. As long as people have money, it has to be somewhere.
Hmm. I have read this book twice. That tells you something about my retention capabilities. Fortunately you don't have to be too smart to trade.
Chris, Here is the full book online if you have Acrobat...Reminiscences of a Stock Operator Thank you for the link. Of the many, many books I've read that one has somehow slipped by me. Being in your Top 5 of all-time is a statement I cannot ignore!
I started trading in 1990 and I am always concerned about the party ending. What I've always done is when I'm making money is pay off all debt and free myself of the burden of having to make money. That means setting aside a 6 month reserve for monthly expenses. Because of this cushion I can adjust to tough trading conditions. Meaning doing less size and trading .I might have to adjust my risk paraments and sweat out early morning lack of liquidity and wait for the trend to reassert itself or just lower my profit targets and instead of going for 1/2's and 3/4's , go for less, maybe I have to take profits sooner and especially into any strenght or weakness.I have too say other than the summer months over the years and I believe a period in the early 90's the market has always allowed traders the opportunity to make profits from it.Whether you not you made any money was related to your own performance and not because of the market. The history of the market is such there is always something happening or some unknown future event that gives traders opportunities to make money. I have confidence in my abilities and knowledge to trade anything,even though most of my experience is in equities and index futures. So even though I might go thru several months of negative profitability I have confidence that market conditions will change and my profitability will re-emerge and by the end of the year I will have met my personal financial goals. The only way you can gain this confidence is by experiencing the ups and downs of trading for several years. I remember , I kept track of all my trades , winning percentage....cents/share....losses over a point ...etc...etc....My first 100 trades I did when I started I made money on 51% . At random over the years I would see what my winning percentage was and you know what? Out of any 100 trades in a row my winning percentage has always been around 50 percent. I would have thought after years of experience it would have improved ,but my trading profits have increased every year basically because I trade much more capital. So I'm always concerned about liquidity and trading conditions but I also know there is light at the end of the tunnel during those tuff times and its not an on coming train.
the other day both SUNW and CSCO traded over 120M shares each. I'm not really that worried about volume running out. I can divide by 10 and I think we'd still be all ok. The hedge funds will run towards commodities just like they did in the 70s. In a deflationary environment (the only thing I'm really nervous about) you can't go for stocks or commodities but currencies. I haven't tested this but I bet techniques like Bottom Fisher work on currencies (but probably after some tweaking). Also, I bet pairs trading works great for currencies but, again, I haven't tried it. Anyone think deflation is around the corner?
ADC " Out of any 100 trades in a row my winning percentage has always been around 50 percent." I'm glad to hear that. I get to feeling inferior whenever I read that LBR has about 70% winning trades and a few others do about 65%. I don't see how they do it.
Nicodemus, The way to have a high winning percentage is to take profits very quickly and give losses a bit of room to turn profitable. With most systems, that is not the way to make maximum profits, but if you're running money and want to have a smooth equity curve and a high Sharpe number, that might be the way to go.