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Trading Gambler and You-the market genius!

Discussion in 'Shares' started by wdongli, 8th Sep, 2011.

  1. wdongli

    wdongli Well-Known Member

    Joined:
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    1,292
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    Perth
    I heard the song, "The Gambler" first time in 2009 after I quit my job and became a full-time market student. I liked this song very much and thought all of us gamble on something day after day due to the uncertainties of the future. Too many market warriors and pundits don't understand the part of gambling in life and market.

    They are scared to die when market is fearful and cheered to be euphoric when market is manic. They could not understand the winning is not about the value, dog, swan, gold, US dollar, China great booming, the resource but the relationship between them and the time you hold the position with them.

    ***
    If you ask me what the most important lesson I have got, I would tell you that is buy for margin of safety while you could identify them with high probability. Why high probability not sure fact? The truth is in the market 99% of the market players are too clever to the fact but too stupid to deal with the uncertainties!

    All we know we should buy at the peak. Could you tell me who really don't know it? But we just buy at the peak with the dream this time things would be different. All we know we should not sell on fire or at bottom. Could you tell me who really don't know it too? But we just sell on fire and follow the media to cry for the sky to fall down!

    ***
    We warn us "not to buy at peak" when the market crashes down to the bottom. We warn us "not to sell on the fire" when the market climbs up to the peak and the music is moving to its end! We all like to show we are clever but we tend to be stupid and idiotic we should not!

    Some people ask what is my own problem in the market. Before I could give you some idiotic answers but now I could say my problem is I tend to be head hot when the market is hot! I did not lose any pennies in IT boom but I lost $400,000 paper profit in IT bust! I didn't lost any pennies in GFC but I did lost $180,000 paper profit between April 2011 and June 2011! After some great winning bets I tend to believe I am genius even I never claim publicly!

    Whom I am? An fool in a market for a game or business for fools to win or lose! We are gambling on something and we need to know what it is about and put ourselves in some great organization about our minds! This organization is our mental system rather than the system with the link to the computer's hardware and software!

    ***
    So regularly listen the song "The gambler" would be great helpful! You could be value, tech, or whatever you like but you have to solve the problem every gambler has to solve:

    *
    On a warm summer's evenin' on a train bound for nowhere
    I met up with the gambler, we were both too tired to sleep
    So we took turns a starin' out the window at the darkness
    'Til boredom overtook us and he began to speak

    He said, "Son, I've made a life, out of readin' people's faces
    And knowin' what their cards were by the way they held their eyes
    So if you don't mind my sayin', I can see you're out of aces
    For a taste of your whiskey I'll give you some advice"

    *
    So I handed him my bottle and he drank down my last swallow
    Then he bummed a cigarette and asked me for a light
    And the night got deathly quiet and his face lost all expression
    Said, "If you're gonna play the game, boy, you gotta learn to play it right"

    You got to know when to hold 'em, know when to fold 'em
    Know when to walk away and know when to run
    You never count your money when you're sittin' at the table
    There'll be time enough for countin' when the dealing's done

    *
    Every gambler knows that the secret to survivin'
    Is knowin' what to throw away and knowing what to keep
    'Cause every hand's a winner and every hand's a loser
    And the best that you can hope for is to die in your sleep

    And when he finished speakin', he turned back towards the window
    Crushed out his cigarette and faded off to sleep
    And somewhere in the darkness the gambler, he broke even
    But in his final words I found an ace that I could keep

    *
    You got to know when to hold 'em, know when to fold 'em
    Know when to walk away and know when to run

    You never count your money when you're sittin' at the table
    There'll be time enough for countin' when the dealing's done

    You got to know when to hold 'em, know when to fold 'em
    Know when to walk away and know when to run
    You never count your money when you're sittin' at the table
    There'll be time enough for countin' when the dealing's done

    You got to know when to hold 'em, know when to fold 'em
    Know when to walk away and know when to run
    You never count your money when you're sittin' at the table
    There'll be time enough for countin' when the dealing's done

    ***
    Do you know when to fold'em and know when to walk away and know when to run?

    I don't know when to walk away and run but can fold if I don't have the chips in hand usually! It tends to force me stay on the table too long and lose what I have got!

