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Trading Hard experiences and lessons

Discussion in 'Shares' started by wdongli, 20th Jul, 2012.

  1. wdongli

    wdongli Well-Known Member

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    All of traders and investors have got some lessons but not all could remember them and follow the rules which could be deduced from the experiences.

    We hate the pains and then we are exclusive from the hard experiences sot that we repeat to do the similar things for different results. We should know it is insane if we are not completely stupid.

    So we do need to remember only hard experience, proven by fact, should impress you and cause you to follow the rules just if you could sort them out.

    ***
    Most of retail traders and investors come to the stock market because the computers and internet. However life is not just about the skills to get the data or information, we need good strategies, which could be very simple.

    Do you know snowballs? Do you know where there are a lot of snow? Do you know you could not let it melt down under any conditions? Do you how to roll it bigger and bigger?

    We could know everything but we can know something very well. Don't put your money in anything you doesn’t understand. Stick to strategies you know and understand.

    ***
    Human is emotional animal. You must be aware of your emotions and the crowd.

    If the crowd is too bearish but you are sensible and have gut for chances, you could hold something for your future. And if the crowd is too bullish and you become alerted for the probability that the music could stop suddenly, you’ll be prepared for worst-case scenarios.

    Do remember getting too emotional about the market may cloud your judgment and damage your portfolio.

    ***
    Don't tell you "stop losses are all" or "buy and hold forever is the key for successes!" They are not the magic words for fortune but need some necessary conditions to use for the success.

    Price is all. Without matter how clever you are if you buy at the price more than you sell regularly, you would be doomed. You have to buy for margin of safety in the time period you would like to hold.

    Do remember you could make human errors. No matter how you analyze the market, get out of a stock when you’re wrong, and stay in when you’re right.

    ***
    It’s easier said than done, but essential for stock market survival. So don't fully trust yourself or anything in the stock market except the enough margin of safety!

    At last but not least important don't waste your hardship in the stock market. The past one year was horrific to the retail traders and investors. The GFC crash made everyone in fear. It was a attrition war. Too many of retail traders and investors have been consumed.

    The worst image becomes worsen. The assets with risky image have being burnt on the fire. Nearly all of trade forum have become ghost towns. It hurts us so much and then no crying is enough but silence.

    ***
    If you would not die silently or Hmm in the side line you have to be reborn!

    How?

    Inverting, inverting, and inverting until you are sure you get the chances with the affordable risks!
     
    Last edited by a moderator: 21st Jul, 2012
  2. wdongli

    wdongli Well-Known Member

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    Asset allocation: bond

    You need hold bond-type or stock-type assets to get a balanced income and future gain with manageable risks.

    Generally saying all of successful market practitioners hold both of bonds and stocks and change the ratio of them to manage the risks and maximize the income and gains.

    Nearly all of retail traders or investors never touch bonds and don't know how to use the bonds to balance their portfolio. It is the time to understand the bond!

    ***
    It was said "retail trading in Australian government bonds is a step closer, as the regulator finalises rules designed to open up the multibillion-dollar market to households."

    1. there are strong appetite globally for federal government debt
    2. small traders and investors have been unable to directly buy Commonwealth bonds since the late 1980s.

    ***
    There are growing demand for safer assets. Small traders and investors need to diversify their assets.

    The government has committed to allow retail trading of the bonds on the Australian Securities Exchange. It was said it could be start to trade the bond later this year.

    The listing of government bonds is a vital step in the development of a larger retail corporate bond market.

    ***
    Aussies have distinctly high weighting towards shares. Most of traders and investors just run away from the crashed stock market and not any trustful shelter for their money.

    By the way the global rush to safe assets sent the yield on 10-year government bonds to an all-time low. It was less than 2.8 per cent earlier this year and the yield was below 3 per cent yesterday.

    Don't just assume bond is safety heaven. It has still the issue: when to buy; when to hold; when to sell; and what to buy. It needs to think about with your trading and investment strategies.
     
    Last edited by a moderator: 21st Jul, 2012
  3. wdongli

    wdongli Well-Known Member

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    Tailor-made rules for tough times

    It is tough now in the stock market. You feel it should be up but it goes down or vice versa. Nothing is certain and then it is important to hold the tailor-made rules for tough times.

    The tailor-made rules would allow you to stick to a plan when you need it most. Indeed, a rulebook is important in any market climate, but it tends to get tossed when stocks are soaring or plunging. Usually if you break the rules one time and you need more gut to follow them again.

    It is very critical to fine tune your sentiment by following the rules. These rules give your the ground using crowd sentiment figures to better understand how markets and individual stocks might move. Don't expect exactly matched patterns but guideline for probabilities!

