16 Habits of Mind

By Steve Burns

The 16 Habits of Mind are a framework for how to think and behave intelligently when problems are encountered and challenges are faced in life for learning and growing. These habits were discovered by the research of authors Costa and Kallick and primarily studied in educational environments. These habits were quantified by drawing on their research and experience in applying the habits of mind to achieve results in education but can be implemented in any area of life like business, sports, and family life. These mind habits are the keys to the mental behaviors for every step in making intelligent behavior a practical outcome in any situation or pursuit in life.

What are mind habits?

Habits of Mind are repetitive thinking patterns that intelligent people use to solve problems they encounter. They use different mental models from their mental toolbox like logic, social intelligence, emotional intelligence, and experience. The best mental habits create heuristic shortcuts to allow smart people to act in effective ways when encountering difficult problems.

What are the critical Habits of Mind?

Below are the 16 Habits of Mind identified by Costa and Kallick in their book Learning and Leading with Habits of Mind: 16 Essential Characteristics for Success

1. Persistence

Not giving up is a powerful habit as perseverance can overcome the obstacles of time and inexperience.

2. Thoughtful communication

Clear and precise communication and thinking can be life changing. The key to communication is making sure you know what your audience needs to hear to understand based on their own perspective. Most of the best communication is in the listening and then the focus on just saying the minimum needed to get your point across. Telling people what you need from them is also crucial. It’s a skill to think clearly using logic and reason and not letting your emotions, opinions, and ego cloud your thinking.

3. Managing impulsiveness

The ability to say no to your own impulses and desires in the short-term to achieve more desired long-term goals is one of the most important mental habits for success in any area of life. Waiting, patience, and self-discipline can pay large future returns.

4. Use all senses to gather data

Complete observation is the process of using all of your five senses to gather all available information. This means allowing information into our brains from as many senses as possible and not just a few.

Being mindful of all our sensory pathways can make us more open and alert to absorbing more information from a situation than those who don’t realize how to use their full senses. Studies are learning more about the impact of art and music on improved mental functioning. Forming clear mental images is essential in math and engineering. Other professional fields use a variety of senses to improve their work. The wider the perspective we can get in a situation from the most senses the more we will understand the different angles of a problem.

5. Social Intelligence

Listening with understanding and empathy is a form intelligence practiced in social settings. Social intelligence is a crucial mental habit that will open up networking and relationships to your life that can help exponentially in all areas of achievement and happiness in general.

6. Creativity

Creating, imagining, and innovating is a mental edge as so many people just do what they’re told and manage what already exists for them. Creating new things is one of the most powerful mental habits you can develop.

7. Flexible thinking

Thinking flexibly helps react to situations as they unfold and adapt to best take advantage of opportunities. A flexible thinker always adjusts to change and looks for the best new pathway for success.

8. Enthusiastic responses

Responding with wonderment and awe makes people feel special and important. How we react to others sets their tone for how they feel about us and how willing they are to help us in anything we need.

9. Metacognition

Thinking about thinking is having the awareness and understanding of your own thought processes. Metacognition is the mental habit of knowing yourself, being mindful of your thoughts as they play out. It’s the practice of mindfulness or being aware of your own biases, strengths, and weaknesses. This is one of the most powerful mental habits as it gives you the higher perspective of self-awareness.

10. Risk Management

Taking responsible risks is a crucial mental habit to stay safe mentally, emotionally, and financially. It allows learning and growing to be safely done in the context of a risk management framework.

11. Precision in action

Striving for accuracy is a mental skill that helps focus effort, energy, and time for optimal results.

12. Humor

Finding humor is a mental skill for both stress reduction for yourself and others.

13. Thinking in possibilities

Questioning and posing problems helps see all possible outcomes both good and bad. This can help establish good risk/reward ratios and see the best and worst cash scenarios before committing to one path of action.

14. Seeing confluences

Thinking interdependently on how things work together is the mental habit of seeing the big picture. This mental habit of seeing confluences can see underlying risks and unintended consequences as well as how to create big wins be combining things that are not obviously related.

15. Using experience

Applying past knowledge to new situations. The mental habit of using experience for learning lessons and not making the same mistake multiple times. Using old lessons to solve new problems. Don’t work the same year over and over again, each new year of experience should see growth and improvement not repeating patterns of mistakes.

16. Life-long learner

Remaining open to continuous learning is a crucial mental habit with the current rate of change in education, business, and technology. If you’re not learning and growing as an individual you are being left behind in a fast changing world.

Why are the Habits of Mind important?

Using the Habits of Mind allows people to continue to optimize positive experiences and overcome negative experiences and continue to learn even when needing to guess or making mistakes. When we use the Habits of Mind we can realize that when a mind is reaching for new information and making connections for problem solving we learn during the process of arriving at conclusions for what to do.

The key to getting the maximum value from the Habits of the Mind is to make them your natural default thought filter through continuously using them in place of emotional reactions or letting ego interfere with the decision making process. Repetition is the key to developing habits.

Source: www.newtraderu.com

Quote for the day

"The poor and the middle class work for money. The rich have money work for them." – Robert Kiyosaki

Quote for the day

"Rule #1: You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. It is rule number one. It is the only rule. This may sound absurdly simple, but most people have no idea how profound this rule is. Most people struggle financially because they do not know the difference between an asset and a liability. “Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets, “ said rich dad." – Robert Kiyosaki

Quote for the day

"While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it almost invariably leads to disaster." – Benjamin Graham

Quote for the day

"Wealth is a person’s ability to survive so many number of days forward — or, if I stopped working today, how long could I survive?" – Robert Kiyosaki

Quote for the day

"Abnormally good or abnormally bad conditions do not last forever." – Benjamin Graham

Quote for the day

"You will be much more in control, if you realize how much you are not in control." – Benjamin Graham

The 20 Rules of Money

There are rules for making money, losing money, holding on to money, and growing money. There are principles for practicing medicine or law and a framework of rules for success, the same applies to finance. There are strategies for winning at sports or in business and there are also ways to win at money.

Here are a set of definitive principles governing the behavior of money.

1. Money is neutral

Money is neither good nor bad, its user is what determines its value. Money just makes a person more of what they already are, greedy people become more greedy and generous people become more generous. The love of money can lead to greed but money itself has no emotions.

2. If you hate money you will stay broke

You will never have money if you think it’s bad or evil and hate it. People that think money is bad will immediately spend it as they will have the subconscious desire to get rid of what they think is bad. The love of money can lead to immoral behavior to get it but the hatred of money leads to wastefulness to get rid of it.

3. Wealth is created through compounding

The magic of becoming rich lies in the ability to compound growth in business or on capital. Things can grow exponentially when you compound returns on top of returns. This goes for investments or business growth. A 10% return on $100,000 is $10,000 but a 10% return on the new total amount of $110,000 is $11,000. This is money making money as the compounding is on the new total. Business sales and profits can grow the same way as a growth rate is compounded on the new business size.

4. Money flows to those that know how to manage it

Money flows from those who don’t know how to manage it to those who do. Money flows from those who waste it to those who know how to grow it. Money flows from consumers to creators of value with products, services, and businesses. If you want to have money create things people will want to give you money for. Invest in businesses that grow. Buy assets that cash flow and go up in value not depreciating consumer goods.

"The whole world is simply nothing more than a flow chart for capital." – Paul Tudor Jones

5. Entries and Exits

Money is made on the entry when you buy an asset at a great value based on its intrinsic value like a stock or real estate, you will almost always be able to sell it higher. However for speculative trades and flipping properties the money is only made at the exit when you find someone to buy it for a higher price and you can take your profits while they are still there. Timing is importance for making money. You must be right in price and in the time frame.

6. Controlling Yourself

Most of personal finance is not about math it’s about self-control. Investing can also be about controlling your fear and greed to make the right decisions. If you can’t control your own actions you will never be able to control your money.

7. Risk/Reward Ratio

The key to making money and building wealth is to always measure the possible risk and the potential reward in every financial decision you make. You want all your financial risks to be worth the reward. Limit the downside and optimize the upside in your financial life.

8. Spend money on value

Spend money on only the things that are worth it and have the most value for you. Optimize your personal finances for value not frugality or being cheap. You can’t buy everything you want but you can buy the things that give you the best quality of life improvements. Spend your money wisely, don’t waste it. Focus on value.