    Do you count your money when you are sitting at the table?

    No usually when I buy since I believe if the chances are there and have great probability to win you have to hit out, but yes when I have more chips on the table and head becomes hot!

    Do you know you would have the time to count when the dealing has done?

    Yes now but not at all before 2004! When the game is over, you have to lock the profit and enough profit but I usually become greedy with my paper profit!

    If you don't know these your value, swans, and system would send you into the hell; the more genius you are the more you would lose until you cannot lose anymore!

    Don't think so? Time will tell you all!

    ***
    Misunderstanding in life logic and common senses are fatal. Misusing of the tech and systems can be corrected and should not be fatal! Most of warriors fail to know the 101 rather than the skills to run a lovely system designed by others!

    I am not clever and a genius in the market. I claim I am a market fool with belief I could be wiser day after day and would like to get wiser with my time and efforts!

    I believe things would move to its opposite if they go too far in one direction! I believe the sky is safe and storm and music will stop at some time points!

    I don't believe we could be rich by googling for the information for our own sanctification. It is never easy to make the money. The easy to google for the information could mislead us in the road for the least difficult but failed road! I don't believe genius in the stock market but do believe it needs the intelligent and wisdom! I do believe you could not believe the human errors and you have to put some buffers for your mistakes!

    ***
    I do believe it is crazy to dump 100million of KIK shares even it could be a rational decision to cut off the traps for some big boys! Short pains much better than crying everyday! I never see anyone comes back from the hell.

    You burnt all and put yourself in the hell? You have to pay the cost to get out of it even the cost is huge! Fortunately these big boys could afford the cost! I would like to help these big warriors out of the hell and believe after I help them from the hell I could get the ticket for some great profit!

    The storm would produce a zero-sum game. To these big warriors it is nothing even KIK back to $0.03 but to me it would mean a 10 baggers! I don't need too many 10 baggers but one or two of them are good enough for the fools as me!

    ***
    We cannot predict the future but we could have our own selection for what scenarios we would prefer for our own future! We could make mistakes and then we also could design some buffer to abate the fatality of our mistakes! It is craze to deny we could make mistakes; it is crazy to give up to buffer our mistakes; we could go forward profitably when we make the mistakes one after another!
     
    Last edited by a moderator: 8th Sep, 2011
  2. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    In short term, market is driven by news. What's the news? News is the communication of selected information on current events which is presented by print, broadcast, Internet, or word of mouth to a third party or mass audience. What could be selected for the information to the mass audience? They must be shocking or sensational!

    Why XAO went up not down today? Why DOW goes up now not down? How could you be shocked or sensational? Don't know? Think about! It is extremely important for a wise or intelligent market players without matter how you hate the speculation! News could trigger some turning points for life, market, and actually everything. However you have to be rational and fundamental sensitive. Not all of information from news could bring your the reward but how you response or reaction to the news!

    ***
    Aussie got better GDP data for the passed quarter. U.S. stocks gained on a report President Barack Obama will propose a $300 billion package to boost jobs. Germany’s top court ruled it was legal for the country to take part in regional rescue plans.

    Could you figure out what they mean to the economies first rather just think about the market response or reaction? Tech just move in the scope which the fundamental factors define.

    One of the interesting things about the market the last three days and possibly last three months is the key focus has been Europe, and today the news is less bad and quite possibly good. Who said the market is not efficient to any news?

    ***
    Why do we worry so much? Why do we hear the prediction that the sky would follow down? We get the messages from the past but past always past. News could give a turning point!

    Bear doesn't move around without limitation or the risks to be defeated in bad time. Bull doesn't move around without risk to lose its trend in good time too. In the worst the bad news become too much and trivial. In the best time good news could be discounted too. Vital news are good news and good enough news in bad time and bad news and bad enough news in good time. They would change the course!

    It has last too long for bear to hit the innocent people in Australia. We cry but we never give up the hope thing could be better!

    Could we say it is the time to turn around? Not 100% sure but likely!

    I really hope we could run under the rising Sun again. Why not? If the Sun would rise again before I could not hold my fishes in hand, I would be thankful since I have got a lot of lessons from this bearish market and my mistakes!

