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Trading Very Regret: miss the chances!

Discussion in 'Shares' started by wdongli, 5th Aug, 2011.

  1. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Let the storm more violent and more fearful!

    It is amazing to see the wholesale selling on fire. All rush for the only exit even no party in Australia stock market. You could not blame them. They are warriors and if no hope but death ahead, they have to use their instinct in extreme and run away from the risks as quick as they could! No time to think tomorrow but just the seconds now!

    Feel not very happy since I allowed cost run and cash reserve run since April, which let me lose a very great chance to buy the dirty and qualified fishes and swans in this whole sale on fire.

    How many warriors would lose the shirts again? How many would be forced to leave market forever? All of the sellers now just have one idea, sell, sell, and sell all to exit before anyone else!

    I have recovered from the shocks due to my mistakes. I would stay with the warriors to sense their panic, pains, despondence, depression, and hopelessness with regret I could not buy from them to service their needs this time. However I would not compete with them for the narrow exit!

    Could it be worst than the GFC crush? Possible but unlikely. It is the time to beat the toughest bargain hunters down. It has been 4 months for the people to make mind to sell or hold since last wholesale selling on fire between May and June. I believe if the sky is there it would generate the best chances for opportunities.

    I would not sell since I hate to do the same thing as market warriors do. The selling could not last too long and possible another recovery would be triggered due to the people around the world to save the sky!

    Accumulate the cash when Wall Street turns bullish and move into greed and buy when Wall Street kills the bargain hunters ruthlessly! After most of bargain hunters in the valley of death, it is the time hope will generated! The timing is not important but everything!

    Let the storm more violent and more fearful next time when I get my mind and cash reserve ready! I would try all to service the warriors at best then!
    Last edited by a moderator: 5th Aug, 2011
  2. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    No words for hopes around today!

    The toughest traders, the toughest bargain hunters, and the whole market are full of bloods but no any words for hopes!

    World markets plunge
    Wall Street massacred
    Local shares dive in early trade
    Australian sharemarket slumped 4 per cent
    The big miners, BHP Billiton and Rio Tinto, also fell sharply.
    Not even gold, a safe-haven asset, could withstand the carnage!

    Tomorrow and someday after tomorrow, we would hear the bargain hunters cry for hopelessness! What if everyone would cry for the poor Australia and Global economies?

    1. The campaign to save the sky would start hopelessly or hopefully.
    2. The people who have been hurt would have to find their own corners to suck the blood and cure the cuts.

    What if all of actions of sky saving fail? Everyone would be losers! What if all of actions of sky saving get the hope for the sky? The losers would be depressed since the damages are so huge. The wise market business people would choose for their selective buying.

    Even all of the market players would be hurt but the warriors would hurt much more than the early birds of the business people in the market!

    No words from the hopeless means great news for the warrior service business. It opens the door to get the goods and assets for their business at lowest cost!

    To a business there are two important things: one is the production and service costs and another is high price when the market desperately need their qualified goods or services!

    I am a very bad market business student. I tend to get over-optimism and let the cost run and cash reserves leak when I should not buy and sell! It is much more risky than any other mistakes when I play in the market as I half acted as warriors and half behaved as a prudent businesslike people.

    I would not allow me to pay the tuition fee without the lessons!

    I would be passionately and prudently to provide my best service to the warriors when they desperately need my services!
    Last edited by a moderator: 5th Aug, 2011
  3. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Conditions to cry "Let storm much more violent and fearful"

    It is difficult to be cheerful when the market as a whole is selling on fire. It is hard when you have not any buffers to sustain the pressure to see all of what you hold turn to be red! It is our instinct to run away when we see the risks!


    How can you not take it personally when you count your cash and worry how to get your living expenses in days or months? We could say a lot of words wisely if we are not in the eye of the storm but when we are in it and see all crashed into ashes, you don't have choices! That is the pity of the warriors and the bargain hunters who used up all of their cash reserves.

    No choice to feel safe: you have to run but think before you run!

    I didn't want to sell CIG a few days ago but I didn't have other choice. I need the cash reserves to avoid to sell all of portfolio on fire. Why did I sell it? It has generated some profit and the people who held it waited for the drilling results. It had sustained some pressure of the system risks but if the drilling result is disappointed, it would be sold more violently and the hurt could be much more in this time. So from my bottom-line goal, I sold to lock some profit and get the valuable cash reserve.

