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Trading Why do you buy or sell?

Discussion in 'Shares' started by wdongli, 20th Dec, 2011.

  1. wdongli

    wdongli Well-Known Member

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    Why do you buy this TV? Why don't you buy another one? Do you buy the quality without concerning about the price or price only without concerning about the quality? So why do you buy and sell the stock? Buy when the price is becoming dearer or when the price down? What're your rules and principles to buy and how long is your holding horizon? Read the posts around you would find too many clever words for fancy but few could be used for profit! Why?

    Logically you need to calculate what a stock is worth, based on the value of
    its businesses. However in the market how many retail market players do so? Most of us(including me) more often gamble that a stock will go up in price because somebody else will pay even more for it. Some prefer to buy the rumors and sell the news. Whatever we do we have to admit we act or behave against basic logic.

    ***
    We need to judge the market price by established standards of value. Unfortunately most of us don't know the value enough. When Banana price increased to $15 per kilo, most of people tried to find alternatives even they love banana very much.

    The incessant stream of stock quotes is like oxygen to most of market players. When the price drops down, the oxygen seems be cut off and most of retail market players seem at the end of the world. Could you have any better reasons about why so many people are crying loudly in the market?

    ***
    In fact the price is a matter much less matter. Why didn't sell in April when I could lock nearly doubled profit? I have to admit I was terribly greedy. I wanted the market to follow my will. Once the market turned to down and down, I realized my problems mentally and psychologically, but it was too late. Market doesn't tolerate any human errors without matter what your reasons.

    We, if intelligent and wise enough, have to be alerted by our own mental issues. You have to lock the profit when everyone cheers for better and higher price. The reason is very simple since once the price goes up, you would get less and less chances to get the profit. We need to own some stocks even we could not find the price everyday.

    Market can be a huge casino to anyone who gamble or bet on the horses. Gambling and winning is exciting things. If you are lucky you could be rewarded greatly. However lucks are few and could be very dear or need to wait for long time. How many people who calibrated the odds for wind direction just lose all? If you like to gamble and try your luck which is fine but you have to be sure most of your capital could work for you positively!

    Good news is that market is not a Casino if you don't want to play it as you are in the Casino. You could get the rules and principles and put the odds squarely in your favor. There are people who make money for themselves in the market and the people who trade them in for nothing. Are the winners are more clever to use the advanced system? It seems not.

    Why? I am trying to figure out! If you know the reasons you just give out your points.
     
  2. wdongli

    wdongli Well-Known Member

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    You can gamble but...!

    Nothing is a sure matter in life. If sure, I would not be here to post with the words until I was 20 I still didn't know the meanings of the words, the English, which just have the letters. History always provides some chances for someone who could recognize or be wrapped in with the reasons no one could explain.

    However it is a mistake when you gamble you believe you hold the truth of the future. In 2000s, that confusion caused mass destruction. If you look around how many mates who jumped into the market a decade ago are still crying and cheering with the market vicissitude? Yes you could still find some clever boys or girls cry tearfully for the darkness but they have lost the guts. They don't dare to gamble anymore and don't know how to wisely play in the market too!

    ***
    Don't blame yourselves for gambling and anyone else. Who don't gamble at all. Almost everyone, it seems, ran out of patience at once at least in the market. The world and internet make everyone could gamble as though they are great in something even at last they all lose their capital and have to run away or just stay at the side line to cry!

    This is a warrior crying time. How could they not? The trading generation started from IT booming, are moving into their last years in life. It is a magic dying time. You shoot from stock to stock like grasshoppers but you just have the words could be used to help you crying beautifully! This is a hopeless market generation!

    Now people began believing that nothing could save them. US is hopeless with GFC. EU is miserable place for debt crisis. China is moving toward to tip off. Australia is a nation with resource which will no one wants.

    After the market players burst how great or clever they are, they have been reckoned by the market. They deserve that! They beaten the market over any period, no matter how dangerous or dumb their tactics.

    ***
    However market likes the intelligent and wise market players. These intelligent and wise market players have lost any interest in being temporarily right. They want to change. They want to reach their long-term financial goals but never want to buy and hold forever. It is because the market is a dynamic mechanism and it could be overpriced or underpriced irregularly. It is stupid to hold over priced stuff and wait for under priced again! Don't forget the market always moves from one extreme to another one.

    Anyway more and more losers have realized that they must be sustainably and reliably right. The techniques that became so trendy in the 1990s—2000s , day trading, ignoring diversification, flipping hot mutual funds, following stock-picking “systems" has been proved not work! Even few really could have gut to know the reasons!