    The things should not be different this time and the Sun will rise sooner or later!
     
    Last edited by a moderator: 8th Sep, 2011
  3. wdongli

    wdongli Well-Known Member

    Joined:
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    Posts:
    1,292
    Location:
    Perth
    XAO found reasons to put it down again!

    It is amused to see the Aussie warriors are so sensitive for any bad news. These warriors are not just the small guys but the institutional big boys. Now they don't believe anything could be valued fundamentally but the strength of the winds in the market.

    They have got some lessons from GFC and the current crash! That is they don't believe 5.3% unemployment rate are much better than 10% ones! After market and business men see the rollers-coasters movement of the market, no one believe Aussie GDP could go up anymore and they sacked workers for their own safety.

    ***
    XAO had been sold in May and June. XAO has been sold in August. XAO is preparing to sell for September, October, deficit crises, more natural disasters, or anything which could force XAO as whole to be right up in the nights!

    XAO as a whole has been in depressed which is so deep that it just could not stop but sell in the head winds. RBA said interest rate will be mainly affected by external matters but XAO doesn't agree. Who knows what hit at the head of XAO?

    Let all of Aussies to jump over the fence for sometimes. Until it sells its whole lot of soul to the bear, it would have all of the desires to jump over the fence again and again. Could it jumps as that for another 24 months? It works too hard and you could not stop wondering when it could have a good sleep in the night!

    ***
    Are Aussies moving into the hell? I don't think so! However in the endless dark and stormy night, you could not have the mood to listen the music which could only be played in the grand party... Who dare to believe Aussies would have sunny days?

    All are hopeless even worse than the gamblers in Casino! Why didn't you collect your chips before the April? Why didn't you buy back in this bottom in time average way? They know how to cry in the ruins but don't know when to fold, hold, walk away, and run.

    Don't be one of these Aussies now! Think first and then act!

    ***
    However, in a bearish market, we tend to be anxious, in denial, fear, desperate, panic, capitulated, despondent, and depressed. Do Aussie warriors and warriors around the world become depressed enough? It is very important to know where the warriors feel collectively. When we decide to buy, hold, and sell, we have to know the probability in quantity.

    Is this bearish market a beginning of GFCII? Why does gold hold its position so tough? Is the market fearful enough? EU? US? China? Australia? Aussie warriors worry all of them. Before these external and internal matters turn to be steady, XAO would be up/down for some times.

    I still don't think we could move into GFCII so quickly. VXO chart tells us that once the price channel starts to contract, the volatility of the market and fears would be reduced to normal, which could take a few weeks or months. This time XAO reacted much more intensively than other stock market. Could we say the overreaction would be corrected while the fear become less and less?

    It seems the fear needs another one month to reduced enough. It is only possible if US, EU, and China would not crash down! All of problems root in the series of mistakes I made between April - May. It is like to play the chess. If we put our first step wrong, it will need more efforts and times to get the winning position. After making so many mistakes, I am fearful to make more mistakes. This fear could cloud my judgment! My intuition and analysis tell me XAO is at its solid rock bottom but I just do fear what if I am wrong after the chips have been collected by Mr market!

    One thing is clear that XAO tends to react desperately to external bad events and goes its own way if everything becomes normal. RBA seems right:XAO would act as a rollers-coasters; no anyone in XAO could stop it stupidly in panic!

    It seems we could say even people worry about GFCII but market is not so fearful as we were in GFC! If no GFCII, why gold keep to hover more than 1800? FMS moved up from $0.125 to $0.16; AKK moved up to $0.034; PRR recovered a little bit; CTO jumped to $0.089; and more or less a lot of fishes in my portfolio moved up. They help me to recover the capital losses. Should I lock the profit or hold my positions? They are still at the range of rock bottom... If I didn't make too many mistakes, the decision would be easy, just hold until the Sun starts to rise again but now I have to say I am in paradox. I just invert from one extreme to another and vice versa with hope I could get a rational and intelligent decision!

    It is not about right or wrong but need a balanced decision to cover the chances and risks! Could I get a balanced decision? I have my own biases. Do I know them and could correct them now?