    Today I sold NAD, which have 100% profit left, which I bought at the worst days of GFC. No red before I sold. I locked profit and get more of the valuable cash reserves.

    I also sold ADY which still had 30% profit left. It was to target my bottom line goal. The selling is to get the cash if the market continue its selling, I would sense the time when the market as a whole become indifferent to any bad news. I mean the time all of money if should be burnt have been burnt out!

    So now I have recovered the cash for living expenses in next 10 months. It is still far away my cash reserve target in worst time but give me a corner now where I could think and wait. Now I get the conditions to cry "let the storm more violent and fearful" in a safe corner!

    If wrong, you have to pay the cost

    Since I started to believe I should play with the margin of safety, I always feel difficult to sell. Now I feel I get the benchmark or corner stone to guide my selling!

    That is to get the income first in bullish time, to get the cash reserve to 50% of my total capital I pay directly in the market before pivot turning point of the market, and after I finish my study about 80/20 I will learn the bull psychologies in mass! I would learn never to be synchronized by the market sentiment since 80% of my failure caused by this kind of synchronization!

    Have to admit I was forced to sell. But I do try all not to sell in panic and sell too much on fire. I sell for my cash reserve for the case if market sale on fire take longer and harder than my expectation! Is it likely? Quite a lot! No too many governments have the capability to spread money for the street bums now! I should not be ignorant and stubborn. I need the cash reserves for my safe corner. Happy now that I have the capability to hold my values!

    Don't make the mistakes when you are overoptimism, which would put you at the position where you would be wrong and completely wrong without matter what you do after that until the market cycle finishes!
    Last edited by a moderator: 5th Aug, 2011
  4. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    The cash reserve makes me stay calm now

    Stay calm

    Why did the market drop down so dramatically?

    1. There was no particular catalyst.
    2. There were a lot of guesses how bad the global economies would be.
    3. But none will relate to a particular news or fact that has suddenly come to light.
    4. Too much worries and fears to a level and the camel of US DOW could not sustain any more.
    5. Sell to lock the profit, sell before US economy move into the worst points

    GFC was not completely gone. All of the people in the market are still in extremely cautious! People try to find excuses in US to sell. Aussies could not believe "decoupling" any more. So DOW drops down XAO down at the similar rate.

    Sentiment change of the mass is very powerful. In Australia, the mass sentiment has never been good enough since September 2010. The longer the pessimism the more hard work to find the sign to lose the money any more.

    What if US credit is lower? What if China tips off? What if all turn to be worse? We could not see into the future. So safety for what you hold become extremely important.

    We become so rational that we could not tolerate any risks. Should we sell or buy? Hard to say since all of us have different personal conditions! Sometimes market sentiment changes have the fundamental bases but sometimes they just turn to be fads.

    I prefer I have enough cash reserve and wait for all who need to sell, just finish their sale. But I could not. I have made some mistakes, which changed my bottom line target completely! However if the market sell all to the level of GFC lowest points, I would use half of my reserves to buy!

    Memories are short

    In 2008 and 2009, we made the GFC. In which Markets dropped precipitously and we cried for the end of the financial world. XAO fell almost 55 per cent between October 2007 and March 2009.

    Since then, V-shape recovery came in with 37 per cent to the close of trade yesterday. Today will erase some of those gains. Regardless the peak in 2007, we work very hard to let double dip become true. But is it better time than in GFC?

    We could say the peak in 2007 was probably a time of unrealistic optimism but the low point, some 17 months later, was likely an over-reaction to the down side.

    Most of dirty-cheap fishes have much more cash now. All of businesses in XAO did not fall by 55 per cent in just over a year. Of course they equally did not improve by 37 per cent since the worst time. In short time market could be far away from the value even it tends to regress to it for long term.

    The market trade the warriors in by its way

    Market always play its cards in a perverse way. It is extremely happy to use the swings or roundabouts to churn the stomachs of the warriors. It makes you happy, overoptimism, excited...and then grind over you until you lose all of the capability to fight!

    The sale on fire need some truth to be realized. The warriors are insane but not completely idiotic.

    Yes there was no single event powerful enough to swing the market negatively so much. But the ongoing macro-economic challenges are real. We have soft consumer spending, governments deep in debt and central banks with little ammunition left in the locker.

