Wednesday, 30 April 2014

30-Apr-2014 CSE Trade Summary


Company Fact Sheet: The Colombo Fort Land & Building PLC - CFLB:N0000

About the company:

Established: 1895                 Quoted Date: 1970-01-01             Sector: Diversified Holdings

The Colombo Fort Land & Building Company PLC is a Sri Lanka-based diversified conglomerate. The principal activities of the Company include real estate and property development, management of an investment portfolio and provision of management services. Together with its subsidiaries, the Company is engaged in real estate and property development; manufacture and marketing of chemicals, paints, hardware and building materials; manufacture and marketing of consumer disposables, food products and marketing and distribution of pharmaceuticals; marketing of motor vehicles and accessories and providing vehicle maintenance services; tourist hotels and inbound tour operations; production, processing and marketing of tea, rubber and desiccated coconut; road construction and provision of waterproofing and industrial flooring; management of investment portfolios, and provision of management services, among others.


Chairman: Mr A. Rajaratnam

Deputy Chairman: Mr S.D.R. Arudpragasam 

Board of Directors:
Mr A.C. Gunasinghe
Mr 
N.H.B.S. Perera 
Mr A.M.De.S Jayarathne (Independent Non Executive Director)
Mr Rajaratnam Anushman (Alternate Director to A. Rajaratnam - Non Executive Director)
Mr 
R. Seevaratnam (Independent Non Executive Director)
Ms A.K. Gunawardhana (Independent Non-Executive Director)
Mr C.P.R. Perera  (Independent Non-Executive Director)

52 Weeks Low: 24.60                                                               52 Weeks High: 41.00
Average Trading Volume: 60,430

Company Financial at a glance:
Click Table to Enlarge

Total Voting shares in Issue: 180,000,000


Notes:
1.180,000,000 Ordinary Voting Shares of the Company were started to trade on 6th May 2011, pursuant to a 5:1 Share Split.

Top 20 Shareholders as at 31/12/2013


Percentage of public holding as at 31st December 2013 was 41.43%

The percentage of Foreign Holding as at 31st March 2014 was 1.19%

Quote for the day

“Risk control should not be confused with fear of risk. A willingness to accept risk is probably an essential personality trait for a trader.” -  Jack Schwager

29-Apr-2014 CSE Trade Summary


Company Fact Sheet: Lanka Ceramic PLC - CERA:N0000

About the company:

Established: 1991                 Quoted Date: 1993-04-07             Sector: Manufacturing

Lanka Ceramic PLC is engaged in mining and processing of raw materials. The Company's segments include industrial goods, plantation and others. Industrial goods includes manufacture of floor and wall tiles and wooden flooring for local and export market, mining and processing of raw material, retail and wholesale trading of ceramic and allied products and manufacturer of aluminium extrusions. Plantation includes cultivation and processing of tea and rubber. Others include leasing of assets and providing plantation management services.

Chairman: Mr W.D.N.H.  Perera

Deputy Chairman: Mr K.D.D. Perera (Non Independent Non Executive Director)

Cheif Executive Officer: Mr N.AAbeyesekera 

Board of Directors:
Mr C.L.V. Jayatilleke
Mr J.A.P.M. Jayasekera 
Mr S. Selliah  (Independent Director)
Mr T.G. Thoradeniya  (Non Independent Non Executive Director)
Mr K.D.G. Gunaratne  (Independent Director)
Ms A.M.L. Page 

52 Weeks Low: 68.00                                                               52 Weeks High: 130.00
Average Trading Volume: 1,140

Company Financial at a glance:
Click Table to Enlarge

Total Voting shares in Issue: 30,000,000

Top 20 Shareholders as at 31/12/2013


Percentage of public holding as at 31st December 2013 was 10.12%

The percentage of Foreign Holding as at 31st March 2014 was 0.05%

Company Fact Sheet: Union Chemicals Lanka PLC - UCAR:N0000

About the company:

Established: 1988                  Quoted Date: 1988-08-01              Sector: Chemical & Pharmaceuticals

Union Chemicals Lanka PLC is engaged in manufacturing and marketing of a range of polyvinyl/ acrylic emulsions for the paint and textile industries in Sri Lanka and for industrial and domestic use as adhesives. The Company also indents, imports and markets a range of products, such as special solvents, polyolefin, coating resins, surfactants and personal care products, which are manufactured by the Dow Chemicals Company and its affiliates worldwide.

