7 Deadly Trading / Investing Sins

Re: 7 Deadly Sins of Trading / Investing

Postby Musicwhiz » Mon Aug 03, 2009 5:09 pm

Aspellian wrote:Another sin - Falling in LOVE with a stock, holding on till the end of time eg. riding Chartered from S$1 to S$17 to S$0.10 and now $2!! :lol:

Part of investing means tracking the business of the Company. If there is a permanent deterioration and impairment in fundamentals, one should beat a hasty exit.
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Re: 7 Deadly Sins of Trading / Investing

Postby winston » Mon Aug 03, 2009 5:18 pm

Ha ha .. I left out the "don't"..
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: 7 Deadly Sins of Trading / Investing

Postby greenhoney » Mon Aug 03, 2009 6:38 pm

after much analysis and research of the stock (fundamentally) and its business, its very difficult not to be somehow rooting for a stock to deliver and make money. this is my biggest weakness, being too attached to a stock that doesnt 'love' me back.

so what their margins were lesser than previous quaters? so what if receivables went down? so what if the EPS went down, now recession what? so what 'this', so what 'that'. just trying to justify a stock and its worth.
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Re: 7 Deadly Sins of Trading / Investing

Postby winston » Mon Aug 03, 2009 6:55 pm

Another deadly sin:-

Not buying when you know that it's time to buy, maybe hoping for a better price..

Example: when oil was at 35, wasn't that going to be close to the low ? But was going thru the head ? It's stuff like "never catch a falling knife" !


So anoher deadly sin, dont let those quotes affect your independent thinking. Quotes like this can hurt your pockets.

"Sell in may & go away" and u have missed the mother of all rallies
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Re: 7 Deadly Sins of Trading / Investing

Postby kennynah » Mon Aug 03, 2009 7:00 pm

greenhoney wrote:after much analysis and research of the stock (fundamentally) and its business, its very difficult not to be somehow rooting for a stock to deliver and make money. this is my biggest weakness, being too attached to a stock that doesnt 'love' me back.

so what their margins were lesser than previous quaters? so what if receivables went down? so what if the EPS went down, now recession what? so what 'this', so what 'that'. just trying to justify a stock and its worth.


i think this might contend for the longest description .... wahahahaha.....brudder...how to abbreviate this?
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Re: 7 Deadly Sins of Trading / Investing

Postby Cherry » Mon Aug 03, 2009 8:16 pm

kennynah wrote:

But I wanted for us to write based on personal trading/investing experiences...


Ken

Based on observation, can or not?

A few points from my observation:

1. Sub-consciously, feel that you are super clever and thereby become arrogant, and think you know
better.
Remedy: Have an open mind to all ideas from experts and non-experts.

2. Stick doggedly to a principle or rule that had served you well before.
Remedy: Be flexible.

3. Just use TA or FA or both to trade/invest.
Remedy: Look at the big picture and listen to the ground first, then consider the FA and TA.

4. Throw all your time, attention, life to the market.
Remedy: The market will consume your life. Never do that.
Last edited by Cherry on Tue Aug 04, 2009 12:31 pm, edited 2 times in total.
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Re: 7 Deadly Sins of Trading / Investing

Postby winston » Mon Aug 03, 2009 8:38 pm

Another one that I have overcome:-

Not letting your profits run..

As mentioned by kennynah, planning the exit helps whether it's TA eg. Resistance, One Day Reversal etc. or FA eg. PEG, P/B etc..

In theory, having a Trailing Stop Loss would help but it's very difficult not to take a windfall profit ..
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: 7 Deadly Sins of Trading / Investing

Postby winston » Tue Aug 04, 2009 7:30 am

Dan Ferris' 3 rules for being a great investor By Dan Ferris in Extreme Value:

In his latest letter to investors, Oaktree Capital Management's Howard Marks offered some advice I felt obliged to pass on to you:

Investors must never again abdicate the essential task of assessing risk. It's their number-one job to perform thorough, skeptical analysis.

Putting Marks' words into my own, I came up with the following three rules:

Obsess about risk, not return. Marks writes, "Risk is something every investor should think about constantly."

Be skeptical. Don't buy anything unless the price and the risk are low enough.

Do your homework. If you don't do your own homework on every investment you put your hard-earned money into, you're juggling dynamite sticks over a bonfire.

Marks said the word "risk" has become too commonplace. We should consider replacing it with the word "danger." Good idea. Keeping your money away from danger is your No. 1 job as an investor. You can't have investment success unless you consistently avoid financial danger.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: 7 Deadly Sins of Trading / Investing

Postby Cherry » Tue Aug 04, 2009 1:01 pm

cherry wrote:

kennynah wrote:

But I wanted for us to write based on personal trading/investing experiences...


Ken

Based on observation, can or not?

A few points from my observation:

1. Sub-consciously, feel that you are super clever and thereby become arrogant, and think you know
better.
Remedy: Have an open mind to all ideas from experts and non-experts.

2. Stick doggedly to a principle or rule that had served you well before.
Remedy: Be flexible.

3. Just use TA or FA or both to trade/invest.
Remedy: Look at the big picture and listen to the ground first, then consider the FA and TA.

4. Throw all your time, attention, life to the market.
Remedy: The market will consume your life. Never do that.


Another point from my observation:

5. Utilise 100% of available cash in trading/investing all the time, whether with leverage or no leverage. When a golden opportunity knocks on your door, you have no cash to answer it.
Remedy: Observed, a high % of people, who made high % gains on their investments, are those who have cash or can call up cash, when the opportunity for a good investment arises. So, don’t anyhow 'chiong' in and 'chiong' out. Know when to hold cash, so that when a good opportunity comes you have cash or can call up cash to invest.
Last edited by Cherry on Tue Aug 04, 2009 3:38 pm, edited 1 time in total.
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Re: 7 Deadly Sins of Trading / Investing

Postby kennynah » Tue Aug 04, 2009 1:20 pm

ok..i will leave this thread around for another week or so... let others have a chance at giving their inputs..and then i will collate...and put them up for voting on which should be the finalists of the 7 deadliest sins...
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