    The stock market needs hope. When you look up you just see the cloud, what could you do. You could not be speculators but it is fact that when demand is high, prices rise; when demand slumps, so do prices.

    Bananas are sold at $13 per kilogram. They are not more tastier but bust because they are. Fundamental changes the value, which change the relationship of demand and supply.

    In my view it is most risky matter if you are synchronized by the market in sentiment. What if I have enough cash reserve, I would buy in time average once I feel the market warriors get into completely depression!

    Buy margin of safety and sell along the way after market being overoptimism!

    Will I sell? If I have cash buffer, I would not sell.

    Why? The market sentiment would push the price away from the value until it goes too far. It is not risky for it drops of 5per cent. The market could not be efficient and price everything at the value. It just move around the value violently or slowly!

    No one could predict what you feel tomorrow. No one could predict what market as a whole feel tomorrow too! However its swing to the negative extreme do provide the chances to reduce the business costs if we could pick up the value at lowest price.

    What if you buy too high and sell too low? You have to fix your mind and let your business to work in the way to get profit every year for long term!

    I am happy I could think independently in the storm!

    How to do your business? How to allocate the capital to the profit business at the lowest or reasonable costs? Don’t sell – or buy – blindly. Buy when you see the margin of safety and you could hold forever. Sell when you bottom line goals could be sure and then extend the winning streaks prudently!

    One thing is extremely important and really a cliche is that never and ever buy or sell synchronized with the market sentiment! Don't check the consequences for feeling but be sure you know the scenarios of the future consequences and the corresponding probability and try all to get the best results for your business.
  5. Johny_come_lately

    Johny_come_lately Well-Known Member

    1st Jul, 2009
    SE Queensland
    Hey Wdongli,

    Tough market. How much did you get burned? I'm down 10%.:eek:
    I hear Italy is in the firing line. Australia always gets hit by bad overseas news.

  6. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Johney, all of my paper profit(25%) got between October 2010 and April 2011 were gone and 10% of my capital locked at October 2011 has been lost in last two weeks. All were caused by my ignorance and arrogance with the euphoria.

    If US job data confirms the market worries tonight, the next Monday would be black one. It would reenforce the market sentiment and more blood would be in the Street. That was one reason I sold to get some cash reserve for the worse cases out of my expectation.

    After a series of mistakes were made due to over-optimism since April, I put me in a very awkward position: any action or no action has its own inherent risks and could result in disastrous consequences.

    I never feel so badly in the market and was so greatly synchronized with the market sentiment. It is not because the losses only but the fact that I was so easy to lose the necessary prudence in the market after I chose to be a full-time student.

    Only one good thing is I perhaps could get a true lesson. As I worked in my office, I got the salary from my labor value, which could naturally buffer a lot of risks. I never realized I need to get the yearly income from the market first as the compensation, which sounds stupid and ridiculous but happened to me.

    Too greedy when market is bullish. Now the market is fearful but seems fearful not enough in hindsight. Cost run and cash reserves gone are fatal in my case. It destroys part of the existing capital and the future opportunities.

    Hope I could be wise and intelligent with great prudence in the future market! Before I could blame others because then I never admitted I was wrong but now I know all are caused by my mistakes. Something wrong and you just find only yourself are ugly, is terrible and really shocked.
    Last edited by a moderator: 5th Aug, 2011
  7. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Feel relief from US job data!

    It seems this time I was lucky. The selling seems the guess work of the market at least temporarily.

    "The U.S. added 117,000 jobs outside the farm sector in July and the unemployment rate fell slightly to 9.1%, the government reported Friday, in a better-than-expected report that might provide temporary calm to jittery financial markets."

    Don't think it would remove the worries from the market completely but do feel good enough to let the market sentiment relax a little bit so that a black Monday could be avoided!

    However I have to warn myself. It is not good that I feel lucky in the market. It means I have made serious mistakes and could not get out of the trap without big losses if I am a little bit not lucky. It is not irrational requirement to myself. I have to do so!

    Next time I should be in a position to feel sorry for the market not to crash down since it would stop me to lower the cost of my business!

    There are necessary conditions we can be fearful when market is greedy and be greedy when market is fearful. That is when market fearful we have to get enough cash reserve and when the market is greedy we have the shares to sell at the price higher than we paid.