Chairman / Managing Director: Dr P.M. Gunasekara

Managing Director: Mr H.A.D.U.G. Gunasekara

Board of Directors:
Mr A.N.U. Jayawardena 
Mr G.R. Pathmaraj
Mr T.N. Jayasinghe
Dr A.M. Mubarak
Mr R.D. Zilwa
Mr U.L. Pushpakumara

52 Weeks Low: 300.10                                                                52 Weeks High: 587.00
Average Trading Volume: 51

Company Financial at a glance:
Click Table to Enlarge

Total Voting shares in Issue: 1,500,000

Top 20 Shareholders as at 31/12/2013


Percentage of public holding as at 31st December 2013 was 25.7%

The percentage of Foreign Holding as at 31st March 2014 was 0.67%

Company Fact Sheet: Lanka Ashok Leyland PLC - ASHO:N0000

About the company:

Established: 1982                  Quoted Date: 1983-01-01              Sector: Motors

Lanka Ashok Leyland PLC is a Sri Lanka-based company engaged in assembling and selling commercial vehicles, spare parts and generators. The Company assembles Ashok Leyland range commercial vehicles and is in the business of import and marketing of Ashok Leyland fully built buses, trucks, truck chassis, spare parts, generators and accessories. The company also carries out repairs and recondition of commercial vehicles including body fabrication on new Ashok Leyland goods and passenger vehicles.

Chairman: Mr D. Amaratunga

Board of Directors:
Mr D.P. Kumarage 
Mr N. Sundararajan 
Mr V.K. Dasari 
Mr K. Sridharan 
Mr S. Perera 
Mr B.M. Riyaj 

52 Weeks Low: 1202.00                                                               52 Weeks High: 2002.20
Average Trading Volume: 1

Company Financial at a glance:
Click Table to Enlarge

Total Voting shares in Issue: 3,620,843

Top 20 Shareholders as at 31/12/2013


Percentage of public holding as at 31st December 2013 was 2.68%

The percentage of Foreign Holding as at 31st March 2014 was 28.33%

Tuesday, 29 April 2014

Quote for the day

“Speculation [is] dealing with the uncertain conditions of the unknown future. Every human action is a speculation in that it is embedded in the flux of time.” -  Ludwig Von Mises

Monday, 28 April 2014

28-Apr-2014 CSE Trade Summary


Quote for the day

“A trading philosophy is something that cannot just be transferred from one person to another; it’s something that you have to acquire yourself through time and effort.”
– Richard Driehaus

Sunday, 27 April 2014

Nicolas Darvas And His Amazing "Box Theory"

The techno-fundamentalist who made millions.

You may or may not have heard of Nicolas Darvas, the legendary dancer-turned-investor who made two million dollars in the stock market in the days when that was a whole lot of money -- and wrote a book on how he did it. In this article I'll go through who he was, how he bought and sold his shares, and how his ultimately successful strategy was based on a "box theory" of how share prices move. I'll also offer a concrete example of his box theory in action, via an example chart that presented itself to me recently.

Darvas, the dancer
Nicolas Darvas emigrated to America in 1951 and trained with his half-sister to become a ballroom dancer. Although they became a highly successful worldwide touring act, this doesn't sound like the ideal background for an equally highly successful investing career. So maybe I should mention that, before emigrating to America, Darvas had studied economics at the University of Budapest.

Darvas, the gambler
Having been offered shares of a particular stock in lieu of payment by a couple of nightclub owners, and having then made a tidy profit on the stock, Darvas got the stock market bug and started asking around for more "stock tips". By his own admission, he was merely gambling, and his shrinking portfolio reflected that fact.


Darvas, the fundamentalist
Darvas signed up with a broker in New York and began regarding the brokers' suggestions as merely "information" rather than "tips", and he began taking a fundamentalist approach to assessing stocks based on factors such as the price-to-earnings ratio. Yet he still lost money, and faced bankruptcy.

