Monday, 21 April 2014
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 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.
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.
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/
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:
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 .
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/
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.
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 FranklIf 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.
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