9. Acquire cash flow not payments

If you use debt then use it for cash flowing assets not consumer goods. Create or buy cash flowing assets that pay you instead of acquiring things with payments. Anything that pays you is a long-term asset, anything you pay a payment on is a short-term liability. Focus on assets.

10. Wealth Mindset

Building wealth starts with the belief that it’s possible for you. Becoming rich also requires working hard and working smart to build a business or investment portfolio but that’s only possible with the right wealth psychology. The right mindset doesn’t guarantee wealth but the wrong mindset almost always causes failure to achieve it.

11. Follow the Money

When you are curious about why something is happening in business, entertainment, politics, religion, charities, or sports, always follow the money. Things are created and pushed for the goal of money in almost every situation you see. You can learn a lot from tracking the money back through the system from the end product.

12. Model Financial Success

If you want to be financially successful find someone who has accomplished the goals you seek and study them in detail. Look at both what they do and what they say. Find the principles of their financial success and create your own systematic process to achieve your own goals.

13. Design your own process for wealth building

Create your own wealth building strategy that fits your own time frame, risk tolerance, monetary goals, beliefs, and personality. You must find what process works best for you to achieve your goals.

14. Your friends and family can affect you finances

Who you hang around with can have a huge impact on your personal finances as you can pick up their belief systems. It’s important to make friends that match your own mindset and have similar goals. It’s also crucial to read books and learn how others think about finances outside your own family. Expand your circle with like-minded people and expand your mind with books by people you want to be like.

15. You are your most important investment

Invest money in yourself. Your education, mental health, happiness, and physical health are your most important assets. Learning, growing, exercising, healthy eating, and your daily habits are where you should invest time and money for greater success in life overall. A healthy lifestyle is cheaper in the long-term than an unhealthy lifestyle.

"You have only one mind and one body for the rest of your life,” Buffett says. “If you aren’t taking care of them when you’re young, it’s like leaving that car out in hailstorms and letting rust eat away at it." – Warren Buffett

"The most important investment you can make is in yourself." – Warren Buffett

16. The power of leverage

Wealth is created through leverage. Financial leverage comes from the loans of other people’s money. Investing leverage comes from margin and option contracts. Housing leverage comes from mortgages. Business leverage comes from controlling assets and having employees. Leverage increases returns on your original capital exponentially. Leverage is one of the biggest secrets of money that few know or understand.

17. Business Partnerships

Almost all great businesses were built through a partnership of at least two people at the top. It generally takes two people to found and build a business. Even Steve Jobs teamed up with Steve Wozniak to build Apple at the beginning and Warren Buffett had Charlie Munger to help him scale Berkshire-Hathaway. Business partnerships help both sides exponentially benefit from each other’s strengths and overcome their own weaknesses.

18. The Get Rich Quick Fallacy

The fastest way to lose all your money and end up broke is to try to get rich quick with risky gambles. Greed leads people to lose money in the attempt to make the most they can in the shortest period of time. Money doesn’t work that way and there is no such thing as easy money, much less fast and easy big money. Even if people do get lucky enough to make a lot of money they don’t know how to manage it and just spend it all quickly as the majority of lottery winners find out as they end up broke. Only the people that build their wealth correctly end up keeping their wealth over the long-term.

19. Risk Management

Once you have money and assets your focus must be on keeping what you have. The first goal may be to get rich but the second goal must be to stay rich. It is crucial to manage your financial risk at all times. Always maintain adequate insurance on all of your assets. Never take risks so big that if they don’t work out they can ruin you financially. Never bet the farm for the chance to win a few more chickens.

20. Perseverance until the financial goal is reached

Most people don’t fail on their path to building wealth, the truth is most just give up and quit early. The best way to win the money game is simply to not quit. Setbacks should slow you down not make you give up. All financial success stories about people who won the money game have one thing in common, they never gave up on their financial goals.

Source: www.newtraderu.com

Quote for the day

"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." – Benjamin Graham

Quote for the day

"Workers work hard enough to not be fired, and owners pay just enough so that workers won’t quit." – Robert Kiyosaki

Quote for the day

"Anything or anyone capable of angering you becomes your master." – Epictetus

Quote for the day

"Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth." – Marcus Aurelius

Quote for the day

"You must not risk more than you can reasonably expect to gain; otherwise, you’re stacking the odds against you, and that’s gambling." – Mark Minervini

Levels of Wealth Explained

By Steve Burns

There are fourteen primary levels of wealth that are each distinct in their experience both mentally and financially. Most people can look at this list and identify where they are in their financial journey rather quickly. Two keys to personal finance is to number one identify where you are, and number two set goals for where you want to be. The levels of wealth can grow to be staggering when looked at on a scale of progression.

The fourteen levels of wealth:

1. Broke
2. Hand to Mouth
3. Financial Security
4. Financial Peace
5. Financial Independence
6. Financial Freedom
7. Millionaire
8. Multimillionaire
9. Decamillionaire
10. Centimillionaire
11. Billionaire
12. Multibillionaire
13. Decabillioanire
14. Centibillioanire

In a free market and free country, people can climb to the level that they are capable of through taking smart risks and working hard once they have access to capital.

Let’s take a look at the fourteen different levels of wealth.

1. Broke

Broke is more a state of mind than a permanent financial level. When you’re broke you have almost no money and/or your bills are higher than your income. Hard work is usually the fastest path out of being broke. Getting your income up to the level of your living expenses is the way.

2. Hand to Mouth

When you live hand to mouth your bills equal your paycheck. Your future earnings are already spent 100% due to your future payments. You have no ability to save money and live under stress as you must not miss any time from work. The two ways to get out of the hand to mouth financial cycle is to increase your income or decrease your debt (or both) enough to give you some financial breathing room between your paycheck and bills.

3. Financial Security

Financial security means you have a good job that more than covers for your monthly bills and debt payments. You feel secure in your career and paycheck and are even able to save money for retirement and maybe your children’s college fund.

4. Financial Peace

Financial peace is another level up where you have no car payments, no credit card debt, and a small mortgage payment. You have no financial stress as it is very easy to make your monthly bills. You don’t stress about your career because you know you can get another job that will easily pay your bills anytime you want. You also have an emergency fund of over three months of expenses. It is a huge mental shift where personal finances are no longer a concern and cause no stress.

5. Financial Freedom

When you reach financial freedom you have the choice of whether you want to work your job anymore. You have enough capital, investments, savings, and assets to pay your monthly bills comfortably for as long as needed. You no longer have to keep your job but are choosing to. You are free to quit whenever you want due to your financial situation. People with financial freedom usually have at least a six figure net worth.

6. Financial Independence

You choose to leave a traditional job because you can pay your bills through your investments or cash flowing assets. Your job is no longer worth your time, energy, and effort versus your net worth and other opportunities. Becoming financially independent doesn’t mean you quit working it means you quit working for other people. People that choose financial independence usually have at least a quarter of a million dollar ($250,000) net worth.

7. Millionaire

A millionaire is someone who has a total net worth of $1,000,000 or more. Anyone with a seven figure net worth or higher. This can include a stock portfolio, real estate portfolio, business ownership, or the rights to their intellectual property. Millionaires don’t usually have a liquid million dollars in their savings account, their capital is in investments. They would need to sell assets to raise large amounts of cash most the time. Their income primarily comes from the cash flow of their assets. Becoming a millionaire is a simple long-term process of optimizing investing in the stock market, owning your own home and staying out of large debts, or creating a business worth one million dollars.

8. Multimillionaire

A multimillionaire can lose a million dollars and still be a millionaire. People worth millions of dollars usually have created their own business or invested early in a great business and held their shares through it’s entire growth cycle. This is a level few people reach because it requires active effort in business success either in creation, investing in one, or stock picking.

9. Decamillionaire

A decamillionaire is someone worth $10,000,000 dollars. Anyone with an eight figure net worth. This is ten times a millionaire. These are high net worth individuals that can need wealth managers and tax advisors to manage their returns on capital and optimize their tax exposure. Decamillionaires are almost always founders of their own business or large real estate investors.

10. Centimillionaire

A centimillionaire is someone worth $100,000,000 dollars. Anyone with a nine figure net worth. This is one hundred times a millionaire. Most centimillionaires both founded and took a company public through an IPO (initial public offering) on the stock market. This is a very rare height to achieve as you must create a huge amount of value in business and convince people to value the equity in your business at nine figures.