Darvas, the technician
Darvas saved his own skin by investing in a stock -- TEXAS GULF PRODUCING -- for which he knew nothing about the fundamentals. All he knew was that its price was rising day after day. This marked the beginning of his time as a technical investor, focused on buying the right stocks at the right time with a view to making small losses and big profits. His chief weapons in this endeavour would be price and volume, the box theory (illustrated later), implemented using automatic buy orders and stop-loss sell orders.

Darvas, the techno-fundamentalist
Having noticed that most stocks go up in a bull market (but some more than others) and that most stocks go down in a bear market (but some less than others), Darvas concluded that what distinguished the good stocks and the bad stocks was their earnings. Thus, he settled on a techo-fundamentalist approach in which he would select stocks on their technical (price) action in the market, but only if he could give "improving earning power" as a fundamental reason for investing.

Top 10 Financial Scandals of All Time


Quote for the day

“The best fertilizer is the farmer’s shadow. This adage applies equally well to trading as it does to farming. Trading profits are cultivated in the rich soil of market discipline, strict money management and consistent adherance to a proven trading strategy.” – Howard Abell

Saturday, 26 April 2014

6 Steps to Changing Your Bad Trading Habits

By Jared Martinez

Over the years, I have discovered six steps that can really help a person change for the better.

I always say that if you truly want to understand something then start by trying to change it. Yes, change can be a challenge for some people, because people react and adjust to change differently. However, change becomes more accepted when the need for it is understood.

Let's say you've recognized a bad trading habit that you want to change. I will help you to see the ‘next step’ for the needed change enabling success to not only find you—but stick around.

Dickson G. Watts ‘Speculation As A Fine Art’ – A Speculator’s Essential Qualities

The book ‘Speculation As A Fine Art’ by Dickson G. Watts is very short and only 45 pages long. Most of the book consists of quotes contained in the second part entitled ‘Thoughts on Life’. Dickson G. Watts was the president of the New York Cotton Exchange from 1878 to 1880 and that the last 85 years (that’s a while back) have changed a lot of things, but the rules of speculation set forth by Mr. Watts are still very effective in today’s market.

His list of ‘Essential Qualities of the Speculator’ and ‘Laws Absolute” show the timeless value of his insight:


Quote for the day

“It's not a matter of coming up with a one-size-fits-all model that is better than the standard Black-Scholes model. The key point is that the correct probability distribution is different for every market and every time period. The probability distribution has to be estimated on a case-by-case basis.” - John Bender

Thursday, 24 April 2014

Quote for the day

“The human mind was made to create patterns. It will see patterns in random data. A turn-of-the-century statistics book put it this way: 'Too fine an eye for pattern will find it everywhere.'” -William Eckhardt

24-Apr-2014 CSE Trade Summary


Company Fact Sheet: Abans Electricals PLC - ABAN:N0000

About the company:

Established: 1981                  Quoted Date: 1984-01-01              Sector: Manufacturing

Abans Electricals PLC is a Sri Lanka-based manufacturer of electric and electronic appliances. The Company is engaged in the manufacture and assembly of household electrical and electronic appliances, and the provision of repair and maintenance services. The Company operates in two segments, manufacturing department and service department. The manufacturing department is engaged in the manufacture and assembly of LG-branded washing machines, refrigerators, televisions, air conditioners, cookers and water geyzers. The service department is engaged in the installation, repair, maintenance and all after sales services of all electrical and household appliances sold by Abans Group. As of March 31, 2013, the Company's parent undertaking was Abans (Pvt) Ltd. As of the same date, it had a sole subsidiary, Abans Jung Poong (Pvt) Ltd.