    I have made a series of mistakes. I would try all to get my cash reserve back to the level as it should be. Without this cash reserve I would be the lamb which just be able to wait for the market to drag it onto the slaughter table!

    I have to remember I could not be not fearful if I am trapped there when the market becomes fearful. How could I not be fearful if I am just beaten by the market everyday? I have to be in a position to be free.

    I have to learn never put myself into the jail in the market first. We want freedom financially but we have to get the freedom to choose when we should hit out or stay in our corners safely! It is a very basic idea but I really don't get it before.

    I will work on to get the lessons from my mistakes. I will never let the cost run and never let the cash reserves gone again! It is very difficult to behave as a swan if naturally I am a dog. Hope I could speed up the evolution without too much cost for the surgeries!

    Some lessons only could be got after we put us in a position we could not find excuses. Get rid of the buffers from salary put me into this position. It is very risky and consequences could be disastrous.

    I have to get new buffer to replace this natural buffer for safety otherwise I would destroy myself in the market. It is not unreasonable fears but it could be the fact in future! It is not about reviving but surviving. No surviving all of other matters are dream in the market!

    We could not predict what will happen actually! We only could do is get the enough buffer for safety and get the affordable risks for chances. We should never expose ourselves barely in the market. We have to get a mechanism to be sure we could do so!
    Last edited by a moderator: 6th Aug, 2011
  8. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Things could be worse

    Feeling is not trustful

    The relief seems not long enough. Bear takes the charge again. Hope and expectation in minutes and days are proven unreliable again when market sentiment is main driving forces in the market.

    However the job data is still good news even when market sentiment is bad all of good things are bad and bad is the sign for sky to fall down. Get one more lesson today that is the worries could make worst become true without the need of some significant events to trigger. The sky could be there but people could act as though it would fall down tomorrow.

    To be safe, it is better we deal with the bear more seriously with extra protection; we deal with the bull less seriously with mild expectation or much less than the market hopes.

    Need to be tough to buy

    If we buy anything wrongly we would pay for the correction always!

    Don't let cost run and don't let cash reserve leak away in bullish time. Don't buy without enough margin of safety and minimum cash reserve in bad time. Don't buy without time average to compensate our errors. Don't buy with the synchronized feeling with the market. Get the business organized, disciplined, analytical, and self-reliant with the plan. To be safe fundamentally rather than expose us without protection.

    The market is a war place! The business needs to be protected even the thing worse than our calculated worst case! I will not let me feel relief on the fire, which only can be achieved safely to let me not on fire! Ask the question such as whether we would put us on the fire to burn before we make decision!

    Knowledge and wisdom enlightens us but the digest of any knowledge and wisdom needs the time. When we learn new things in the ever-changed market, we have to hold the things which make the profit. We have to know what we are really know and what are half known. It is most risky that we know half even the full-known result only could get through the half-known stage.

    VIX is a way to measure the fears

    VIX shot up to 39 and rebated back to 35. This index is more reliable to check how fearful the market is. If we buy for margin of safety with probability analysis and VIX right interpretation, we could have more chances to get the right position and time.

    Since 2004 until April 2011, I use VIX as a additional way to check the fearful level of the market before any buying. But I didn't do the necessary analysis since April with the reasons I listed before.

    VIX is the ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market's expectation of stock market volatility over the next 30 day period.

    It shows if market fear increases, you could buy with unacceptable risks; however if we could know value, the probability distribution, the proper identification of the bottom channel, and extremely cautions, VIX analysis would add winning probability!

    I broke not just the rules, principles, and guidelines since April but I broke the process to buy also. In hindsight, all of the problems started when I became over-optimism and let my feeling took the charge.

    I did find that my personality has fatal fault which doesn't fit into the market.

    Is it a joke?

    Bull wins out again and DOW gets to 110. In a day DOW could swing positive 150 points and then negative 200 in a few times. Still hope bull could win out. So that I could buy more time to adjust myself to moderate the damages.

    However I should not take the short time relief too seriously. My problems are not rooted in the reliefs but in my failure to follow the right rules, process, and being prudent in the market. I have to change my behaviors and be extremely prudent without the giving up to find the chances with a valid process for a long enough time frame. In buying I need to know more about value. In selling I am happy I sorted out my mind how to sell. In business senses, I need to put more time to learn.