11. Billionaire

A billionaire is someone worth $1,000,000,000 dollars. Anyone with a ten figure net worth. This is one thousand times a millionaire. Most billionaires achieved their wealth in just one of a few ways. 

• They founded a company, took it public, and built it into a large corporation while holding a large share of equity.
• They were successful wealth managers for other peoples’ capital.
• They founded very successful hedge funds.
• They were one of the top traders in the world for decades.
• They were early employees in startups that were awarded huge amounts of shares and options. (Rare)
• They inherited it from a multi-billionaire parent.
• They married a billionaire.
• They divorced a multibillionaire.

12. Multibillionaire

A multibillionaire is someone worth at least $2,000,000,000 dollars. This is two thousand times a millionaire.

Multibillionaires are extremely rare and are among the top 1,000 richest people on earth. These are titans of industry and finance that built wealth through operating at the highest level of business.

13. Decabillionaire

A decabillionaire is someone worth at least $10,000,000,000 dollars. Anyone with an eleven figure net worth. This is ten thousand times a millionaire.

Decabillionaires are near the pinnacle of wealth and are among the top 180 richest people on earth. These are the business people that dominate industry now or at some point in the past to achieve this level of net worth. These are the best of the best at what they do in business building and deal making.

14. Centibillionaire

A centibillionaire is someone worth at least $100,000,000,000 dollars. Anyone with a twelve figure net worth. This is one hundred thousand times a millionaire.

Centibillionaire is a rare level of wealth only held by people that are among the top five richest people on earth. At the peak of bull markets the top ten richest people can be worth over $100 billion at the same time. People at this level almost always achieve it by founding companies that they grow into one of the most successful companies in history while holding a huge stake in the company equity.

They won their own lottery in business. Most keep the majority of their net worth in their company’s stock through its entire growth cycle.

At what level do you want to be?

Source: www.newtraderu.com

Quote for the day

"The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right." – Benjamin Graham

Quote for the day

"Poverty doesn't shame the people who are affected by it, poverty shames society." - Ruth Dreifuss

Quote for the day

"The safest wealth is the poverty of needs." - Franz Werfel

Quote for the day

"In school we learn that mistakes are bad, and we are punished for making them. Yet, if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk." – Robert Kiyosaki

Quote for the day

"Peace makes wealth, wealth makes devilness, devilness brings war, war brings poverty, poverty makes humility, humility makes peace again." - Johann Geiler of Kaysersberg

Quote for the day

"Contentment is natural wealth; luxury, artificial poverty." - Socrates

Quote for the day

"When you sell half, if the stock goes higher you say to yourself, “Thank goodness I kept half.” If the stock goes lower, you’ll say, “Thank goodness I sold half.” Psychologically, it’s a win/win either way." – Mark Minervini

Quote for the day

"Investing isn’t about beating others at their game. It’s about controlling yourself at your own game." – Benjamin Graham

Quote for the day

"The most precious things in life are not those you get for money." - Albert Einstein

Quote for the day

"First say to yourself what you would be; and then do what you have to do." – Epictetus

Quote for the day

"It's not through inventions but through improvements that fortunes are made." - Henry Ford

Quote for the day

"When the last tree is cut down, the last fish eaten and the last stream poisoned, you will realize that you cannot eat money." - Michael Ende

Quote for the day

"I accepted everything for what it was-not what I wanted it to be." – Nicolas Darvas

Quote for the day

"Long-term success in the stock market has nothing to do with hope or luck. Winning stock traders have rules and a well-thought-out plan. Conversely, losers lack rules, or if they have rules, they don’t stick to them for very long; they deviate." – Mark Minervini

Quote for the day

"The intelligent investor is a realist who sells to optimists and buys from pessimists." – Benjamin Graham

Quote for the day

"Many roads lead to wealth, and most of them are dirty." - Peter Rosegger

Quote for the day

"It is impossible for a man to learn what he thinks he already knows." – Epictetus

Quote for the day

"He who restraints his desires is always rich." - Voltaire

Quote for the day

"The lack of money is the root of all evil." – Robert Kiyosaki

Quote for the day

"My only sound reason for buying a stock is that it is rising in price. If that is happening, no other reason is required. If that is not happening, no other reason is worth considering." – Nicolas Darvas

Quote for the day

"Whatever gifts or ability someone might have been born with, success in the market comes from a concerted effort and a willingness to allow the learning curve to unfold, no matter how long it takes." – Mark Minervini

Quote for the day

"The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant." – Robert Kiyosaki

Quote for the day

"Investing is a unique kind of casino—one where you cannot lose in the end, so long as you play only by the rules that put the odds squarely in your favor." – Benjamin Graham

Quote for the day

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. By this means the government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft." – John Maynard Keynes

Quote for the day

"Hard work compounds like interest, and the earlier you do it, the more time you have for the benefits to pay off." - Sam Altman

Quote for the day

"Successful traders spend as much time studying themselves and their trading as studying markets. In the patterns of your best and worst trades is the information that can make you the best trader you can be." - Brett Steenbarger PH.D.

Quote for the day

"Every adversity, every failure, every heartbreak, carries with it the seed of an equal or greater benefit." - Napoleon Hill

Quote for the day

"Before success comes in any man’s life, he is sure to meet with much temporary defeat, and, perhaps, some failure. When defeat overtakes a man, the easiest and most logical thing to do is to quit. That is exactly what the majority of men do. More than five hundred of the most successful men this country has ever known told the author their greatest success came just one step beyond the point at which defeat had overtaken them." - Napoleon Hill

Quote for the day

"Whatever the mind can conceive and believe, it can achieve." - Napoleon Hill

Quote for the day

"The average person puts only 25% of his energy and ability into his work. The world takes off its hat to those who put in more than 50% of their capacity, and stands on its head for those few and far between souls who devote 100%." - Andrew Carnegie

Quote for the day

"Planning is important, but the most important part of every plan is to plan on the plan not going according to plan." - Morgan Housel

Quote for the day

"Independence, to me, doesn’t mean you’ll stop working. It means you only do the work you like with people you like at the times you want for as long as you want." - Morgan Housel

Quote for the day

"A wise man turns chance into good fortune." -  Thomas Fuller

Quote for the day

"If somebody had told me my method would not work I nevertheless would have tried it out to make sure for myself, for when I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money. That is speculating." - Jesse Lauriston Livermore

Quote for the day

"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." - Benjamin Graham

Quote for the day

"Acquisition of skills requires a regular environment, an adequate opportunity to practice, and rapid and unequivocal feedback about the correctness of thoughts and actions." - Daniel Kahneman

Quote for the day

"Know your circle of competence, and stick within it. The size of that circle is not very important; knowing its boundaries, however, is vital." - Warren Buffet

Quote for the day

"Speculate with less than 10% of your liquid net worth. Risk less than 1% of your speculative account on a trade. This tends to keep the fluctuations in the trading account small, relative to net worth. This is essential as large fluctuations can engage {emotions} and lead to feeling-justifying drama." - Ed Seykota

Quote for the day

"Intelligence is not only the ability to reason; it is also the ability to find relevant material in memory and to deploy attention when needed." - Daniel Kahneman

Quote for the day

"We are prone to overestimate how much we understand about the world and to underestimate the role of chance in events." - Daniel Kahneman

Quote for the day

"In the world of business, the people who are most successful are those who are doing what they love." -  Warren Buffett

10 Golden Quotes by Rakesh Jhunjhunwala

1) "Respect the market. Have an open mind. Know what to stake. Know when to take a loss. Be responsible."

2) "Hastily taken decisions always result in heavy losses. Take your own time before putting money in any stock."

3) "Anticipate trend and benefit from it. Traders should go against human nature."

4) “Never invest at unreasonable valuations. Never run for companies which are in limelight."

5) “Trading always keeps you on your feet, it keeps you alert. That's one of the reasons why I like to trade."

6) “Emotional investment is a sure way to make loss in stock markets."

7) "You cannot make profits in the stock market unless you have the ability to bear losses."

8) "Buy when others sell and sell when others buy – the stock market mantra."

9) “Invest in companies which have strong management and competitive management."

10) “When opportunities come, they can come through technology, marketing, brands, value protections, capital, etc. You need to be able to spot those."

Quote for the day

"If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety. So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you’d need." - Warren Buffett

Quote for the day

"The struggle you’re in today is developing the strength you need tomorrow." - Robert Tew

The 80/20 Rule or the Pareto Principle - How it can change your life?