Chairperson / Managing Director: Mrs A. Pestonjee

Board of Directors:
Prof Lakshman Ravendra Watawala (Independent Non Executive Director)
Mrs Dayangani Priyanthi Pieris (Independent Non Executive Director)
Mrs Saroshi Dubash
Mr Behman Pestonjee
Mr Rusi Pestonjee
Mr Allen Raffel
Mr C.A. Fernando 

52 Weeks Low: 75.00                                                                52 Weeks High: 145.83
Average Trading Volume: 1,510

Company Financial at a glance:
Click Table to Enlarge

Total Voting shares in Issue: 5,110,560 

Notes:1. 1,064,700 Ordinary Shares of the Company were allotted on 14th December 2004, pursuant to a 1:1 Bonus Issue.
2. 1,064,700 voting shares of the company were listed on 7th July 2010, pursuant to a capitalization of reserves in the proportion of 1:2.
3. 1,064,700 Ordinary Shares of the Company were listed on 23rd August 2010, pursuant to a 1:3 Rights Issue @ Rs. 45.00.
4. 851,760 Ordinary Voting Shares of the Company were listed on 4th October 2013, pursuant to a capitalisation of reserves in the portion of 1:5.


Top 20 Shareholders as at 31/12/2013


Percentage of public holding as at 31st December 2013 was 32.21%

The percentage of Foreign Holding as at 31st March 2014 was 1.97%

Quote for the day

“Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake. You need to believe in something, but at the same time, you are going to be wrong a considerable number of times. The balance between confidence and humility is best learned through extensive experience and mistakes.” - Michael Steinhardt

Wednesday, 23 April 2014

23-Apr-2014 CSE Trade Summary


Three Best Practices During Trading Slumps


Here's a list of best practices during trading slumps:

* Keeping risk-taking down until you see markets clearly - Losing small and gaining big is what makes for excellent risk-adjusted returns. Accepting that you're not seeing things well is half the battle. By continuing to actively engage markets in small size, you give yourself an opportunity to regain perspective. Trading larger or more often out of the frustration of losing is a recipe for disaster.

* Focusing on yourself - Very often, losses occur because market patterns have changed. Slumps occur because your mindset has changed. By working on yourself before you go hard at markets, you place yourself in an optimal mindset to press your advantage when things line up. Stepping back from trading, renewing your energy, getting back to core strengths--all can help create the mindset to see markets freshly.

* Searching and re-searching - Stepping back from trading doesn't mean you step back from markets. When times are tough, great traders double down on research and idea generation. It's that pipeline of ideas that will produce the next winning trades. Research and development is what ultimately keeps your trading business alive; turning the search for trades into trading re-search turns a losing period into an opportunity for advancement.

Drawdowns are inevitable. Slumps are not. Your job in coaching yourself is to learn from the drawdowns and use them as opportunities to make yourself better. A drawdown only becomes a slump when it gets inside our heads and takes us away from our core strengths. Drawdowns become business opportunities when they focus us on those strengths and prod us to expand them.

Edited article from http://traderfeed.blogspot.co.uk/

Company Fact Sheet: Pan Asia Banking Corporation PLC - PABC:N0000

About the company:

Established: 1995                  Quoted Date: 2005-04-05              Sector: Banks Finance & Insurance

Pan Asia Banking Corporation PLC (the Bank) is a Sri Lanka-based company engaged in banking and related activities, such as accepting deposits, personal banking, trade financing, resident and non-resident foreign currency operations, travel related services, corporate and retail credit, project financing, lease and hire purchase financing, pawning, ran loan, issuing of local and international credit cards, telebanking facilities, Internet banking and short message service (SMS) banking. The Bank's key product offerings include savings account, children's savings accounts, current accounts, easy pension, fixed deposits, home loans, leasing, gold loan services, safety lockers and global traveler's card.

Chairman: Mr W.D.N.H. Perera

Deputy Chairman: Mr E. De Silva

Cheif Executive Officer: Mr D. Seneviratne 

Board of Directors:
Mr J.A.S. Sumith Adhihetty
Mr M. Goonathilleke
Mr 
T.G. Thoradeniya 
Mr G.A.R.D. Prasanna 
Mr T. Igarashi 
T. Murakami
Mr 
H.K. Seneviratne  (Senior Director)
Mr J.D.N. Kekulawala  (Non Executive Independent Director)

52 Weeks Low: 15.40                                                                52 Weeks High: 23.30
Average Trading Volume: 49,230

Company Financial at a glance:
Click Table to Enlarge

Total Voting shares in Issue: 295,041,086

Notes:
1. 55,068,524 Ordinary Shares of the Company were allotted on 26th October 2006, pursuant to a 1:1 Rights Issue @ Rs. 10.00. (55,571,883 Shares Offered)
2. 36,880,136 Ordinary Shares of the Company were allotted on 31st March 2010, pursuant to a 1:3 Rights Issue @ Rs. 12.00.
3. 295,041,086 Ordinary Shares of the Company were started to trade on 8th June 2011, pursuant to a 2:1 Share Split.