    Objectively saying the damage has been done. While I try to reduce the losses I should not forget the rudimentary problems in myself. If I could get the lessons, it would be the great bonus for me. If I could not get the lessons and ingrained the prudence into my blood, I will make more trouble for myself and could be dragged onto the slaughter table by dear Mr Market.

    Work in the market need the feeling to be involved with people. That is why I put so much time to post my thought here. However I would try all to be honest and not provoking with hope we could share the common assets, wisdom with anyone.
    Last edited by a moderator: 6th Aug, 2011
  9. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Sentiment, quality, value and so on!

    Market sentiment is powerful. It acts on us differently based on our position. Perfect match between best position and market sentiment is the only way to make the business profit. Best position need the effort to identify the market price valley so that the quality of the business could got at low cost.

    Low cost is not low price. Low cost is about the low price is that lower than the fair price to intrinsic value. At a special time, a price is a fair price to a value. At different time, a price is not a fair price anymore. The great price valley tend make the price lower than the fair value and often than not destroy the weak value.

    Quality is hard to know to a business. It is not the same as the value of a product or one service for a trading/investing business. Quality is the capability to get the value at low cost constantly. Quality is the capability to sell the value at fair or reasonable higher price than the fair price.

    If no value and no low cost, there will no be quality. Value is elusive. Value identification needs expertise. Value could be identified in different ways. Different value evaluations have different conditions and contexts. Good valuers are few. It needs self-education with clear goals and focus for long time. There are always some illusion or delusion to value. Few could not be distracted away to know value.

    Few valuers make high quality few in the stock market. Few are trained for market or trained by false knowledge. People cheer for value when they don't know value. Value becomes a powerful excuse for ignorance and arrogance so that the prudence gone and shirt-losing become destination.

    When things goes wrong, often than not all are in the price valley with weak value which paid at high price. Emotion could not be controlled if you are at the door step of hell or grand party. Few would not cry for pains if on the fire to burn. When you desperately run to the exit without too much hope to survival in the valley of death, you could not be calm down let alone rationally response to the market.

    It is joke to believe we could act different in the same desperate situation. Once in the right situation, few would not fully synchronized with market sentiment. Once the synchronization happens, the damages is unavoidable. Few believe protection is first and then business can be done.

    Naturally and instinctively human is made to fail in the market. Few prepares to change their behavior. Few can win in the market! It is perfect fair. Resources are scarce which is much easier to destroy than make. It is impossible 80% of people gets all they want. They contribute what they have, to the hands of 20%, who want to get competitive advantages, in any fields.

    In the offices, few needs to worry about the road map where to go; most focus on how to do what they are required. In the market, no road map so that nowhere to go. No plan to follow the road map so that nowhere to go. No operation specified by the plan nowhere to go. Too many challenges over us result in confusion and the impulse for short cuts. Even following the right direction, a few mistakes could result in dangerous consequences for people to question their own capability! Few could have guts, resources, capabilities and passion to have a full go!

    Market is the most free place but the freedom needs good self-adjusted behaviors for even butter and milk. Few just come to market for butters and milks even they could not get them. Few haven't dreams. Few would like to pay efforts for dream to be true. Few has gifts. Few could get the dream to be true. It is true for genius or fools!

    If fail in the market, don't cry for your fool. It is possible you put your genius minds in wrong direction. The harder you work the more you lose! You are not a fool but you could be insane! There are thin air between genius and madness! It is always true madness will destroy assets and value!
    Last edited by a moderator: 6th Aug, 2011
  10. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    Vital few, attributions, and process of operations

    There are vital few to affect our performance. In the dirty-cheap fish circle, the vital matters are

    1. Get the ugly with high probability to be beauty at the time you sell
    2. Avoid ugly with high probability to be falling knife in the time frame you tend to hold
    3. Hold for market surprise and sell when ugly becomes reasonable beautiful.

    The contribution of falling knife is a significant price falling than we paid without hope to recovery.

    So the goals since 2004 to me: avoid the falling knife and get the swans. It works if I focus to add the highest probability of the surprises. However when I chose them by feeling, cost runs, cash reserves gone, losses made by the falling knifes, and I was greatly synchronized feeling to the market rollercoaster. When it happens, simple things turn to be complicated and any bad events stir the guts and crunch minds, since the risks are so real with the buffer of labor value.