Have you ever wondered something? That some of your mates or even your business partners do a little and get a lot in return. Well, is that black magic? It might not be because a scientific method which is known as the Pareto’s principle or 80/20 Rule is here to explain the whole deal to you. 

Understanding the knowledge of the 80/20 principle

The 80/20 is sometimes known as the Pareto principle. This was originally an observation made by Vilfredo Pareto that around 80 percent of the world’s wealth is only owned by 20 percent of the population. We are not here to discuss economics right. We are here to decipher the whole trick and help you to prepare for your life scores in the best possible way needed.

There are some simple tricks that you need to apply to your Life because mugging up won’t do you any good. Living smart is the option right now, and with that comes the need for your presence of mind. Successful people who know how to advance their Lives already have learned the 80/20 rule. It always helps them to prepare life exams and to ace the results later.

While it does not seem like it is the precisely 80/20 rule which works here, these imbalances are seen in your Life and often in other cases as well.

To this day, the 80/20 rule applies in real Lifelike:

Most of the time, you will see that only 20 percent of the people have the riches of the world, and 80 percent have half of it. This might seem unfair but it is how it is.

In your exam time, you can see that students who only study about as little as they want, they will get 80 percent of the marks. The rest of them will attain lower grades.

In your business analytics, the managers or the workers who only spent less time of their work into the business then they are obtaining 80 percent of the incentives. The 20 percent is attained for the lower part of your motivation.

The 80/20 Rule to advance your Life

You might be wondering what the 80/20 rule is so here we will cover it for you. For instance, living with a limited amount of resources for a day can be hard for you. Under final observation, it is seen that different people have a distinct style of coping, and that is how the whole factor is determined.

Studies have seen that people who have only put 20 percent of their effort have scored above 80 percent of the results towards their achieved goals.

You might be thinking that how it really happens but well, there is a trick to it. Don’t apply if you don’t know the entire rule. The beauty of the 80/20 rule is that it works for you, and it is quite simple to understand as well. Even you can turn around your life in just a single way if you are using this strategy. If your friend is struggling and always finding it hard to cope better with their Life, then you can recommend this to him/her as well.

How does it work?

One of the best mental models that you can get around for yourself is the 80/20 or the Pareto principle. You can basically apply it in your daily life, and it helps you with a lot of things that you want to improve in. Like if you wish to have better learning skills, use this principle to do better. This can also be used by people who want to analyze better ideas for their business and else.

Well, the 80/20 rule is used to improve everything in a well-systematized way.

If you are a typical analyst of Life, then what do you do? You spend half of the time into sulking the fact that why you are not getting your dream job or doing productive work in a single day. Your version of living Life is wasted onto the thoughts that you put inside it. Pareto’s principle is the mental model you can use.

You need to understand where your focus lies and make sure that it sticks to it. You need to have a core and basic understanding of your surroundings. Here, you cannot dive into the growth of the process. You have to get the pieces together, and only then you can dive into the success of Life. By putting the right type of focus on the work that you do, you will be changing your Life for the best. It will help you to get a charge on your Life.

Using the 80/20 rule for your benefit

Well, according to the Pareto principle, you need to devote a few hours of your time and focus on the thing that you want in your life.

The rest of the time which you waste should be accounted for a minimum part. It is only for a smaller potent. This does not usually happen to the majority of the people out there. They will take their time to understand and then focus on their Life. Here is something you can look out for.

1. Make sure that you only spend 20 percent of the time in understanding your goal. Understand that the 80 percent is meant for you to persuade it.
2. When you are wasting your time, waste only for 20 percent, rest, use it for your source.
3. Eighty percent of your time is spent on the mindless hunting of better apps and fiddling with your phone.
4. Use the 80 percent of your time into collecting the information you need to change your Life. The best hack lies here.

Prepare for the best

These preparation strategies are here to improve the potency of your Life and advance the options. Using Pareto’s principle will help you to find the best meaning to Life. Always understand that keeping the priorities ahead of you will help you to land somewhere in Life.
Source: www.tradebrains.in

Quote for the day

"Optimism is a happiness magnet. If you stay positive good things and good people will be drawn to you." - Mary Lou Retton

Quote for the day

"You’re braver than you believe, and stronger than you seem, and smarter than you think." - A.A. Mine

Quote for the day

"Winning doesn’t always mean being first. Winning means you’re doing better than you’ve done before.” - Bonnie Blair

Quote for the day

"You always pass failure on the way to success." - Mickey Rooney

Quote for the day

"Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep." – Robert Kiyosaki

Quote for the day

"Develop success from failures. Discouragement and failure are two of the surest stepping stones to success." - Dale Carnegie

Quote for the day

"Grit is that ‘extra something' that separates the most successful people from the rest. It's the passion, perseverance, and stamina that we must channel in order to stick with our dreams until they become a reality." - Travis Bradberry

Hagakure: Trade Like A Samurai

By Steve Burns 

The Hagakure: The Book of The Samurai records Yamamoto Tsunetomo’s views on bushido and the warrior code of the samurai. It was written in the early 18th century and explains many principles of the Samurai warrior. Many of these same principles can be used in business, sports, trading, and investing to achieve a warrior mindset and overcome your ego and emotions along with your adversaries.

Bushido Code

The Bushido was a code of conduct for the Samurai consisting of 8 core principles.

1. Righteousness
2. Heroic Courage
3. Benevolence & Compassion
4. Respect
5. Integrity
6. Honor
7. Duty & Loyalty
8. Self-Control

Let’s apply these same principles to success in trading and investing.

Trading Like A Samurai

Doing the right thing: If you have your own system, method, and process with an edge over the competition then if you follow it you should be free of guilt and regret. Knowing you are doing the right thing is a powerful psychological tactic that frees your energy and creates single-mindedness and focus of action.

Confidence in yourself and your strategy: You can take immediate action to follow your strategy when you have faith in yourself and your process. Faith in action leads to less stress when facing unknown future events.

Positive self talk: We must be a friend to ourself with internal self talk. Our own inner dialogue and thoughts should be positive and like that of a friend and coach not an enemy.

Self respect: We must appreciate our past successes and have confidence in our path and future goals. We should never talk negatively about ourself to others. Right action and effort creates self respect, laziness and wrong action hurts it.

Know yourself: Be whole and undivided in who you are and what you believe. Ensure your actions match your words and beliefs.

Honor: Samurai were warriors with a sense of self worth and lived by the highest code of behavior and conduct. To abide by the principle of honor, we must acknowledge your moral responsibilities for taking actions consistent with or systems and beliefs.

Doing the work consistently: We choose the method we will focus our work and effort on at the beginning of our journey. Then our path consists of executing loyally to our goals.

Managing emotions, desires, and ego: The ability to use your mind and your principles to override feelings, wants, and arrogance is true power. A true samurai first defeats their self before facing any external enemy.

Source:www.newtraderu.com

Quote for the day

"Energy and persistence conquer all things." - Benjamin Franklin

Quote for the day

"Challenges are what make life interesting and overcoming them is what makes life meaningful." - Joshua J. Marine

Quote for the day

"Move out of your comfort zone. You can only grow if you are willing to feel awkward and uncomfortable when you try something new." - Brian Tracy

Quote for the day

"I'd rather regret the things I've done than regret the things I haven't done." - Lucille Ball

Quote for the day

"Hire character. Train skill." - Peter Schutz

Quote for the day

"The best leaders are those most interested in surrounding themselves with assistants and associates smarter than they are. They are frank in admitting this and are willing to pay for such talents." - Antos Parrish

Quote for the day

"An attitude of positive expectation is the mark of the superior personality." - Brian Tracy.