Debentures Listed on CSE:

Top 20 Shareholders as at 31/12/2013


Percentage of public holding as at 31st December 2013 was 52.22%

The percentage of Foreign Holding as at 31st March 2014 was 21.43%

Quote for the day

"Large interests are practically always in the market. They usually have their scale orders in on both sides so that they buy on declines and sell on rallies. They always have money with which to buy on declines, because they sell on the rallies. They thus realize a profit as well as supply funds for the next decline. If the public would learn to do this, there would be fewer stock market fatalities." - Richard D. Wyckoff

Tuesday, 22 April 2014

22-Apr-2014 CSE Trade Summary


Company Fact Sheet: Kotmale Holdings PLC - LAMB:N0000

About the company:

Established: 1967                   Quoted Date: 1969-01-01              Sector: Beverage Food & Tobacco

Kotmale Holdings PLC is a Sri Lanka-based company holding company. Through its subsidiaries, the Company is engaged in the manufacture of dairy products, as well as the packeting and distribution of milk powder. Its products include ultra-high temperature (UHT) milk/Pasteurized milk, cheese, yogurt, ice-cream, fresh cream, ghee, curd and milk powder. As of June 30, 2011, the Company had six subsidiaries, namely Kotmale Dairy Products (Pvt) Ltd, Kotmale Milk Foods Ltd., Kotmale Milk Products Ltd., Kotmale Products Ltd., Kotmale Marketing (Pvt) Ltd. and Kotmale Kiri (Pvt) Ltd. However, Kotmale Milk Foods, Kotmale Marketing (Pvt) Limited and Kotmale Kiri (Pvt) Limited were dormant companies during the fiscal year ended June 30, 2011.

Chairman: Mr Stuart Young

Deputy Chairman: Mr V.R. Page

Managing Director: Mr M.I. Abdul Wahid 

Board of Directors:
Mr P.S. Mathavan
Mr A.T.P. Edirisinghe
Mr Sunil Mendis
Mr J.C. Page


52 Weeks Low: 35.00                                                                52 Weeks High: 58.00
Average Trading Volume: 1,180

Company Financial at a glance:
Click Table to Enlarge

Total Voting shares in Issue: 31,400,000

Top 20 Shareholders as at 31/12/2013


Percentage of public holding as at 31st December 2013 was 8.34%

The percentage of Foreign Holding as at 31st March 2014 was 0.10%

Social Media and Smartphone Facts

Review of Why Men Look For Business & Love While Women Seek Games & Knowledge

Social media and mobile use give us a treasure hoard of insights about our general habits as a community. So it’s only inevitable that we find numerous surveys about the two platforms based on one of the most popular categories: gender difference. These converging platforms are considered to be one of the biggest disruptive trends, as trivial as changing society’s shopping habits and critical as changing government through popular revolutions. And as in real life, men and women differ in using social media and their mobile devices.

We’re already familiar with the disparity in words used by both sexes. We have a comprehensive collation of words used by men and women in their social networks, which, interestingly, showcases the f-word as one of the favorites in men’s comments and posts.

Likewise, we’ve shown before in our previous infographic how women dominate men in social media; this time, we want to dig deeper using the recent studies on social media and mobile use by Pew and Nielsen, among others.

Apparently, the gender difference revolves around three distinct areas: our personal and professional relationships, the need for information and entertainment, and consumer behavior. On that note, we prepared this infographic based on those parameters for a broader look at how men and women differ. There are distinct variances. For instance, men are more likely to use social media for business and dating, while women for relationships, sharing, entertainment, and self-help.

