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Trading Run under the risking Sun!

Discussion in 'Shares' started by wdongli, 14th Aug, 2011.

  1. wdongli

    wdongli Well-Known Member

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    Prepare to Run under the rising Sun!

    The storm might or might not pass by but it will! Once the market becomes stable, it would be the best time to shopping! However I don't know value enough and I need to shift my focus on how to learn and use value approaches when market has the hope and feel relief.

    In a stabilized market, the following actions should be good:

    1. scan the shares of XAO for better discount to means and value.

    2. replace the shares which less hopeful in portfolio with better shares in means and value

    The key question is how we do. If we know how to do we would get the better deal so that get the opportunities the storm provides to us.

    The recovery would be a process. Theoretically there will be chances for some times.

    This process is simple but not easy.

    1. scan for watch list
    2. check each of shares in watch list for winning probability. More deep and thorough checking the better chances we could get better discount.

    If we could swap our portfolio and reduce the cost, we could run under the rising Sun after the storm!

    ***
    Read the financial statements of some shares as deep as I could. Everything sounds familiar but don't have a process to get the margin of safety and value. I have accepted the market philosophy and approaches but don't know in details.

    Not read to be a value investor! However trading in the market is the best way to learn how to run the service business to the warriors!

    So get the books below together. Read them before now I should read them to see what I could use them in my service business to the warriors.

    The Little Book of Behavioral Investing
    The Little Book of Common Sense Investing
    The Little Book of Main Street Money
    The Little Book Of Value Investing
    The Little Book of Bullet Proof Investing
    The Little Book that Saves Your Assets
    The Little Book That Beats The Market
    The Little Book Of Bull Moves In Bear Markets
    The Little Book of Economics
    The Little Book of Failure
    The Little Book That Builds Wealth

    Before I start to read, I need to think how to provide the best service for warriors in next euphoric time, get all of cash reserves in position, get all of share sold when market is anxious and in denial, and then buy after warriors have burnt on the fire. That is my strategic operational plan.

    The storm is too strong to last too long! I am prepared to buy in the hopes and optimism of the market! I would warn me for overoptimism!
     
    Last edited by a moderator: 15th Aug, 2011
  2. wdongli

    wdongli Well-Known Member

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    You decide to run under the Sun or cry in the hell!

    You are your own worst enemy! The crash make you cry since you have been defeated by yourself! You allowed you euphoric gut googling for cheering and now you allow your painful soul gooling for crying. You follow your instinct rather than intuition for better future!

    Yes, it is not your fault for the crash but what your part in the crash? If you sold all for your best cash reserve before the crash, you could loudly laugh for the seemingly unbelievable cheap gems and gold in the ruins! Don't cry to prove we are rational in darkness. It is the easiest thing to cry for human being. Have you seen the babies cry for food? They have the moms to look after. You, a market baby, would be a orphan if you just find the things to cry.

    Don't cry but think how you could run under the rising Sun, which will appear in the horizon sooner or later!

    All of us are a human being and we humans are all prone to stumble into mental pitfalls. This is as true in investing as it is in every other walk of life. Indeed, Ben Graham (the father of value investing) even went so far as to say:

    “The investor’s chief problem—and even his worst enemy—is likely to be himself.”

    Don't feel sorry for your mistakes too long. Get your gut! Get your consciousness! Get your goals clearly! Get your plan to fix your problems! Do you believe we should be self-reliant? If yes, when do you google for your loudly crying? Everyone could fall down and never try to get up but not you if you don't give up your hope to service the warriors in your best!

    Why do we fail in the market? We might know we are our own enemies but we just are despondent and capitulated always. That is why most of us do worst than the market as a whole. The herd collectively never loses its shirt since a few years later it could come back.

    How many IT warriors have left the lovely market forever!
     
  3. wdongli

    wdongli Well-Known Member

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    Not US, Euro, Flood stampede us down!

    Why did you fail? Would you fail under the rising Sun?

    We are not rational if we are cheerful and painful due to what market does for us!

    We all think our own are excellent and rational even when we cry we could not give up this bias. It is the act and reality that the irrationality handles far more of our actions than we would be comfortable to admit.