Quote for the day

"There are three things you can do with your life: You can waste it, you can spend it, or you can invest it. The best use of your life is to invest it in something that will last longer than your time on Earth." -  Rick Warren

Quote for the day

"Life’s tough, but it’s tougher when you’re stupid." - John Wayne

Quote for the day

"Be nice to people on the way up, because you may meet them on the way down." - Jimmy Durante

Quote for the day

"When it is obvious that goals can’t be reached, don’t adjust the goals, but adjust the action steps." - Confucius

Quote for the day

"Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment." -  Buddha

Quote for the day

"Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes … the ones who see things differently — they’re not fond of rules … You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things … They push the human race forward, and while some may see them as the crazy ones, we see genius …" - Steve Jobs

Quote for the day

"The difference between a successful person & others is not a lack of strength, not a lack of knowledge, but a lack in will." - V. Lombardi

Quote for the day

"Everybody wants to be famous, but nobody wants to do the work. I live by that. You grind hard so you can play hard. At the end of the day, you put all the work in, and eventually it’ll pay off. It could be in a year, it could be in 30 years. Eventually, your hard work will pay off." - Kevin Hart

Quote for the day

"Life is not a problem to be solved, but a reality to be experienced." - Soren Kierkegaard

Quote for the day

"I like criticism. It makes you strong." - LeBron James

Quote for the day

"Life imposes things on you that you can’t control, but you still have the choice of how you’re going to live through this." - Celine Dion

Quote for the day

"Life is ten percent what happens to you and ninety percent how you respond to it." - Charles Swindoll

Quote for the day

"Health is the greatest gift, contentment the greatest wealth, faithfulness the best relationship." - Buddha

Quote for the day

 “You must not lose faith in humanity. Humanity is an ocean; if a few drops of the ocean are dirty, the ocean does not become dirty.” - Mahatma Gandhi 

Quote for the day

"Doing something wrong repeatedly does not make it right!" - Tim Fargo 

Quote for the day

"To succeed…You need to find something to hold on to, something to motivate you, something to inspire you." – Tony Dorsett

Quote for the day

"We become what we think about most of the time, and that's the strangest secret." - Earl Nightingale. 

Quote for the day

"These things will destroy the human race: politics without principle, progress without compassion, wealth without work, learning without silence, religion without fearlessness and worship without awareness." -  Anthony De Mello

Quote for the day

"The purpose of fear is to raise your awareness, not to stop your progress." - Steve Maraboli

Quote for the day

"Getting knocked down in life is a given. Getting up and moving forward is a choice." -  Zig Ziglar

Quote for the day

"Blind belief in authority is the greatest enemy of truth." - Albert Einstein

Quote for the day

"Your living is determined not so much by what life brings to you as by the attitude you bring to life; not so much by what happens to you as by the way your mind looks at what happens." - Kahlil Gibran

Quote for the day

"People with a positive attitude are influenced by what goes on within them. People with a negative attitude are influenced by what goes on around them." - Keith Harrell

Quote for the day

"Mistakes are always forgivable, if one has the courage to admit them." - Bruce Lee:

Quote for the day

"Nothing is interesting if you’re not interested." - Helen MacInnes

Quote for the day

"Your hardest times often lead to the greatest moments of your life. Keep going. Tough situations build strong people in the end." - Roy Bennett

Quote for the day

"Life is full of surprises and and serendipity. Being open to unexpected turns in the road is an important part of success. If you try to plan every step, you may miss those wonderful twists and turns. Just find your next adventure-do it well, enjoy it-and then, not now, think about what comes next." - Condoleezza Rice

Quote for the day

"Work hard. Through determination and self-focus and discipline, you can accomplish anything." - Kimberly Guilfoyle

Quote for the day

"For every disciplined effort, there are multiple rewards. That’s one of life’s great arrangements. If you sow well, you will reap well." - Jim Rohn

Why Being Smart Is Your Biggest Handicap in Investing

"Some people are born smart. 
Some people are born lucky. 
Some people are smart enough to be born lucky."
- Ed Seykota

Are you smart? Did you do well in school? Well, I have news for you…

By being “smart,” you suffer from a huge handicap in becoming a profitable trader…

If intelligence were the key, every finance student who graduated with a PhD from Stanford or MIT who tried his hand at trading would be filthy rich…

And unless they happen to be savvy poker players with a strong dose of practical, hard-earned street smarts, they probably aren't...

Understanding why this is the case can help you make -- or better yet, help you keep -- your hard-earned investment profits in the market...

You've heard this story before...

Picture this...

You are a financial analyst at a top investment bank...

You recently graduated from Harvard Business School and all your friends and family think you’re pretty smart.

After all, you always won all of the spelling bees and math contests that you entered since you were a kid -- and you got great grades in college while most of your peers slacked off...

So you research a red-hot Chinese Internet stock IPO. You speak to the management. You run your complex financial models. You value the company at $14 share.

You write a “BUY” recommendation. This is then distributed to your employer's leading institutional clients, who are responsible for investing tens of billions of dollars in the global financial markets.

After the company is listed, the stock shoots up to $24.00. If anything, your valuation makes you look overly conservative...

Then the stock starts dropping. Within five days, the stock is down to $14, and then falls further to $10.

You run your models. You still come up with the $14 target price.

The stock is now at $8... one third of its peak trading price from just a month ago -- and almost half of your current valuation...

But as an analyst, you “know” the stock is worth $14. You'll do anything to avoid admitting that you're “wrong.”

This story has been repeated thousands of times on Wall Street. In fact, this anecdote recounts the recent fate of RenRen (RENN) -- The “Facebook of China.”

The stock was a hot IPO a month ago, soaring on its first day of trading. Then it promptly fell off the table.

The “Tiny Flaw” in Smart People

Smart people have a tiny little flaw in them that makes them highly unsuitable to be traders and investors…

Consider the results of an experiment conducted by “Trader Vic” Sperandeo… one of the top traders profiled in the original “Market Wizards” book by Jack Schwager.

Having been entrusted with building a trading operation, “Trader Vic” hired and trained 38 traders.

He assembled a diverse group, as he wanted to find out whether there was any correlation between intelligence and trading success...

The results were revealing...

Five of the 38 traders made more money than the others combined...

One of the five who made it was a high school dropout who, according to Sperandeo, “didn’t even know the alphabet.”

One who made no money in five years had an IQ of 188 and was a champion on Jeopardy.

Why? The “smart” traders could never bring themselves to admit that they were wrong.

Many Smart People = Big Problems

Get enough “smart” people together in a room and you can bring the global financial system to the brink of collapse...

That's precisely what happened with Long Term Capital Management (LTCM) in 1998.

LTCM was founded by a top Salomon Brothers trader and two Nobel Prize winners, Robert Merton of Harvard, and Myron Scholes of Stanford.

LTCM was the most successful hedge fund of its day, generating consistent 40% annual returns over several years… compared with the long-term track records of Warren Buffett and George Soros of around 30% at the time.

The LTCM geniuses were much smarter than Soros or Buffett… at least for a while…

The flaw was that LTCM was leveraged between 200 and 300 times (up to almost $500 billion dollars) on a capital base of about $2 billion…

...and the fund collapsed overnight after the devaluation of the Russian ruble in 1998.

Wall Street knew that these guys were the smartest guys in the room...

What they didn't know was that “being smart” was precisely their problem...

In reality, LTCM knew less about managing risk than a good poker player, who knows not to ever go “all in” on any single hand that could wipe him out...

But back to the flaw in smart people…

Smart people LOVE information!

They think information -- and ever more complex financial models -- are the key to making correct investment decisions.

And the more information you have, the better decisions you make.

But here’s the reality:

There’s always more to know...

And the more complex the model, the less “robust” or accurate it is...

The real problem, however, is psychology.

Smart people have a bad case of what trading psychologists call “need-to-understand” bias and “need-to-be-right” bias.

That's why, after making an initial recommendation, they spend most of their energy proving that they were right in the first place...

The Lesson You Should Learn...

So, here is the irony: being a “smart” analyst often makes you the worst trader.

And don’t be overly impressed with an analyst's employer or academic credentials.

George Soros failed his Charted Financial Analyst (CFA) exams twice… and gave up…

Warren Buffett was rejected by Harvard Business School…

Meanwhile, an analyst at a top investment bank may -- unlike George Soros -- pass her CFA exams on the first try.

But that has nothing to do with her ability to manage money, especially if she spends all her energy trying to prove that her analysis deserves an “A” -- the same grade she got on her thesis at Princeton.

More importantly, don’t be too impressed with your own “analysis” either.

Never bet too big on any single idea, no matter how compelling the story... and always have your exits in place…

That is, unless, you were -- as Ed Seykota says: “smart enough to be born lucky.”
Published on 15/06/2011
Nicholas A. Vardy
Editor, The Global Guru
http://www.nicholasvardy.com

Quote for the day

"Talent is nothing without dedication and discipline, and dedication and discipline is a talent in itself." - Luke Campbell

Trading Wisdom - One Liners

• Look at your trading as a series of probabilities, do not focus on any single profit or loss.