Surprisingly, women ignore paid advertising more often than men. This makes sense because women in general are more conscious of their social circle and ads are intrusive strangers. Moreover, women seem to use their smartphones in more ways than men. Here’s a mini-shocker: women play games in their smartphones 10% more often than men. In fact, women dominate men in almost all the top smartphone activities, such as, visit websites, download apps (surprise!), messaging, text, and camera use.


future of social media
Originally published at http://reviews.financesonline.com | Author: David Adelman | Visit our Twitter
Review by David Adelman | Our Twitter

Quote for the day

“Forecasters, by definition, are biased and untrustworthy recorders of current economic events. In other words, they tend to uncover evidence that supports their forecasts, and they ignore or analytically dismiss anything that challenges it.” -  John Liscio

Monday, 21 April 2014

21-Apr-2014 CSE Trade Summary

Company Fact Sheet: Cargo Boat Development Company PLC - CABO:N0000

About the company:

Established: 1980                   Quoted Date: 1981-01-01              Sector: Land & Property

Cargo Boat Development Company PLC is a Sri Lanka-based company mainly engaged in property development. During the fiscal year ended March 31, 2013, the Company's principal activity was renting out premises.

The Company continued to maintain its investment portfolio in outside enterprises, and the market value of such investments was Rs. 1,217.4 Million as at 31.03.2013

Chairman / Managing Director: Mr R.B. Thambiayah 

Board of Directors:
Mr Merril J Fernando
Mrs M.A. Jayawardena
Mrs N.A. Thambiayah
Ms S.R. Thambiayah
Mr R.S. Tissanayagam
Mr C.S. Wijeyeratne
Ms A.L.Thambiayah
Ms N.R.Thambiayah

52 Weeks Low: 77.00                                                                52 Weeks High: 151.00
Average Trading Volume: 484

Company Financial at a glance:
Click Table to Enlarge

Total Voting shares in Issue: 10,200,036

Notes:
1. 3,400,012 Ordinary Shares of the Company were allotted on 14th November 2005, pursuant to a 1:1 Bonus Issue.
2. 3,400,012 Ordinary Shares of the Company were allotted on 4th January 2006, pursuant to a 1:2 Rights Issue @ Rs. 15.00.

Top 20 Shareholders as at 31/12/2013


Percentage of public holding as at 31st December 2013 was 35.18%

The percentage of Foreign Holding as at 31st March 2014 was 2.43%

Quote for the day

"Whenever too many people are doing the same thing, the market will go through a period of adjustment." - Gary Bielfeldt

17-Apr-2014 CSE Trade Summary


Sunday, 20 April 2014

The Secret World Of Gold

In light of the Chinese demand we discussed earlier, the ongoing manipulation of ‘rigged’ markets everywhere, and rising geopolitical tensions (as the de-escalation continues), we thought it worth dusting off this excellent and wide-ranging look at the history and present of the barbarous relic, gathering many perspectives (pro and con) on gold.


The following documentary moves from historical shipwrecks to Nazi ‘death gold’ and England’s war chest to recent years where widespread economic uncertainty has given the yellow metal a “new lustre in the world of high finance.” Valued for its permanence, beauty and scarcity, people will lie, cheat, steal and kill in the name of gold; and the clip provides colour on many of the market manipulations of the last few years. As MacDonald says, whether it’s a few gold coins or gold bars stored in one of the many vaults around the world, many investors are taking a shine to gold. But there’s not a lot of it. It is said that, even melted down, there would not be enough to fill an Olympic swimming pool. Some claim that much of the gold held by the Bank of Canada, the Bank of England, the Federal Reserve and Fort Knox is gone – that for every 100 ounces of gold traded, there exists only one ounce of real, physical gold. So, where is the gold – and who really owns it?


Source: Zerohedge.com

The Four Types of Trades

First, I encourage you to remember that the market can go up, down, or sideways, in any time frame, and it is out of our control. We all know that.

But there are things within our control. Trading what, when, and how much are within our control. Our P&L is at the intersection of what is within our control and not.

In order to navigate this busy intersection, it’s helpful to think of four possible types of trades or trade outcomes.