    In fact, very often we end up trusting our initial emotional reaction, and only occasionally do we recruit rationality to review the decision. For instance, when bang our head on a beam (an easy thing to do in my house), we curse the inanimate object despite the fact that it could not have done anything to avoid our own mistake!

    Is it US, Euro, and flood which stampede us down? If you think it is, you will be stampeded next time! You will lose the opportunities under the rising Sun!

    ***
    It is not easy to act rationally in the market always. Don't cry even harder than be calm in the storm. I felt very depressed since the end of May after the mistakes have caused the consequences I didn't want to see.

    I really wanted to sell and forgot. Fortunately I have worked to update my mind for years. Having spent a lot of days and nights, at last I could sort out my mind. It is great time to get the direct experiences from the mistakes with a conscious mind just in time.

    It is our natural to react rather than response. Market is a war place but we are not the primary animals to be survival in the wild anymore! We need logic and common senses much more than any places in this word!

    If we could stay in our corners when the storm hit everyone else and we could run under the rising Sun when most of warriors are still suck their cuts and let the blood dry, we would have little opportunity cost for our own business!

    ***
    Check your logic capability to answer the questions:

    Consider the following three questions:

    1. A bat and a ball together cost $1.10 in total. The bat costs a dollar more than the ball. How much does the ball cost?

    2. If it takes five minutes for five machines to make five widgets, how long
    would it take 100 machines to make 100 widgets?

    3. In a lake there is a patch of lily pads. Every day the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long will it take to cover half the lake?

    See the difference between your feeling and calculation!

    Market is much more complicated and your judgment in the market should take longer to get. If you just react based on your feeling, you will lose your shirts sooner or late!

    Do you really know the reasons why the market crashed? Don't trust your feeling or judgment in 100%! Something wrong always to any human being! Of course if someone are super beings, they would win in the market effortless!

    I like market since it is not effortless and force me to change!
     
    Last edited by a moderator: 15th Aug, 2011
  4. wdongli

    wdongli Well-Known Member

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    Change behavior is not to change the lanes

    It is a war place. War could be going on or paused.

    There are times when risk is high for your warrior service business. It is always the time when genius and bums both get some extra money on the tables! There are times when risk is low and full of risks. It is always the time after most of the warriors have been dragged onto the slaughter table and most of money need to be burnt have turned to be ashes!

    To move in the war place for the best services, you have to know when it is the best time to make warriors more happy and soothe their pains in most.

    IT bust, GFC, and the crash in last few weeks, are the time when warriors have been dragged onto the slaughter table collectively. They burnt too much and they desperately need the cash for survival. If you could not provide the services they desperately want, you lose your business!

    ***
    If you could find the best time for your service to warriors, you can choose the fast and slow lanes to service the warriors. All of us are different and then some would run much quicker and some could run slowly. It only affects how much profit you could get from your services. You don't need to cry for the sky since your pains anymore!

    In the slow lane are investors. They concerned about road conditions and how good their vehicles are in the running. In the fast lane are traders, anxious to move around, pass others and maneuver any way they can to reach their destination faster.

    Under the rising Sun, all of them could make mistakes but if they have ordinary IQ they would all get some extra money on the table sooner or later! Both could be the genius and bums for more and more money until the war starts again.

    ***
    You have to know you want to take the fast or slow lanes. The ones who keep to change the lanes will increase the chances for accidents even under the rising Sun. It is a common senses but few like to follow.

    When do you change the lane when you drive to your office first time? You don't do the necessary reading of the map. You get lost somewhere and struggle to move back to the lane you want. You don’t know where you are going or how to get there.

    Traders make money, investors make money, but wafflers get run over. If you can’t decide the strategy you want to follow, then you are going to get caught in the cross-fire of traders who are controlling the market right now. said clinical psychologist Richard Geist, president of the Institute on the Psychology of Investing.

    If you are a real, seasoned trader, this is a good time to be active because there are some real opportunities out there for you right now. If you are an investor and you have your portfolio where you like how you set it up, this is a good time to decide if you really are a long-game player.

    Whom am I? I could only be a trader since dirty-cheap fishes are more easily affected by the fads, feeling, and environment. They are very risky but also very profitable. I have to buy if the margin of safety is big enough and sell when anyone of them turn to be hot!