• Want what the market wants.

• Do your homework. Come prepared to each day’s trading.

• Never take a trade on the open in the direction of a that day’s gap.

• Don't risk too much of your trading capital on any single idea.

• Remain flexible.

• Believe what you see. If the market’s going up or down, it’s going up or down.

• Anything can happen. The wildness lies in wait.

• Verify your trading methods or systems.

• Caveat emptor ("Let the buyer beware.") when buying a trading system or hiring a mentor.

• Your own personal psychology will express itself regardless of your chosen method.

• An opinion isn't worth much, your own or someone else’s.

• Watch how the markets react to the news.

• Learn from your mistakes.

• Stay in the now. Don't trade yesterday, today. Don't trade tomorrow, today.

• Don't worry about a missed opportunity. Another one is on the way. Besides there were several that just passed of which you were totally unaware.

• If you don't risk, you can't make money. If you lose all your trading capital, you can’t trade. Find balance.

• Markets don't go in a single direction. The trend will wobble on it’s way to its destination.

• The trend is your friend. Unless you're a counter trend trader, and then only it’s end is your friend.

• Tomorrow’s another day, a whole new trading opportunity. Be optimistic.

• Forgive yourself. Take the lesson, and move on.

Source: Edited Article from - http://www.ruthroosevelt.com

Quote for the day

''Self-discipline begins with the mastery of thought." - Napoleon Hill

Quote for the day

"I believe that through knowledge and discipline, financial peace is possible for all of us." - Dave Ramsey

Quote for the day

"Self-discipline is the ability to make yourself do what you should do when you should do it, whether you feel like it or not." - Elbert Hubbard

Quote for the day

"We must all suffer from one of two pains: the pain of discipline or the pain of regret. The difference is discipline weighs ounces while regret weighs tons." - Jim Rohn

Quote for the day

"Discipline is the refining fire by which talent becomes ability." - Roy L. Smith

Quote for the day

"So long as men praise you, you can only be sure that you are not yet on your own true path but on someone else's." - Friedrich Nietzsche

Five Bear Market Mistakes

By  Neil Faulkner

It's easy to forget the mistakes we make. That's a mistake in itself. Here are five traps to avoid during a bear market.

1. Focusing on our short-term performance
One Fool reader once commented that a long-term, buy-and-hold strategy is a short-term strategy gone wrong. Sometimes that's true, but I think it's fair to say that most investors buy into the market with the aim of making money over years rather than months or weeks.

Indeed, over the next few decades, we're all going to be buying a lot of shares, aren't we? That's why we should be content with prices being low. Remember, it's at the end of the investment life that you get the greatest profits from compounding.

For the same reason, we shouldn't get overly concerned during bear markets. Prices do fall from time to time. Perhaps we'll have some extra cash in that period to invest further in quality shares. Regular investors should like bear markets and shouldn't be too bothered about solid shares under-performing for a while.

2. Becoming enduringly bearish
Who knows when 'the right time' to invest is? Economic indicators are wrong at least as often as they are right, and as mysterious as the Delphic Oracle's mutterings.

Let's say you disagree and want to time the market a little. If it's a rising market then things can quickly look over-priced. Only a madman would get in, wouldn't he? In a falling market, prices could just keep sinking, so you'd be crazy to buy something that's decreasing in value. But now we've reached the bottom and it's climbing again. Or is it? Is this a fake bottom, or a 'dead-cat bounce'? Or a dead-cat's fake bottom? Negativity is insidious, and a bit rude.

If you find yourself constantly negative, you'll worry so much about the right time to invest that you'll miss it by a great margin. The stock market, on average, rises more often than it falls and outperforms other investments (or at least it has historically). On that basis, the best time to invest is always now (or more precisely, as and when you have spare money to invest).

There are extremely rare times when all indicators are overwhelmingly in agreement (including the Delphic Oracle), but in general I don't think we shouldn't worry too much about exactly when we get into the market. It's far more important to ensure you spend most of your time invested and you put in as much money as you can reasonably afford.

3. Believing financial journalists are experts
I'm shooting myself and my colleagues in the feet for you. Hope you appreciate it. Thing is, what sells newspapers is what's happening now, not what's likely to happen to the stock market in 30 years. Papers love to be negative, so in a bear market they're extremely happy.

Journalists are not hired for their moderate views or long-term commitment to improving your wealth. They're hired to sell papers. Anyone who just buys shares and holds them forever isn't going to be all that interested in reading the financial pages on a regular basis, and so journalists don't write for this audience. If they do, the editor deletes the clause 'but...' from the phrase: 'A top economist predicts market crash, but...'

The most successful investors do their own research; they don't rely on papers to make buying or selling decisions.

4. Not spending enough time on your investments
Before you get addicted to buying and selling shares, it's tempting for beginners to just get buying, especially if their friend, mother or local pub landlord says that he's buying this or that share because he can't lose. No one should leap into stock-picking like that.

If you want to invest in a hurry, read up about index trackers and ETFs. Read everything you can on them. Take a look at what people are saying about them on our discussion boards and ask your questions there. It should take you just a few hours a day for a week or two to get comfortable with the idea of them. That's not much effort to lay the foundations of your future financial security.

Once your money is invested relatively safely, you can then take the time to truly learn what on Earth it is you're getting into when you're looking at individual shares. May I suggest you be as cynical about them as you like? Keep digging to find out what's wrong with the company and only then, if you find nothing serious, can you buy. In other words, concentrate on what might go wrong with a share before you consider what might go right. Your wallet will thank you for it.

5. Spending too long on your investments
On the other side, once you've got used to investing it can begin to get you a little too excited. Lots of people check their shares every morning or several times a day.

You know your friend who goes to the gym, and working out is all he talks about? Or how much your other friend talks about just clothes and fashion? You know how boring that is? You know how much you wish they'd just get a life? Well then.

Keep a balance. By not over-doing it, it'll also help you resist the costly temptation to over-trade. But that's going into a sixth mistake, and I just promised you five.
Source: www.fool.co.uk

Quote for the day

"The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts." - Bertrand Russell

Quote for the day

"People often say, with pride, 'I'm not interested in politics.' They might as well say, 'I'm not interested in my standard of living, my health, my job, my rights, my freedoms, my future or any future.' ... If we mean to keep any control over our world and lives, we must be interested in politics." - Martha Gellhorn

Quote for the day

"Faith shows assurance while anticipation brings doubt." - Nancy Winningham

Quote for the day

"Hope is like the sun, which, as we journey toward it, casts the shadow of our burden behind us." - Samuel Smiles.

Quote for the day

"If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts, he shall end in certainties." - Francis Bacon

Quote for the day

"Most of our life we spend in anticipation but not in participation." - Debasish Mridha.

Quote for the day

"Fear is pain arising from the anticipation of evil." - Aristotle.

Quote for the day

"I believe there are two ingredients necessary to make every day a masterpiece: decisions and discipline. They are like two sides of the same coin; you could call them 'goal setting' and 'goal getting.' And they can't be separated because one is worthless without the other." - John C. Maxwell

Stock Market Crash - What Happens When the Stock Market Crashes?

To put it simply, the Stock Market is really people, humans who are either a buyer or seller and controlled by emotions. Fear and greed tend to dominate human emotions...and this is what causes a stock market crash or commonly a Crash!

When enough sellers offload a stock because of their own fear of loss based on something they've heard, it will cause the price of that stock to drop. In the event of a disaster or bad news, especially on a global scale, when those sellers panic and sellout on a mass scale, stock prices plummet!

This is what causes a crash...so where does the money go?

When you really think about it - there must be someone willing to buy for a desperate / nervy investor to successfully sell their shares doesn't there?

And if a company has good management, solid financial prospects, and offers a very good ground for investing in before a stock market crash occurs, then what has changed about that company during and after a market crash?

For most companies like that, the only thing that changes is their share price.

For the savvy investor......this represents an awesome buying opportunity. Buy when others are fearful the Warren Buffett saying goes.

So while the novice investor dumps their stock and leaves the market once conditions become undecided or volatile, the savvy investor rubs their hands together in glee. This is the guy who loves a stock market crash, because more often than not, the volatile times are when the best bargains are to be had, just ask Warren Buffett.

Throughout a bear market, the only thing that affects a company's falling share price is the downturn in economic and market conditions. And while we as humans tend to think the good times will never end while we're in them, we also give in to the assumption that when things are bad that they will remain that way forever.