    Do you want to know the reasons? Could you change yourself? Could you use your behavior and conduct to make your winning cases? Don't forget it is one matter you know what is right and it is another matter you do thing right!

    Are you sure you could change successfully? Seriously saying I really don't know even I believe I could. You always need some lucks. Could your kids change your minds even they are right? It is huge challenge to change yourselves. It needs guts, knowledge, action, and persistent efforts to correct your fragile mental framework. No one could change it and update it too soon. You want it to happen soon? You are cheating yourselves.

    It is a game to get resources and any resources need efforts mentally and physically! Don't work but twist the words or cry for darkness in darkness? You would fail! Don't believe that? Ask your mum but never ask your professors!

    ***
    Most of market players want to get the quick money, which is understandable but in reality few could get the money in the speed they want.

    Could you imagine that you want to go a place from your home with about 130km. If you drive at the 65km per hour, you can drive that distance in two hours. But if you drive 130kph, you can get there in one hour. If you could be survival, are your right?

    The common sense tells us never drive a car at 130kph. It is too dangerous. Is it stupid you do so because you hear someone bragging that it
    “worked”?

    Flashy gimmicks for beating the market, such as buying the rumor and selling the news are much the same: In short streaks, so long as your luck holds out, they work. Over time, they will get you killed. How many clever but also stupid market players have been killed in their quick money chasing game.

    Why do you cry? You feel frustrated or has lost your guts while you lost your money! However wisdom and intelligence need the gut and efforts to find the chances. Of course if you make human errors you should be still OK!
     
    Last edited by a moderator: 21st Dec, 2011
  3. wdongli

    wdongli Well-Known Member

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    Where is your brain?

    How do you buy and sell? Just by following others or books? It never works. Too many retail market players pick up one book after another while they are in the deep water.

    However life logic tells us you have to choose. Some books are great for your leisure time. Some books are not good for market playing. Usually the most useful books are boring. You should love the life logic and then you could change your mental framework and then use them for your life.

    Too many retail market players, especially those who are old enough, are too eager to tell what others wrong but never know they should be self-aware too. They may have some experiences but they just could not make money in the market. They talk sitting at the sideline, which make them very enjoyable.

    All of us would like to teach others for something but if you just tell how the people should cry, which doesn't just waste time but does do some kind of abuses for others' wisdom and intelligence.

    ***
    Too many market players just enjoy to google. Gooding could be a exciting matter. All are new when you sink into the continuous data about stock. However it is a real problem that the modern communication system such as internet, turned the stock market into a nonstop word game. When you google you feel more knowledgeable about the markets than ever before.

    Unfortunately, while you were drowning in data and internet, knowledge was nowhere to be found. Stocks became entirely decoupled from the companies that had issued them—pure abstractions, just blips moving across the computer screen.

    All of reasons to buy and sell is about where price will go next second. The people become crazy and then suddenly things turn to worse and then all of the great traders lose the mind in the blips.

    To most of retail market players, winners or losers, it is really matter that whether the price were moving up, nothing else mattered. However life logic tell us that the price moving up increases the risk to lose and the price dropping down gets the bubble out of the market.

    ***
    Since April the market has been full of the losers. These losers curse everything since their systems just failed to work. Losing is painful but you can lose the money but you should not lose your mind.

    How many market players predicted GFCII after they lost their shirts? Too many! How would they do in next peak or bottom? They might have nothing to do since they have lost their guts. US crashed down to Ground, people said so for quite long time. China would tip off is what people expect. House price in Australia would crashes down to ground too.

    I just feel funny to see what these people post and thought. All they could do are to jump over the fence based on the price and what news told them. Where is your brain? It has been lost for quite long time or might be never exist in their heads. They are lemmings in the market!
     
  4. wdongli

    wdongli Well-Known Member

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    Are you gamblers?

    It is not wrong to be a gamblers if you would like and could afford. However if you gamble but believe you hold the key for your fortune and believe you could make killing, it is very risky in the market. If you like gamble you don't need to to beat yourselves. Who don't gamble sometimes in life?

    When you buy rumors and sell the news, you are gamblers. When you buy and just hold for ever you are gamblers. When you buy quality and refuse to sell it after its overpriced, you are gamblers. All of actions without sufficient analysis and protection of their capitals in the market is gambling.