    ***
    Warriors often choose one lane and then make sudden changes.

    If you always thought you were an investor, but you’ve been watching the news and think it might be time to start making trades. Good luck to you because there are at least as many opportunities to make mistakes as to make money and you should not get ready to calculate the winning probability, allocate the capital, and organize your business for trading. You could not pre-commit to your business and then you increase the chances to lose!

    Why the passive investors sell funds in worst time and buy funds at peak? They don't put time to sort out their minds for strategy. They want to invest for long terms but they could not refuse the synchronization of their feeling with the market sentiment.

    They change the lanes when they should not such as when market is euphoric and panic! These are classic mistakes are made in times like these, when volatility makes the market scary enough that investors act on impulse, either trying to protect themselves or thinking they could do better by trading.

    After you change the lane, you have to run in this lane for sometimes! What happen in the lane you left now? Could you ignore them? Few could do so. They may change their lane again when they should not in future.

    They are traders or investors? They are both and they get lost to know themselves and then they lose the shirts again and again! Is it a system problem in hardware? No! It is the problems from the operators!

    An problematic operators would drive a great vehicle into the hell, which usually is much faster than their imagination!

    ***
    We all like to see the views in the rear-view mirrors to get the ideas for future! It is extremely popular when market is extremely hot or cold! No IQ could fix this kind of problems!

    There are a lot of people who are looking at what their funds or shares have done this year or over the last few years, and they see it as being flat and are thinking ‘That’s not working, so I have to play the game!

    Maybe they are expecting 5% out of their funds in a year, and now they see the market moving 5% in a day and they think ‘If I can capture that one day right now, I’d be set for the entire year.’ But they don’t capture it and they don’t just make one trade, they are sliding from investor to trader, and that’s not what the average person should do right now.

    In worst or best time all of us tend to reassess risk tolerance and come up with a strategy for what to do when the markets, seemingly, go crazy.

    To traders or investors both, some questions are necessary:

    Could you stomach a loss of X% in this trading or investing? The real problem comes up

    1. when you are down, say, 15% and
    2. you don’t know what is going to happen next, but
    3. you realize that the only one who capped the downturn at 20% was you, and that was only in your head.

    ***
    Without matter you are traders or investors, you would be tough guys, right up to the moment where the market punches you in the face. You could blame, curse, and cry but useless and sooner or later you would lose the energy to cry anymore!

    Simply saying: damage has been done and you have to accept the reality! Could you accept the lessons or just keep to be ignorant, arrogant, and synchronized with the market sentiment?

    If you don’t have a strategy for what you should do when the market goes crazy, then you need to look at whether you have any strategy at all right now.

    1. You need to say ‘Given my current portfolio, will I be able to stick with my plan when things get worse from where they are now?’
    2. Then get yourself to a plan that you will be able to live with.
    3. While all of investors like the idea of trading, they’re not very good at it
    4. If you do what you are not good in the market, you would lose the shirts.
    5. You would leave your portfolio in the hands of a bad trader — you
    6. It is almost always worse than leaving your portfolio in place for the lanes you are better
    7. Don't forget to recheck your long term plan for selling at next peak and buy more in next worst.

    ***
    Don't make things worse than the worst! If you change your lane, you should be sure you are best in that new lane. Not sure and change? It is stupid!
     
    Last edited by a moderator: 15th Aug, 2011
  5. wdongli

    wdongli Well-Known Member

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    7 P's to run a perfect warrior service business

    All of people, if having stayed in the market long enough, know we should do to prevent ourselves from falling into the emotional time travel pitfalls.

    The question is how not whether you could. One simple answer is to prepare and pre-commit.

    A businesslike market player should learn to follow the seven P’s—:

    Perfect planning and preparation prevent piss poor performance. That is to say, we should do our study, mind updating, research when we are in a cold, rational state—and when nothing much is happening in the markets—and then precommit to following our own analysis and prepared action steps.

    The mistakes and cold market with so many people crying in their own corners, have built a perfect environment to follow the 7 P's.

    Having prepared for about 4 years before GFC, it gave me the chances to pass the acid test in GFC and let me run on the V-shape recovery in full.

    Now I am more conscious and rational before GFC. I will perfectly plan and prepare for the days when the Sun is rising and shinning with perfect planning to prevent piss poor performance.
     
  6. wdongli

    wdongli Well-Known Member

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    Cheerful when all fearful!