    ***
    There were go-go markets such as those in the late 1960s, mid-1980s and late 1990s, and middle 2000s; the bear market of 1973-74, October 1987’s crash, the IT bust in 2001, and the GFC crash in 2008/2009.

    The basic lessons keep coming back; they don’t change! It’s just that we don't know or forget them and need to be reminded or learn in hardship.

    With global markets gyrating, we need these tailor-made rules for some perspective. With the light of some of these rules I avoided the damage of GFC and took the advantage of V-shape recovery but I also made some very serious mistakes when I threw the rules away.

    ***
    Markets tend to return to the mean over time as things recur to its mean.

    By “return to the mean,” when stocks go too far in one direction, they tend to come back to their long-term trend. Overly euphoric or pessimistic markets cloud people’s estimation and judgment of what they can reasonably expect.

    Euphoria is the time everything is too bullish and it definitely will come back to the mean and go far away from the mean into depression or hopelessness. It is unavoidable. If you don't lock your harvest, you would be doomed...

    *
    Back to mean is a process. Its paths are unpredictable. It gives everyone a paradox box and most of retail traders and investors fail to react properly! You have to be patient and have cash or stocks for the trend to change to the point you expect.

    If you could not hold your position in half way you would be doomed. You must be brave and have gut with clear vision! It is not straight line from one extreme to the mean and another extreme. You could be confused and disbelieve the course.

    In the course you could lose terribly and relatively. You could give up. You could get in at wrong time and wrong position. The key is the means in value. Your buying price must be fully discounted for your safety.
     
    Last edited by a moderator: 22nd Jul, 2012
  4. wdongli

    wdongli Well-Known Member

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    One Extreme end stops at the opposite extreme

    Stock market is a macro-control system, which is partly open and partly closed in loop. Sometimes the positive feedback loop affect the system more powerful and sometimes the negative feedback loop set the course.

    As individual retail traders or investors, we simply could not predict what would exactly happen tomorrow even we could roughly know the trajectory profile. Human is great since it could sort out what is about vision and what is about daily operations for the possible best goals. Traders and investors tend to be technicians to control the system by working for the believed sure things but they could not.

    You have to know whom you are. You have to know where you would die and never allow yourself to put the toes on. Too many systems in traders' hands are failed system naturally. The more they struggle the more lose they get. To be doomed is their fates.

    ***
    It is the law excesses in one direction will lead to an opposite excess in the other direction. House booming in US led the way for GFC. GFC crash led the way for V-shape recovery.

    Markets in a bubble can seem ready to pop. The positive loops mainly from the price and crowd sentiment would manage to stretch into unrecognizable shapes, or so called unauthorized water. Usually once the markets get into the unauthorized water, the market would be in a self-fulfilled operation mode. At last moment all are thrilled or dizzy and huge cake or hell would hang over there.

    Too many traders and investors thought bust is extremely risky. It is wrong. The most of risks happen at the peaks. They are the burners for assets and money. The least risky time is the crash done.

    ***
    The lessons from my market experiences in last 20 years are:

    1. When all of warriors are crying and most of them have been consumed, get your money ready, put the money into the market in diversification and buy in time average.

    2. When all of warriors become euphoric by the new age of human kind, historical great human chances, sell what you have got, strengthen your corners, and watch out for your safety.

    3. Know yourself and never forget you have only one enemy in your life and market practice, that is yourself.

    *
    4. We need buffers since we could not know when the storm or tsunami would come in. Caution make your snowball bigger and bigger.

    5. Never and ever forget the conditions and contexts. The same things can result in completely different results. It includes the patterns.

    6. Never and ever make losses. Never and ever stop the losses but your own human errors.

    ***
    All are so simple to know but hard to understand onto the earth.

    How make your English so good? It involves the experiences, education, your personality, culture, and behavior. Success is some sort of matters about habit and behavior. Sometimes you would feel nowhere to go.

    It is the same for me to work on my English listening. However we all could be educated to change if anyone can make the things happen.

    ***
    Just finish watching "Doctor Who." Feel half good and half bad. I could feel my advance in English listening but it is much slower than I expect.

    I feel I get a lot of lessons from my mistakes since the beginning of 2011 but I do be alerted that the instincts and the old me could beat me down again in the stock market. I will try all to stop it!

    I believe I can if I am not extremely unlucky for my English Listening and my market practice. I am working on dance for them!
     
    Last edited by a moderator: 22nd Jul, 2012
  5. voigtstr

    voigtstr Well-Known Member

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    Have you considered using a diary instead of this forum to record your thoughts? Just a thought...
     
  6. wdongli

    wdongli Well-Known Member

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    Why? What will you post? Your thought? Why don't you write down in your diary? Copy and paste others' ideas here? Why do you waste your time and the space? Tell what should be done by others? Have you got your own job done?

    We need involvement even every one has his own idea. Do you think the forum is not for our own thought but copy others' idea for nothing?