    [​IMG]

    [​IMG]

    ***
    Do feel a round of coordinated rate cuts and other measures to ease monetary policy by global central banks is growing increasingly. Today Euro zone hold its rate. RBA kept the rate not change.

    US and euro-zone governments unlikely to provide a fiscal response to economic weakness due to the debt crises. However the negative feedback loop between weak growth and soggy asset markets makes a coordinated monetary policy easing move more likely. It is "perhaps as early as the G7 meeting" this weekend in Marseille, France.

    It seems that the Fed, the European Central Bank, the Bank of Japan and the Bank of England could all participate in a coordinated move with a mix of rate cuts and quantitative easing, which is necessary to break down the fear loop which has been intensive since the end of July!

    The worse than expected global economies could also force the central banks of emerging economies to use monetary policies to reduce the pressure of the global financial system.

    Could not say the ease of monetary policies would get rid off the causes but the problems only could be fixed in a stable financial system! If system becomes stable, resource and gold should move up from their current position. Hopefully the move up is steady and mild!

    ***
    At last decided to sell FMS and CTO to lock the profit, which is not huge but could make me feel better and avoid any chance to sell on fire. I still need to recover my cash reserve for the possible calculation errors for worst time!

    AKK has moved very well but I would like to hold until its shale drilling. Do feel it could be more than $0.10 since its good shale assets in US.

    My direct goal is still to lower the cost: sell the fishes whose profit is OK and buy the fishes whose price I believe are lowest ones in their bottom channel. It would give me the reasonable balance between the risk and reward.

    FMS and CTO were sold. After they gone, feel much better. I could buy lower and sell higher now which is the necessary conditions to lower the cost of my portfolio so that if fears gone they could produce better profitability without extra risks. If more selling and I feel the price is extremely cheap I could buy more! What if FMS and CTO move up further? I have got what I want!

    Learn when to fold, hold, run, and walk away by inverting, inverting, and inverting my judgment and decision The market is not in white and black and we could be very biased.
     
    Last edited by a moderator: 9th Sep, 2011
  4. wdongli

    wdongli Well-Known Member

    Joined:
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    Posts:
    1,292
    Location:
    Perth
    There are bargains around!

    European and US market become more fearful today. What would you do in this volatile market? I would continue my direct goal to get more cash reserve and continue rebalance my portfolio for lower cost so that I could get a best position when the Sun rises in the market again! There are three fundamental matters:

    1. in short term, no one could predict what card would be on the tale; market is very fearful; anything could be the trigger for market to react dramatically; you buy with the margin of safety but market could push the price much lower than the price with margin of safety; it is fearful if you just hold without view for long term.

    2. in long term, just as 6 months or a year, the storm has to abate and then stop without matter how it ferrous or turbulent. The sun would rise without any different from any other sunny days even the wind and fad could be different.

    So for long term goal we need to get a position to run under the rising Sun, which needs to use this volatile time to lower the cost and lower the cost by locking some profit to sustain your market business and revive in the sunny days!

    Fear is powerful to destroy the asset and capital if anyone allow himself to be synchronized the market fear. Ignorance is powerful to destroy the asset and capital too if you ignore the destroying power of the fear.

    1. don't cry in tears for the sky falling down, which is there for thousands of years for life in this world at least. The sky will be there

    2. don't cry for the paper losses but find the cheaper ones with better margin of safety to replace them. System risks crash all of the market and then the good or bad ones. Could you find the best in value?

    3. if you could find the bargain in value and lock the profit if they are good enough. We should know this volatile market better than in May and June. We could buy some fishes or swans to get some reasonable profit or reduce our paper losses.

    Good things this fearful market has last for more than one months globally as shown in the chart of VXO. Would EU be disintegrated? Do you hold some gold or gold stocks? They tend work in opposite direction of financial system. I am happy I hold some insurance.

    Some believe gold has not value. I could not see the logic. Human could not ignore the history and would be affected by the history. It is arrogant to ignore the monetary status of gold in history.

    Good news is if we have GFCII VOX needs to be 80 points first. Fears plays its part mainly in momentum. If fears could not put this world into GFCII in two months, it would miss the chance this time quite likely! We are not in the GFC crash but the extension of GFC which should be less fearful generally speaking!

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