    How many retail market players are not gamblers? How many property investors are not gamblers? Full analysis and full protection for good enough return are few in the market. Intelligent speculators in the market are few too. That is why there are so many retail market players lost their shirts. That is why so many retail market players have to stop their market playing sadly and so many retail market players just know to cry now!

    • You must never delude yourself into thinking that you’re intelligent when you’re gambling.
    • Gambling becomes mortally dangerous the moment you begin to take it seriously.
    • You must put strict limits on the amount you are willing to wager.

    If you could not win through gambling, it is normal and it is the result that should be. If you don't want to lose or could not afford, you have to change your behavior and mental framework to stop gambling and how to turn yourself from a gambler to a owner of a little gambling house.

    Do you know the difference of the owners of the gambling houses and gamblers? Any houses need some budget, plan, discipline, analysis, and self-reliance. Any gamblers just care about the chips on the table only! They just want to know when to buy, hold, and get the chips and run away!

    The fact is that most of houses would be there and the gamblers gone and leave the lost shirts behind since lucks could not just belong to them forever. George Soro is a intelligent speculator. He gambled with calculated winning probability and with tight control on his speculation against the crowd sentiment. Do you have the control on yourself?

    ***
    You have to do anything in the market in sensible way. You could not lose the control, nearly most of the intelligent market players designates a tiny portion of her total portfolio as a “mad money” account. Sometimes it could work very well.

    How much you put into gambling of your wealth, if you have, the maximum permissible amount to put at speculative risk. Never mingle the money in your gambling action with your intelligent market playing; never allow your gambling thinking to spill over into your whole market activities; and never put more than 10% of your assets into your mad gambling activities, no matter what happens.

    For better or worse, the gambling instinct is part of our nature. You don't need to beat it fully down and to most of us it is futile efforts. Instinct is hard to suppress, good or bad. However if you are responsible people you must confine and restrain it. That’s the single best way to make sure you will never fool yourself into confusing gambling with your market playing.
     
    Last edited by a moderator: 22nd Dec, 2011
  5. wdongli

    wdongli Well-Known Member

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    Are you intelligent enough?

    Most of market players think they are clever but they never mind whether or not they are wise or intelligent enough.

    Just ask a question to check whether you are intelligent or wise enough in the market. Do you recognize that even high-quality stocks cannot be a better purchase in all of the time? Do you recognize the high quality bonds can not be held under all conditions? Do you think dogs have dogs' day and you should not go out if it is not your days?

    Is it too easy to think about and let you feel shamed as though your name or esteem have been damaged? Think about and think about how you buy and sell your shares to use your conclusion. Never think about it before? You should be alerted.
     
    Last edited by a moderator: 23rd Dec, 2011
  6. wdongli

    wdongli Well-Known Member

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    Fear, a friend or a enemy to you?

    Naturally, all of market playing actions need good policy to protect the market players from unseen risks and be sure enough return.

    It is just because of the uncertainties of the future no one can afford to put all his capital into one basket, neither in the bond type, despite the relative safe in return, such as those relative to your labor value, government bonds, corporate bonds, junk bonds, and so on, nor in the property type, and nor in the stock basket. The reason is that there are no things which will go in one direction only.

    The more you depends on your portfolio and the income, the more necessary you need to guard against the unexpected and the disconcerting in this part of your life. It is axiomatic that we should play in the market conservatively and should seek to minimize our risks.

    It must be evident in hindsight that in the last decade most of retail market players, who were excited by the great increased information volume, have failed to setup right mental framework, been too much enthusiasm at the market peak, without enough attention on the market fluctuation, and then been fearful and depressed after market crash.

    No one can afford to buy at peak, be consumed in contrition market push and pull, curse and cry in his money ashes, and sell on fire. In the same sense no one could afford not to buy after the whole market become depressed and hopeless and be sure what he pay would be affordable.

    When all are fearful, we need to be cheerful. It is not because we want to prove we are clever but it usually gives the best time to buy low and give the chances to sell high.

    Fear itself is part of our life. We all can be fearful in risk.

    1. We need this instinct but it is not enough and under some conditions it could be very harmful as anything else.
    2. There are always real reasons for crowd to be fearful. We need to be humble. We need to respect the crowd fear when it starts and has not spread wide enough. We should avoid mistakes to ignore that and let our greed hide our intelligence for the coming crush.
    3. The intelligence means useful data collection and analysis based on the reality. The main purpose of them is to protect us even crash happens. It is to avoid cost run, cash burnt out, cash reserve diminishing or gone once euphoria spread which tends to be the preconditions to crash and crowd fear!
    4. Avoidance is always better than crying in the ruins.
    5. Fear could be your friend depend on how you use it as anything along the way in life. Crowd fear could be your friend too. Fear is a burst of emotion. it comes quick and spread quick and sometime later it would be gone. At a point, crowd fear will generate some life opportunities.
    6. Could you find the over-fear in crowd and learn how to find the turning point, that means less fear or better better off which is unavoidable.