During these conditions, those who are inexperienced, impatient and fearful will often oversell their shares. So a stock market crash is really just a means for transferring funds out of the hands of those who don't know what they are doing and into the hands of those who know exactly what they are doing.

By - Anthony Manly
Source: http://EzineArticles.com

Quote for the day

"You begin to build a better life by determining to make good decisions, but that alone is not enough. You need to know what priorities to set for your life." - John C. Maxwell,

Quote for the day

"Your life changes the moment you make a new, congruent, and committed decision. " - Anthony Robbins

Quote for the day

"Listen to the desires of your children. Encourage them and then give them the autonomy to make their own decision." - Denis Waitley

Quote for the day

"Great decision-making comes from the ability to create the time and space to think rationally and intelligently about the issue at hand." - Graham Allcot,

Quote for the day

"Maturity is the capacity to endure uncertainty." – John Huston Finley

Quote for the day

"Let go of certainty. The opposite isn’t uncertainty. It’s openness, curiosity and a willingness to embrace paradox, rather than choose up sides. The ultimate challenge is to accept ourselves exactly as we are, but never stop trying to learn and grow." – Tony Schwartz

Quote for the day

"If there’s one thing that’s certain in business, it’s uncertainty." - Stephen Covey

Quote for the day

"It is hard to fail, but it is worse never to have tried to succeed." - Theodore Roosevelt

Quote for the day

"Never confuse a single defeat with a final defeat." - F. Scott Fitzgerald

Quote for the day

"You can’t let your failures define you. You have to let your failures teach you." - Barack Obama

Quote for the day

"Failure is nature’s plan to prepare you for great responsibilities." - Napoleon Hill

Quote for the day

"I honestly think it is better to be a failure at something you love than to be a success at something you hate." - George Burns

Quote for the day

"Disappointment is really just a term for our refusal to look on the bright side." - Richelle E. Goodrich

Quote for the day

"Blessed is he that expects nothing, for he shall never be disappointed." - Benjamin Franklin

Quote for the day

"If we will be quiet and ready enough, we shall find compensation in every disappointment." - Henry David Thoreau

Quote for the day

"The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind." - T.T. Munger

Quote for the day

"Wealth is not his that has it, but his that enjoys it. " - Benjamin Franklin

Quote for the day

"Every time you borrow money, you're robbing your future self. " - Nathan W. Morris

Quote for the day

"You can only become truly accomplished at something you love. Don’t make money your goal. Instead, pursue the things you love doing, and then do them so well that people can’t take their eyes off you. " - Maya Angelou

Quote for the day

"What we really want to do is what we are really meant to do. When we do what we are meant to do, money comes to us, doors open for us, we feel useful, and the work we do feels like play to us. " - Julia Cameron

Quote for the day

"While poverty persists, there is no true freedom." - Nelson Mandela

Quote for the day

"Successful people don’t fear failure but understand that it’s necessary to learn and grow from." - Robert Kiyosaki

Quote for the day

"Don’t let complexity stop you. Be activists. Take on the big inequities. It will be one of the great experiences of your lives." - Bill Gates

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"People…were poor not because they were stupid or lazy. They worked all day long, doing complex physical tasks. They were poor because the financial institution in the country did not help them widen their economic base." - Muhammad Yunus

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"Poverty is not only about income poverty, it is about the deprivation of economic and social rights, insecurity, discrimination, exclusion and powerlessness. That is why human rights must not be ignored but given even greater prominence in times of economic crisis." - Irene Khan

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"You always pass failure on your way to success." - Mickey Rooney

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"The quality of your life is directly related to how much uncertainty you can comfortably handle." - Tony Robbins

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"Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity." - Martin Luther King Jr.

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"While we are free to choose our actions, we are not free to choose the consequences of our actions." - Stephen R. Covey

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"Everyone will experience the consequences of his own acts. If his act are right, he'll get good consequences; if they're not, he'll suffer for it. " - Harry Brown

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"Maturity is when you stop complaining and making excuses, and start making changes." -  Roy T. Bennett

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"Some changes look negative on the surface but you will soon realize that space is being created in your life for something new to emerge." - Eckhart Tolle

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"The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking." - Albert Einstein

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"Change the way you look at things and the things you look at change." - Wayne W. Dyer

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"Life is a series of natural and spontaneous changes. Don’t resist them; that only creates sorrow. Let reality be reality. Let things flow naturally forward in whatever way they like." - Lao Tzu

The Investor Sentiment Wheel

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"Leadership is about empathy. It is about having the ability to relate to and connect with people for the purpose of inspiring and empowering their lives." - Oprah Winfrey

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"Nobody can predict interest rates, the future direction of the economy or the stock market. Dismiss all such forecasts and concentrate on what's actually happening to the companies in which you've invested." - Peter Lynch

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"Rising interest rates are considered bad for stocks because they raise the cost of doing business and depress corporate earnings and because higher yields make bonds relatively more attractive than stocks to investors." - Alex Berenson

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"In a time of deceit telling the truth is a revolutionary act." - George Orwell

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"There are two ways to be fooled. One is to believe what isn't true; the other is to refuse to believe what is true." -  Soren Kierkegaard

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"Never tell the truth to people who are not worthy of it." - Mark Twain

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"Leadership is the capacity to translate vision into reality." - Warren G. Bennis

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"Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world." -  Joel A. Barker

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"Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion." - Jack Welch

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"A wrong connection will give you shock throughout your life, but the right one will light up your life." -

Leonardo DiCaprio

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"Be thankful for the hard times, for they have made you." - Leonardo DiCaprio

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"The strong usually suffer without complaining, while the weak complain without suffering." - Pierre Claude Boiste,

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"The difference between impossible and possible is a willing heart." - Lolly Daskal

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"Endurance is not a desperate hanging on but a traveling from strength to strength." - Eugene Peterson

Are You A Bull Or A Bear?

Casual acquaintances who come to learn know I trade for a living (something I rarely volunteer without being asked) will always ask whether I’m a bullish or bearish on the market or economy. My reply often irritates them when I say “I'm neither one – I'm just an opportunist.”

What I mean by that is that I go out of my way to avoid placing myself into a neat and tidy category that can influence my analysis of the markets and the stocks I trade. Although I'm far from perfect and sometimes let my opinions cloud my judgment (I am human after all), I do really try to do everything I can to look for opportunities on both sides of the market.

Many investors and also traders try to fit themselves into one neat category based on their opinions or of others who've they have come to respect. Even worse, those views are frequently tainted by how their portfolio is currently positioned (people want to be right after all) which can be both dangerous and quite unprofitable.

Believe it or not, some of the most profitable trades I've taken have been ones that run contrary to my personal views.

Case in point, I know several traders who are struggling now because they are very bearish about the market. While in principle I agree many of their views, I cannot let those views cloud both my analysis and trading. While I'm fairly certain there will be a time when their views will be proven correct, in this business timing is everything. Opinions after all, don't pay the bills – only profitable trades do!

As you'll soon learn if you haven't already, there is no difference between being “early” and “wrong” in this market. Likewise, it pays to remember there were lots of hedge funds that went broke prior to March of 2000 because they shorted all of the Internet and tech stocks. These guys were proven to be right on the money much later on, but in reality they never were able to take full advantage of it because they lost so much money before the bear returned.

Remember this – in trading it isn't about who is right or wrong. Instead it is all about who can make money and take advantage of the most opportunities in the present. Opinions are terrific things, but in most cases, you would be wise to set them aside and trade the market you see rather than the market you think you should or want to see.
By Charles E. Kirk
http://www.kirkreport.com

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"All successful people learn that success is buried on the other side of frustration." - Tony Robbins

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"If you so choose, every mistake can lead to greater understanding and effectiveness. If you so choose, every frustration can help you to be more patient and more persistent." - Ralph Marston

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"To conquer frustration, one must remain intensely focused on the outcome, not the obstacles." - T.F. Hodge

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"I’ve come to believe that all my past failure and frustrations were actually laying the foundation for the understandings that have created the new level of living I now enjoy." - Anthony Robbins

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"Frustration is a very positive sign. It means that the solution to your problem is within range, but what you’re currently doing isn’t working, and you need to change your approach in order to achieve your goal." - Anthony Robbins

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"Success isn't always about greatness. It's about consistency, as consistent hard work leads to success, greatness will come." - Dwayne Johnson.