Type One:
The first type of trade is when you execute on your edge, your thesis, or your plan and the outcome is positive – you make money. The trade is in synch with the market – or as one of my clients says, “The market cooperated”. Everyone’s favorite type!

Type Two:
The second type of trade is where you execute on your edge, your thesis, stick to your plan and the outcome is negative, you lose money. For whatever reason, the market did not cooperate. We know there will always be a number of these type two trades. Good traders not only know this, they accept it as part of the business.

Type Three:
The third type of trade is when you do the wrong thing – you veer from your edge, forget your thesis, or ignore your plan and the outcome is negative – losing money. This is the trade we look back on after the fact and say, “Why did I do that again”! And often you can see pretty clearly, after the fact, what you ignored or minimized during the trade, when you were caught up in trading your P&L more than the market.

Many traders experience this type of trade, but the better traders have much fewer. The better traders learn from their type three trades. They learn about the market and they learn about themselves.

Type Four:
The fourth type of trade is when you do the wrong thing, ignore your plan, but the outcome is positive. Examples of a type four trade include an impulse trade that pays off, or doubling down on a loser, or holding a loser far too long (incurring opportunity costs along the way) until it finally turns into a winner. Type four trades are an example of getting rewarded for the wrong behavior. Type four trades have the potential to be the most dangerous type of trade with respect to your mind.

Type four trades are an example of variable, or random intermittent reinforcement, getting rewarded randomly. Psychologists have long known behaviors rewarded with random intermittent rewards are among the most difficult behaviors to extinguish.

A great example of this is the obsessive or addictive behavior seen when some people play the slot machines in a casino. On the behavioral level they are responding to a variable intermittent schedule of reinforcement. On a biological level, the brain’s neurological reward circuits involving biochemicals such as dopamine are very active; creating a neuro-behavioral system that is difficult to break.

High performing traders don’t want to reinforce bad habits. I know this from working with many elite high performing traders and portfolio managers. The best traders learn to do more of what works and less of what doesn’t. That’s how they become great and remain great.


The place to start is by tracking all your trades and categorizing them into these types.
Extracted  article from http://www.andrewmenaker.com

Quote for the day

“In the present generation Jesse Livermore's operations are the most spectacular, but he is not by any means always right. Like all other traders, big or little, he makes serious mistakes at times. He has personally described to me his methods in detail. They provide for mistakes, accidents, errors in judgement and those unexpected happenings which every big or little operator must allow for.” - Richard D. Wyckoff

Saturday, 19 April 2014

7 Principles That Predict What Steve Jobs Would Do

By Marty Zwilling
Steve Jobs was one of those entrepreneurs who seemed universally either loved or hated, but not many will argue with his ability to innovate in the technology product arena over the years. He was instrumental in creating Apple, which has pioneered a dazzling array of new products, and even surpassed Microsoft, to become the world’s most valuable technology company.

Carmine Gallo, in one of his secrets books “The Innovation Secrets of Steve Jobs,” outlines Jobs “insanely different principles for breakthrough success.” I'm not convinced that Jobs’ world was that simple, but Carmine has boiled it down to seven principles, which I suggest every entrepreneur can learn from, as follows:

1. Do what you love. Think differently about your career. Steve Jobs followed his heart his entire life and that, he said, made all the difference. Innovation cannot occur in the absence of passion and, without it, you have little hope of creating breakthrough ideas.

2. Put a dent in the Universe. Think differently about your vision. Jobs attracted like-minded people who shared his vision and who helped turn his ideas into world-changing innovations. Passion fuelled Apple’s rocket and Jobs’ vision created the destination.

3. Kick start your brain. Think differently about how you think. Innovation does not exist without creativity, and for Steve Jobs, creativity was the act of connecting things. Jobs believed that a broad set of experiences broadened the understanding of the human experience.

4. Sell dreams, not products. Think differently about your customers. To Jobs, people who bought Apple products were never “consumers.” They were people with dreams, hopes, and ambitions. Jobs built products to help them fulfil their dreams.

5. Say no to 1,000 things. Think differently about design. Simplicity is the ultimate sophistication, according to Jobs. From the designs of the iPod to the iPhone, from the packaging of the Apple’s products to the functionality of the Apple Web site, innovation means eliminating the unnecessary so that the necessary may speak.