    Not easy to use fears as experts which perhaps needs some gifts. However in the market, anyone, who fails to govern the fear or cheer of himself and crowd would pay out or even trade themselves in. Most of market players should be consumed by the market. It is because experts mean the efforts and most of market players have not desire to be this kind of experts.

    Read around and just find too many want to get holy grail or handbook for life or beat others in words if anyone question their handbook for life. No handbook for life could be understood by everyone and if a handbook for life needs your protection, it is not. Who could know why you cry really? You have to find the reasons for yourself.

    Seriously if I could I want to be a expert about fear and cheer plus the qualities in the market. Unfortunately or fortunately I have to build my bond type investment again and try to buy extremely low when all are doomed in the market.
     
    Last edited by a moderator: 24th Dec, 2011
  7. wdongli

    wdongli Well-Known Member

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    Consistent behavior and Jumping over fence

    Dogs act as dog. Cats act as cat. Is it a logic and common sense? Most of market players always as the dogs in the market and do you wonder how they could be market swans sometimes?

    Some traders use the dogs' view to check why W. Buffett to deal with IT and derivatives and declared some ridiculous assertions: such as Buffett was out of data or Bufffett cheated since he played the derivatives after GFC and he said derivatives were the time bomb to destruct the market.

    Most of traders have too simple minds which just could tell black and white. For example, the buying the rumors and selling the news. Is it true the rumors and news the future fact? The fact is black and white never could tell you enough when you see a completed house even the black and white are extremely good for the blue print.

    ***
    Market playing should be in a business way. However few market players have any ideas how to run businesses. They jump into the market for quick and easy money.

    For any business, the owners have to hold consistent policy for sure return in the future or at least work for this return while business conditions are normal. However even the most clever retail market players, as we see in this forum and those somewhere else, don't understand this simple logic.

    1. Opportunities for 20 people only: What it means? If you miss, you would miss all. Is it true?

    2. Buy rumors and sell news: What are rumors? Not sure but someone say so. What is news? Something happened in the past. What do they tell in future?

    3. Handbook for life? What is the life? Which book could give you all for life?

    All of these are clever assertions but logically, basically, and scientifically they are wrong! They are simply the big words to stir the reactions of greed and fear. That is skill to sell and always is too good to be true!

    ***
    How to detect a boom is at the end? There are things are there but crowd just could not see or don't want to see:

    1. There have been great move forward in price.

    2. there is a definite deterioration in the overall earnings of corporations. The rate of profit become lower than average level

    3. Invested capital fall to the lowest percentage in long enough time period. 4. A considerable number of companies reported net losses and many became “financially troubled,” and

    5. Usually for the first time since the boom there were quite a few important bankruptcy proceedings.

    ***
    How could you sense the seasons of the market? Yes we know dogs have dogs day but we just don't know when the dog's days are in. Who don't want to hold some good position before the genius and bums both could make money? The problem is most of us would fail to see the dogs' days gone or move in. Could you see the days or just too late not to cry?

    There are a lot of ways to sense the temperature of the market. Some are based on the primary instincts and some are based on the right policies and good management of their market playing. No management no business. No management, the people in the market just act as warriors. They fight in every days with the great name, trading! However most of warriors would be consumed by the war!

    There is a temperature sensor in the market actually. It is the “price/earnings ratio” of a stock, or of a market average like XAO index. It is a simple but effective tool for taking the market’s temperature. If, for instance, a company earned $1 per share of net income over the past year, and its stock is selling at $8.00 per share, its price/earnings ratio would be 8; if, however, the stock is selling at $70, then the price/earnings ratio would be 70. Most of market players like high P/E time more than the time when all are crying as it is now!

    History said in general, a price/earnings ratio (or “P/E” ratio) below 14 is considered low, between 15 and 19 is considered moderate, and greater than 20 is considered expensive. Do you think so? Do you know these number can be used to sense the market temperature and how hot your head is? We are clever in the ruins we tend to predict the thing would be worse.

    We are clever to buy at peak and sell in the ruins! However it is never a way to buy low and sell high!
     
    Last edited by a moderator: 25th Dec, 2011