    Thank you for your words but could you write something you would only write in your diary, which would tell your true thought about the market and could be helpful.

    ***
    What do you want to read? Do you have the gut to tell? If my words upset you, please skip them over. We all need to go our own ways in the market!

    Of course if you give the words with wisdom I am listening but if you just feel upset, I would not be your comrades! Never!

    Wait to hear you are very successful in the stock market and could give me some lessons!

    ***
    Do you know we have to be self-reliant and independent? Any good ideas about it? Write down them here. It is very useful for someone.

    Generally speaking if we lose heavily we would be desperate. If we are desperate we would be very easy to be upset. If we feel upset we would be more desperate. The more we are desperate the more we lose.

    We have to learn what we should write down in the forum. Don't cheer for peak and don't depress for the ruins. How? Using any words you write down for your mental frame work updating.

    ***
    What if someone disapprove what you write? It is normal among the retail traders and investors that they are ignorant and arrogant but pretend they hold all for themselves and others.

    "I told you" is what they like to say even they are losers! Losers tell the winning stories and winners feel regret for their mistakes!

    Too many write and become losers. Too many post for nothing. It is wrong. If you could not save the world you should save yourselves, right?

    ***
    I could not save anyone in the stock market. I could not teach anyone since I was stupid more often than I could sustained. No one can save or destroy anyone except himself in the stock market.

    I have given up to blame anyone or feel upset for the words. The words are nothing if you are stupid. If we feel upset not by our mistakes but by others, we have confirmed a fact that we are very stupid and more stupid than we could image.

    Are you stupid? Don't think so? You are stupid! Do you think Warren Buffet would be upset by my words? Why am I upset by your words? Since I could be more stupid than you! If you are stupid but don't admit you are the loser in the stock market.

    ***
    By the way, I write to make me a little bit wiser and feel involvement. No personal provoking even you could feel hurt. It is better than to be hurt by the bloody market.
     
    Last edited by a moderator: 23rd Jul, 2012
  7. wdongli

    wdongli Well-Known Member

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    Bought BLZ and IAU

    It is dire everywhere today. XAO has being extended its selling from May to July. All of risky assets are in selling mode even XAO refuses to lead the dropping down.

    I bought BLZ at $0.001 and IAU at $0.20 today.

    AKK moved up to $0.019 after one of its well shed the oil. It is drilling in US. It was sold at its cash reserve seemingly.

    ***
    IAU has troubles with its partner in Indonesia with a advanced gold project. It seemed the market thought what if IAU would lose its project.

    It closed at $0.245.

    All of value of its advanced gold project has been removed from the price.

    [​IMG]

    How could it be? It was said its partner got all of its workers out of the sits. The crowd believed it was not negotiable or worried the closure. What if a few days or months later it announced a new agreement has been achieved? Who care!

    The crowd is so powerful and if it wants it could destroy all in your hand. It knows cash is king! $0.01 in the pocket now is better than $1 in the pocket 1 year later! Is it insane? You tell me if you are a genius!

    ***
    No news was good news today. All of the swans in the stock market look as the black ones.

    So for safety the crowd took all as the black swans. The crowd is very powerful in self-fulfilling.

    Market as a whole has lost its vision! Actually if we just used our eyes no one could be alive in the stock market.

    ***
    XAO seemed in the mood to correct the V-shape recovery.

    This mood works with fundamental issues around the world to let the crowd gutless. In days or months, all seem very reasonable.

    Sanity in details drives all in the insanity in ruins.

    [​IMG]

    ***
    Could XAO down to 2,000? It seemed very possible, eh?

    [​IMG]

    Don't say it is impossible! EU gone or China gone or US gone or everyone gone could be possible. How could we be safe if all should be gone? At last we all will die but I don't bet on it!

    ***
    I will shift to look after my cash position and be sure I have enough cash in hand before it comes back to 4500 if not 6000.

    Not joke as Soros said in the early June 2012 the EU needed 3 months; I said China needed 3 months to land its economies and US needed 3 months to stabilized. So it would be Sept 2012.

    It seems I should use the patters of XAO in 2010 and 2011. All come down after the May and down further into September and run to March!

    ***
    The corrections happened in July 2010, 2011, and now. The corrections of 2011 and 2012 so far turned to be the same one.

    Could it hold up over 4,000 before September? No one could tell. XAO could not lead the world so now it follows.

    Finger cross for the coming months of US, EU, and China. Hope my personality matches the requirement in months if not years.
     
    Last edited by a moderator: 23rd Jul, 2012
  8. wdongli

    wdongli Well-Known Member

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    Run to cliff!

    Asia dropped down! EU is dropping down! US is dropping down! All run to cliff?

    Asia stumbled!

    European shares painted a deep shade of red!