6. Create insanely great experiences. Think differently about your brand experience. Jobs made Apple stores the gold standard in customer service. The Apple store has become the world’s best retailer by introducing simple innovations any business can adopt to make deep, lasting emotional connections with their customers.

7. Master the message. Think differently about your story. Jobs was a great corporate storyteller, turning product launches into an art form. You can have the most innovative idea in the world, but if you cannot get people excited about it, it doesn't matter.

Carmine suggests and I agree that these principles for breakthrough innovation will only work if you see yourself as the brand. Whether you are an entrepreneur working out of your bedroom, or a small business owner looking for ideas to improve your business, you represent the most important brand of all – yourself.

How you talk, walk, and act reflects upon the brand. Most importantly, how you think about yourself and you business will have the greatest impact on the creation of new ideas that will grow your business and improve the lives of your customers.

Thus you need to look inward first and assess your basic potential. Then imagine what you could achieve in business with the real insight and inspiration. Imagine what you could accomplish if you had Steve Jobs guiding your decisions. What would Steve Jobs do? Follow the principles above and you can do it too.
http://blog.startupprofessionals.com/

Framing Market Cycles: Speculators,Skeptics,Suckers & Sage.

"The crowd is untruth." - Soren Kierkegaard

Two years ago, stock prices hit their lowest point of the current market cycle.  As the investor herd wonders how to make money in year three of the Bull Market, I thought it prudent to observe the herd from a distance and frame the market cycle in a different way.I like to divide the investor herd (and market cycle) into three segments -Speculators, Skeptics and Suckers:
  • Speculators jump into stocks in the late stages of a Bear market and into the early stages of the Bull market; they are the gamblers; and they are willing to accept higher relative risk to capture the largest price movements that occur later, when the Skeptics and Suckers are buying in larger numbers.
  • Skeptics wait for the Speculators to make the first move and to see real evidence of economic recovery before buying into a Bull market. Skeptics don't jump in; they move in increments; and they usually miss the biggest price movements, both up and down. Put simply, Skeptics make their money when neither fear nor greed are at peak levels.  There is also a sub-category of Skeptic, which are the Contrarians, who are skeptical to the degree that the most prudent position is the opposite of the herd.
  • Suckers will buy or sell at any point during a market cycle but tend to buy more at higher price levels and sell more at lower price levels; therefore, as a whole, Suckers are the last to join a Bull market and the last to abandon it.
These are generalizations and most investors will exhibit characteristics of all three types at various points of a market cycle.  For example, at the market cycle extremes--the highest and lowest points--many Speculators and Skeptics become Suckers.  Also, there are hybrid forms (e.g. Speculative Suckers, Skeptical Speculators, Perma-Suckers, and so on).

At the present moment, I believe the market cycle is somewhere near the mid-point, where most Speculators have made their biggest gains; at least half of the Skeptics' assets are in stocks; and the buy high/sell low Suckers have yet to jump in.  In other words, uncertainty about the near-term direction of stock prices is higher now than at the easy-to-recognize extremes: The Bull market has room to run higher but short-term corrections are inevitable; and any investor armed with five-minutes' worth of gathered information could make a believable case on either side of the Bull vs Bear market argument .
"Ever more people today have the means to live, but no meaning to live for." -  Viktor Frankl
If there were to be a fourth 'S' for investor types, it would be the Sages:  These are the investors who do not predict, categorize, or apply heuristic models; they place self-knowledge and self-awareness above financial knowledge and market awareness; and they use money as a tool for life rather than following the herd's general behaviour of using life as a tool for money.

Where do you think the market cycle is today?  When do you think the current Bull market will end?  Are you a Speculator, Skeptic or Sucker (or Sage)?
Edited article from: http://www.thefinancialphilosopher.com/

Friday, 18 April 2014

Quote for the day

"What sets successful traders apart?……Most people think that winning in the markets has something to do with finding the secret formula. The truth is that any common denominator among the traders I interviewed had more to do with attitude than approach." – Jack Schwager.