    Jeremy Grantham, chief strategist of GMO, said in GFC:

    As this crisis climaxes, formerly reasonable people will start to predict the end of the world, armed with plenty of terrifying and accurate data that will serve to reinforce the wisdom of your caution.
    (Wdongli: It was not GFC II since most of banks and businesses have more cash reserves than in GFC. XAO reached at 3800s. All knew what happened in Middle East, the impact of flood and minor government in Australia, the China inflation and over-over spent stimulus, The Japan quake, The tsunamis, The US weak economies, and Euro debt crises... All of us should know market are great to digest what are available. XAO just got its crash ready for its worst images. After the crash happened, it needs more powerful negative events to drive it down further. No one could be sure what will happen exactly but in probability, it has less likely to be worse! Want to be sure 100% winning? Great! But is it likely you could be sure for future!)

    Every decline will enhance the beauty of cash until, as some of us experienced in 1974, “terminal paralysis” sets in. Those who were over invested will be catatonic and just sit and pray. Those few who look brilliant, oozing cash, will not want to easily give up their brilliance. So almost
    everyone is watching and waiting with their inertia beginning to set like concrete.
    (wdongli: this time we don't have the terminal paralysis. I was catatonic since I allowed the cost run and deletion of cash reserve. However the market is fearful enough. The bargain hunters who have the cash reserves have been in. The fretted day traders without insight in long term is busy to risk the dollars for pennies. So a picture is being shown that big boys are buying and little boys are trying to get out with some loss recovery in pennies!)

    Typically, those with a lot of cash will miss a very large chunk of the market recovery.There is only one cure for terminal paralysis: you absolutely must have a battle plan for reinvestment and stick to it. Since every action must overcome paralysis, what I recommend is a few large steps, not many small ones. A single giant step at the low would be nice, but without holding a signed contract with the devil, several big moves would be safer.
    (wdongli: terminal paralysis is not there for big boys but it just moves in to paralyze capability of little boys to get the insight for future. Usually the little boys don't have organization, do analytical work, always synchronize them with the market sentiment, and sit on the sideline after burning the money into the ashes! After I work on to fix my own problem for more than two months, I could confidently say, most of the little boys would miss the opportunities again! My mistake was I allowed the deletion of cash reserve and then I would miss a great opportunity too!)

    It is particularly important to have a clear definition of what it will take for you to be fully invested. Without a similar program, be prepared for your committee’s enthusiasm to invest (and your own for that matter) to fall with the market. You must get them to agree now—quickly before rigor mortis sets in. . . . Finally, be aware that the market does not turn when it sees light at the end of the tunnel. It turns when all looks black, but just a subtle shade less black than the day before.
    (wdongli: fortunately most of retail market players run single people businesses in the market. You don't need to get your committee to agree quickly before rigor mortise sets in. You could let yourself to be one of these mortise. The key is you have to understand "market does not turn when it sees light at the end of the tunnel. It turns when all looks black, but just a subtle shade less black than the day before."

    Market will be anxious, in denial, fear, desperate, panic, capitulate, despondent, and depressed in a crisis as GFC. What stage of the market is at? Panic was over; Capitulation and despondence were in the way for little boys when I was in depression. What now? The little boys would be in great depression for a while while the big boys who know the top-down approaches are building their position. They could sell for quick money? It seems no the story. If I could see the things so they should know it is good time to buy even they would not hold forever!

    What shape of the coming recovery? Don't know but it will come in, which is my belief)
     
  7. wdongli

    wdongli Well-Known Member

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    I will learn to take my responsibility for warriors!

    The chaos in XAO is so extreme(A best economy led the crashing even it was triggered by the worst economies around the world), the panic selling so urgent, that there is almost no
    possibility that sellers are acting on superior information; indeed, in situation after situation, it seems clear that investment fundamentals do not factor into their decision making at all.

    While it is always tempting to try and time the market and wait for the bottom to be reached (as if it would be obvious when it arrived), such a strategy proved over the years to be deeply flawed. Historically, little volume transacts at the bottom or on the way back up and competition from other buyers will be much greater when the markets settle down and the economy begins to recover.

    Moreover, the price recovery from a bottom can be very swift. Therefore, an investor should put money to work amidst the throes of a bear market, appreciating that things will likely get worse before they get better.