    Feeling is not for job let alone business.

    Low cost to buy is the strategic goal for any business. By itself it is a process to add value for business. Low cost doesn't mean cheapness even few doesn't think so. Zero cost is cheap but usually means air in this world. No one could get his life by air only!

    What're the attributions of ugly?

    1. ugly is disgusting.
    2. disgusting is about feeling not value
    3. feeling is not trustful so chances are for future swans at ugly price
    3. ugly is priced at discount
    4. no ugly could be priced in fair value without surprising events
    5. ugly could appear dreadful for long time
    6. ugly is dumped first if asset and value of the market are in risk
    7. ugly could be seen as beauty suddenly

    These attributions of ugly are important to trading/investing business. What the attribution could be used to add value for your business? However it is sure ugly makes probability of discount higher.

    Ugly is not the same as dreadful. RIO is a hopeful swan but in GFC it was ugly to its holders. It turns falling knifes to cut anyone who dared to buy it at $135. Often than not the ugly has more chances to be beauty again after they become falling knife and send enough people into the hell.

    Of course the falling knife could continue to fall until no one would like to pay for it.

    Value, ugly, and beauties

    Ugly is because

    1. out of the fads
    2. real and true ugly behavior
    3. bad lucks to be beauty
    4. lamed in disasters
    5. temporarily ugly behavior

    However ugly has its value and adding value is the ticket to be beauty:

    1. market is a place for value rediscovery
    2. business is to turn ugly into beauty even some destroy the value too.
    3. fads in market turn ugly to be beauty time by time
    4. ugly in the fads could be taken as beauty
    5. all of beauties come from ugly
    6. ugly is relative not absolutely
    7. value could be see in long time
    8. price could be anything around value in short time
    9. value adding is the internal reason for ugly to be beauty
    10. Potential to add value are ticket for ugly to be beauty
    11. adding value is a accumulated process and at some threshold ugly becomes beauty.

    Get beauties when they are ugly

    Four things are vital few around ugly:

    1. ugly
    2. beauty
    3. low cost from the ugly appearance
    4. high price for beauty of core value

    The more ugly is it the less is the price for it. The better is it the more beautiful is it. The ugly is to get low cost for the beauty. Ugly is not the goal but the way to get the beauty and low cost.

    No ugly and then no low price. No low price of the present ugly will results in no low cost of future beauties.

    All of tricks to add the value in your trading and investing business is to get the ugly with high probability for it to be the future beauties.

    Suggested business vision and mission

    It is actually the goal for all of business in financial terms. You business vision is something like that:

    Hands for happiness and relief in the market

    You business mission could be somethings like

    1. know quality and value of beauty and what kind of ugly could be beauty
    2. check the ugly in the market ruins based on the remained value, probability distribution, survival capability, volatility or activity when market is peaceful and quiet(Fear just gone now)
    3. buy the ugly at the crap price(not too late)
    4. hold for their days(ample cash for mind and mental peace)
    5. supply the beauty to the grand party with reasonable premium(do your job)
    6. all are happy!(consequences we expect and strike for)

    Basic requirement in performance and behavior

    1. Don't do anything without direct goal, plan or process to approach the golds, and necessary due-diligence for them
    2. Don't allow your feeling is synchronized with market sentiment.
    3. Be responsible and disciplined for any tasks for goals defined in the plan and process
    4. Always behave as a professional business people, who is visionary, missionary, brave, creative, prudent, wise, intelligent, and disciplined with high self and environment awareness
    5. Know the market sentiment deeply but never allow the synchronization between personal feeling with market sentiment!

    Rules, process, safety and beauty

    There are simple and tough challenges
    1. future is uncertain
    2. ugly is risky but can be very profitable
    3. no ugly and then no low cost
    4. no quality and no value, only generate falling knifes

    Bottom line goals of business
    1. get the minimum income for labor value of business and cash flow of overlay
    2. get good capital allocation among minimum cash reserve after scheduled ugly buying in worst, maximum capital of each ugly and portfolio, capital to buy a ugly and possible backup to buy more of this ugly.
    3. set up fuse or breaker mechanism to stop cash run and over spending of cash reserve.