    Greece facing IMF aid suspension!

    VIX surges more than 5%!

    DOW lost more than 200!

    ***
    It is very scared. Black Monday around and Black weeks are coming in?

    Where will XAO down to?

    Let's see the power of the crowd! Let's get more pains before enjoying the Sun!

    Don't blame anyone, stupid! You just need to tighten your belt if you just got some recently. Before any hopes are there it has the room to go down!

    If it goes down I will rebalance my portfolio to reduce the cost.

    ***
    Should I have sold IAU at $0.3 to lock the profit? In hindsight it seems I should have.

    The paradox is you look after the discount and then you would try to get the value. However it is normal the thing would be discounted more. That is the beauty of the diversification and time average, which if used properly could protect you.

    20% of buffer is enough? Should be but it could not be. We really could not fathom the depth of the crowd's stupidity! Better to get the discount as big as possible.
     
    Last edited by a moderator: 24th Jul, 2012
  9. wdongli

    wdongli Well-Known Member

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    IAU: traded at its cash value

    It was said that IAU "

    1. remains in an enviable liquidity position having reported US$139 million in cash and term deposits at the end of the first quarter" and
    2. has "524 million shares outstanding."

    $139/524/1.05 = $0.252 vs $0.245, the close price yesterday.

    That means someone if have enough capital could take it over, demolish its mining rights and tangible asset at any price, and take the money in the bank for break even.

    After the mania passes by it seems worth much more than $0.245! A very good deal in business sense.
     
  10. wdongli

    wdongli Well-Known Member

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    IAU: it is about desperation!

    After a house is burnt down terribly, if no moral standard is considered, three things should appear:

    1. the people inside, who has been burnt terribly and shocked by the damages, would try all to get out.

    2. the people inside, who has been burnt terribly but has given up the hope or realize the damages have been done, would stick where they are and hope the fire would extinguished.

    3. the people inside, who has been burnt terribly and become more fearful, would like to run since there are still fire there.

    4. the people outside, who could smell the gold inside somewhere and would like to take the risks, jump in and run out with some precise items and would like to jump in again and again.

    5. the people outside, who could see or feel the value of the houses and gold in vault, would like to buy in as new owners.

    Most of them would run away at last with something, nothing, or losses.

    ***
    Depending on the scale or seriousness of the fire, all of them would speed up or give up what they want to do. It is a situation all act based on the feeling rather than accurate calculation.

    Most of people would be followers rather than leaders since nearly all of them act based on the instinct. There are some genius who pretend to know everything but they really don't. However who can get the accurate calculation of the remaining value and pay the reasonable price would win out. They can buy in and sit down there to let the crowd sentiment settled down.

    At last value would win without matter it is absolutely or relatively. No one would like to give out $1 at $0.5 in normal time. However it is normal in stake.

    ***
    To human it is normal to act madly in desperation and quick money. If you can act wisely rather than instinctively you would be goo.

    It is important to know the bigger the fire the more emotional the people would be without matter how they want to do. It is also obvious that the bigger the fire the quicker and fast the outsiders would like to run between inside and outside for the things they feel precise. IAU lost more than 50% on the fire. All around it are runners and their eyes star at the looking rather than what IAU really is.

    Do remember value needs the due-indigence to appreciate. It could only happen after the fire extinguishes and damage have been registered.

    ***
    All of us have the instinct to get the quick money in uncertainties. Run desperately is what we could see now around IAU.

    I really want to run since cash in the fire means nothing to all of the people if they could not see it is locked in a safety box.

    I could see the box but I don't really be sure the box is safe. I just could use my senses with the help of the wisdom to make my decision.

    ***
    Everything recurs to the mean and the cash in safety is the basic element of the mean in the stock market.

    How much the project worth? The runners say it is worthy nothing but I just don't believe it. Runners sometimes would like to pay much more it could be priced in weeks since they are very emotionally.

    I should learn sell them once I feel enough. The trouble is no a standard for the enoughness.
     
    Last edited by a moderator: 24th Jul, 2012
  11. wdongli

    wdongli Well-Known Member

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    Sold PPX for GOA

    PPX came back to $0.052 and GOA struggled at $0.007.

    PPX has huge fundamental issues, which I just wanted to trade. It surprised me to see its price dropped down to $0.04 and hurt my heart too much. I want to be tougher buyer but PPX slapped me too hard. I still hoped PPX could come above $0.06 but I know I should swap it for better option.

    I sold it at $0.05 with losses of $100 plus the fees of $60. I have been noticed by GOA since its graphite reserves had been doubled and its price has been pushed down too hard by shorters.

    [​IMG]

    It is a time all try to find an excuse to sell. Me too! However I don't want to trade for trading but to get my portfolio balanced and steady in the storm, which would give me chance to run under the Sun slowly but successfully!