    I hate the words above since I don't have the cash reserves to service the desperate little warriors who are crying loudly. I should give my hands to them but I could not. I fail my responsibility!

    I failed and know more for my responsibility now. Usually I dislike anyone cry but now I understand if you want to cry for longer, you would feel better; the damages have been done; if you could feel better by crying loudly, please cry and then life would be better!
     
  8. wdongli

    wdongli Well-Known Member

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    Favorable times vs Worst Time

    Why did IT bust generate so many losers? Why did GFC burn so much money on fire? Some argue it was because we don't have advanced systems; Some argue it was because we are our own enemies!

    Who is right? Not all of people could design rocket and send him to the moon, which is my belief. Some systems are great but if you use them you would be the losers. So could you find whom you are and find the tools, spades or rocket launchers which satisfy your needs to make profit or do your business in the market.

    ***
    I know digital control system and DSP but they could not be used to design all of the control systems for all of application, if you want your system fail-safe. Observation over many years has taught me that the chief losses to warriors come from the short or long at wrong time.

    Some just long the fishes or swans with low margin of safety at times of favorable business conditions. Some just short the things with high margin of safety at time when market have been bottomed out! Too many don't know how long and then short!

    Often than not the buyers view the current good price up as equivalent to “earning power” and assume that prosperity is synonymous with safety. In the market at last you need to get the profit with the fail-safe. If you rocket launchers just shoot you up and the gravitation force drags you into the hell, you fail!

    ***
    Modern education system is great since it turns millions if not billions of the bums into good tools and some could be very successful. However the tools need masters to tell when and where they should work hard.

    The problems are after the tools in the offices and workshops move themselves to the market, they don't know how to master the tools since their education and experiences are learn how to be mastered.

    I was one product of this modern education system. However I have to admit my illogical and no senses in broad market scope. Do you agree market is a war place? Do you agree you need to understand the art of war to be OK? How many really know the art when they strike to know the hardware rather than to make themselves to be the master of the art?

    ***
    Genius could break their wings if they don't care about how to look after the wings. Sir Isaac Newton was a example to break his great wings in the market! If you could not tell the difference between good and bad time, all of your system would just be useful to send you into the hell!

    High education helps to generate the generally rose-tinted view of life. Psychologists have often documented a “self-serving bias ” whereby people are prone to act in ways that are supportive of their own interests. But, as Warren Buffett warns, “Never ask a barber if you need a haircut.”

    What do you want in the market? A advanced and sophisticated system or profit for long time which you can make? IT losers want the sophisticated systems by burning their money on the fire. Have you read a lot of tech books in IT booming time but at last you found all of them didn't work!

    ***
    All of my mistakes come from overoptimism and human biases so far. When you need to be cautious you cheers and when you need to be cheerful you are coward, what can you get in the market? Losers!
     
    Last edited by a moderator: 15th Aug, 2011
  9. wdongli

    wdongli Well-Known Member

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    What's the most matter?

    To do business and service the warriors, one thing is the most matter in worst time:

    What matters is not so much how low the odds are that circumstances would turn negative, what matters more is what the consequences would be if that happens to your business.

    In other words, the potentially long term negative outcomes are so severe that you simply can’t afford to ignore them, even in the short term.

    ***
    When you make mistakes in this kind of matter, you have to be brave and honest to admit and take the responsibility.

    You have to think in this way:

    Anything wrong is the result of the bad judgments and decisions. You need to find theme and learn from them so that hopefully you don’t repeat the same mistake.

    Running under the Sun is a easy to say but hard to do.

    ***
    Learn how to check self

    [​IMG]

    So could you identify the conditions and context for the skills and mistakes? Good luck an bad luck? The matters you could not control so happy for good luck and forget the bad lucks!

    Don't hand in your independent analysis to any experts. Don't forget your mistakes in the past. Find the time to review them, which would make your running under the Sun much more safely!

    Don't be too happy for your skills, which could hit you down if you use them in wrong time and place. So if you feel hot, put your skills aside and let you cool down!

    Don't re-rationalize your reasons when you check yourself for good or bad consequences.

    Do remember all are to change the behavior, which is key to decide you are loser or winners in long term!
     
    Last edited by a moderator: 16th Aug, 2011