    All above are sub-goals for no-loss business operation in worst time.

    Tasks and process for bottom line goals

    1. some ugly would be falling knifes definitely, which usually is caused by extremely bad economy and market sentiment but could happen in sunny day with high cash burning rate
    2. each buying needs roughly right value or means, which should be high enough which is extremely important in the tight financial liquidity time
    3. no buying if vix is extremely high, which usually happens when market is in selling mood.
    4. no buying if no margin of safety or no attractive margin of safety
    5. no buying when there is synchronization between self and market sentiment
    6. no buying without trustful analysis based on the fact if market is very bullish or move into bearish dropping track
    7. if value is trustful, buy in half of the allocated capital in the extremely panic, which usually come with the surprised gap or vertical price dropping down
    8. before buying recheck the affordability and probability to win out.

    The above actions are extremely important for business viability. It is not to be sure no mistakes but measures to be no loss in worst cases.

    Vital few, intuition, insight, and right questions

    1. The problem or opportunity in future could not be seen.
    2. Decisions need intuition, insight, and prudence: ask the right questions rather than getting the right answers to the wrong questions, such as:

    • What problems and opportunities could potentially have tremendous consequences?
    • What is working well when it shouldn’t, or at least was not intended to?
    • What are unintentionally actions, which bring in unexpected profit? Why?
    • Is there something going badly astray, where it is believed Known all doing is totally wrong?
    • Something important is always happening underneath the surface, without anyone noticing it. What could it be this time?
    Last edited by a moderator: 7th Aug, 2011
  11. wdongli

    wdongli Well-Known Member

    31st Mar, 2010
    When to buy the ugly

    What is for what?

    1. Beauty sometimes is sold at ugly price.
    2. Buying beauty at ugly price will great reduce the cost for warrior service business.
    3. It is the logic and common senses and no one should beat it furiously


    1. There are barriers for mass or herd to run away.
    2. The exit gate to safety is narrow and some ways to the hell are too expensive
    3. In panic running for safety but not clearly knowing where is safe, results in stampede among the herd or mass always.
    4. In the stampede noting is valuable and gems are missed in the ruins

    So beauty is not be cherished and dealt with as the same as the ugly

    When is it best time to get the beauty?

    1. Any good thing is made with the pains and risks, which you take or others take
    2. It is wise to let the herd to stampede each other until the panic running is at the end
    3. No one could save anyone who is in panic running. If you want to be safe just stay away from the running
    4. Be scared and warned when you see the panic running going on
    5. Check the VIX for sure the market becomes calm again!

    Be sure the waves of the margin call just pass by!

    What to do when herd stampedes each other?

    1. Scan the market for the most ugly
    2. Check its value if you can
    3. Get the means of probability for long history
    4. Go around trading forum to see what traders said before the panic running
    5. Get a watch list of the most ugly
    6. Check the margin of safety
    7. Check the engine and fuels for the likely shooting up between 6 months - 2 years
    8. Prepare to sell for your bottom line goals in financial terms.

    What the goals?

    1. No loss
    2. Immediate profit after buying so that you could have chances to hold or sell
    3. Reduce the cost for possible best profit
    4. Prudent and wise behavior
    5. Get the job done for your business

    Questions for buying?

    1. is it a no loss buying?
    2. is it a immediate profit buying?
    3. is it a buying for a high probable high profitable buying?
    4. is it a possible over-optimism buying?
    5. is it a affordable buying?
    6. is it a buying with the care of portfolio balance?
    7. is it a buying with the back up or capital for second buying?
    8. what if the errors worse than normal or worst lucks?
    9. did the cost running and cash reserves leakage happen before?
    10. is the cash reserve and back up buying capital in position?
    11. could you be prudent now?

    Get the answers and decide what you choose! You should have little chances to be ignorant or arrogant now!

    What if you are wrong?

    Don't worry it would be fine since most of warriors are in extreme depression now. You are their relief and hope! No one could do service business without any risks.

    What will you do now? I have scanned the market for this whole day. I will put most of my time on it in the coming months! I have made a lot of mistakes. I could not afford to make more mistakes now!

    Unfortunately I still could not evaluate business as a business people. So I could not use value as the base. However I would move into it once I finish the learning about 80/20 rules.

    The above is part of my work on my business plan!