Quote for the day

"It's not what we do once in a while that shapes our lives. It's what we do consistently." - Anthony Robbins.

5 Most Powerful Financial Advice for Beginners in Stock Trading

Beginners in stock investment are often in need of effective advice. These advices are collective wisdom of the top gurus in stock trading investment. I will not be able to named it all because the source is just too many. For details, you can easily Google this up to find out more about the following advice.

If you asked whether its effective or not, yes its effective. But in reality an effective technique is not enough to reap profits. You still need financial education, talent, right attitudes and complete understanding of the stock market to succeed. Take this advice as only a tip of an iceberg, the real hard work still needs to be done in your part.

Advice #1: Aiming for Quick Money is the fastest way to lose BIG amounts of money.

Why? Getting rich quick in stocks is like shooting yourself in your own foot. Why? Its a matter of luck. And this “luck” factor is never been an effective strategy in stocks. Too often you read stories of getting rich quick in stocks, think twice before you believe in them. They are often marketing methods just tempting you to buy their systems.

The best investors in the world which is Warren Buffet takes his entire life to accumulate wealth. And only a very few investors in the world that can match his experience and skills. Why would you want to be rich quick when only a handful of financial experts succeed from their young until the old age?

This is where patience in stock trading is very important. If you read stories about holding to stocks for a very long time to reap profits is a sound advice. Assuming you pick-up a good stock because it will surely appreciate over time. Effective techniques such as cost averaging and long term stock investment needs years to reap its effective financial rewards.

Advice #2: Do not buy stocks with products you do not use

Its simply because if you are buying those products that you really need, it simply proves the company is indeed producing valuable products. This “need” by its customers can cause the stocks company value to increase. For example, I am a marathon runner and all the time, I used to love Nike Shoes because of durability, performance and quality. So when I invest some of my savings in stocks, I would definitely try to invest Nike shoes first, because its the products that I use and love.

Advice #3: Do not buy stocks for businesses you do not understand

Again, all too often you get stock reports from brokers and other financial services tempting you to buy that stock because its the next BIG thing. Simple say NO. Its because that would be a nice trap of investing into a business that you do not understand.

You should only invest in stocks of companies that you know how their business and money making really works. For example, supposing I am a webmaster and knows Google very well. I know that Google makes a lots of money from advertising online and is their main source of revenue. I even use Google products on my site and even make money from Google ads.

So it make sense that if I have an opportunity to invest in stocks, I would definitely pick Google on top of my list. Its the business that I understand.

Advice #4: Always assume you lose all your money in stocks tomorrow

This does not mean you should think negatively. In fact this advice helps you to re-consider risk and money management as a very important tool in stock trading. In financial risk management, it will teach you NOT TO INVEST ALL YOUR MONEY in stocks. The primary reason is security. Stock trading is a random game, you will never know what will happen tomorrow. So this means only invest a percent of your savings in stocks. Investing your entire savings is a big mistake. Typically how much percent depends on how risky you are. You might want to read this tutorial on how much to risk when trading stocks.

A lot of beginning investors in stocks would become bankrupt very soon because they let their entire savings invested in such a high risk environment.

Advice #5: Always Test everything on paper FIRST

You might have read about “paper trading”. Its a very effective tool that will let you test your techniques and trading methods and strategies without using real money. Other types of paper trading online are stock trading games that you could join for free. Most stock brokers have this kind for service. Of course, do not fool yourself. If it seems effective on paper does not mean its “100%” effective on real trading. Why? Its because if you are trading real money-> “greed”, “emotions” and “fear” will be joining your game. Your goal in paper trading is that you should invest in stocks confidently without the emotions, greed or fear being a factor in the decision making.

Source:http://www.stock-trading.me

Quote for the day

"With the increasing speed of business in today's economy, transparency isn't just desirable - it's essential." - Michael Thomas Sunnarborg

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"Life’s tragedy is that we get old too soon and wise too late." - Benjamin Franklin

Quote for the day

"Life is really simple, but men insist on making it complicated." - Confucius

Quote for the day

"If you want to live a happy life, tie it to a goal, not to people or things." - Albert Einstein

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"Life is not a problem to be solved, but a reality to be experienced." - Soren Kierkegaard

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"In three words I can sum up everything I’ve learned about life: It goes on." - Robert Frost

Quote for the day

"Life is ten percent what happens to you and ninety percent how you respond to it." - Charles Swindoll

Quote for the day

"In crucial things, unity. In important things, diversity. In all things, generosity." - George H. W. Bush

Quote for the day

"There are two types of people who will tell you that you cannot make a difference in this world: those who are afraid to try and those who are afraid you will succeed." - Ray Goforth

Quote for the day

"Don't be afraid to give up the good to go for the great." - John D. Rockefeller

Quote for the day

"I find that the harder I work, the more luck I seem to have." - Thomas Jefferson

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"Experience is not what happens to you--it's how you interpret what happens to you." - Aldous Huxley

Quote for the day

"One way to boost our willpower and focus is to manage our distractions instead of letting them manage us." - Daniel Goleman

Quote for the day

"Anyone can be angry--that is easy. But to be angry with the right person, to the right degree, at the right time, for the right purpose, and in the right way--that is not easy." - Aristotle

Quote for the day

"When dealing with people, remember you are not dealing with creatures of logic, but with creatures of emotion." - Dale Carnegie

Why Your Trading Isn't Working Out

A good physician knows that, before cure comes a diagnosis. You cannot treat a problem before you identify what that problem is.

All too often, traders assume that their performance problems are due to a single cause: trading the wrong chart pattern or indicator, having the wrong mindset, etc. As a result, they seek out one trading guru or coach after another, only to see their P/L head steadily south.

The reality is that there are quite a few reasons why trading might be unprofitable. Figuring out which might apply to you is the first step is getting the right help.

Here's a fourfold scheme that I have found helpful in conceptualizing trading problems:

1) Problems of training and experience - Many traders put their money at risk well before they have developed their own trading styles based on the identification of an objective edge in the marketplace. They are not emotionally prepared to handle risk and reward, and they are not sufficiently steeped in markets to separate randomness from meaningful market patterns. They are like beginning golfers who decide to enter a competitive tournament. Their frustrations are the result of lack of preparation and experience. The answer to these problems is to develop a training program that helps you develop confidence and competence in identifying meaningful market patterns and acting upon those. Online trading rooms, where you can observe experienced traders apply their skills, are helpful for this purpose.

2) Problems of changing markets - When traders have had consistent success, but suddenly lose money with consistency, a reasonable hypothesis is that markets have changed and what once was an edge no longer is profitable. This happened to many momentum traders after the late 1990s bull market, and it also has been the case for many scalpers after volatility came out of the stock indices. Here the challenge is to remake one's trading, either by retaining the core strategy and seeking other markets with opportunity or by finding new strategies for one's market. The answer to these problems is to reduce your trading size and re-enter a learning curve to become acquainted with new markets and methods. Figuring out how you learned the markets initially will help you identify steps you need to take to relearn new patterns. 

3) Situational emotional problems - These are emotional stresses that are recent in origin and that interfere with decision making and performance. Some of these stresses might pertain to trading, such as frustration after a slump or loss. Some might stem from one's personal life, as in a relationship breakup or increased financial pressures due to a new home or child. Very often these problems create performance anxieties by putting the making of money ahead of the placing of good trades. The answer to these problems is to seek out short-term counseling to help you gain perspective on the problems and cope with them effectively. 

4) Ongoing emotional problems - These are emotional patterns that predate trading and that show up in areas of life apart from trading. They include depression, anxiety, anger, attention deficits, and substance abuse. Such problems skew how people experience themselves and the world and lead to biases in processing information. As a result, it is difficult to trade (and manage risk) with consistency. The answer to these problems is to seek out competent professional help from a licensed psychologist or psychiatrist, including (possibly) counseling and medication assistance.

The important point is that not all trading problems are psychological in nature. Sometimes we need to work on the markets, sometimes we need to work on ourselves, and sometimes we need to do both. But first of all, we need to identify what our problems are. If you seek help for your trading concerns, make sure you do so from an individual who is experienced in both trading and psychology. If people only possess hammers, they'll treat you like a nail. You want mentors who possess multiple tools and who can design the kind of help that will be right for you.

For the trader, as the physician, diagnosing problems is the first step toward cure.

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