IGNORE OTHER PLAYERS & THE DEALERS: Don’t get distracted by what other people say or do concerning the stock market. Combining different strategies will only cloud your thinking and prevent you from taking correct decisive actions. Remember that there will always be a well-qualified expert with convincing advice to take almost any position on the future course of the stock market.
The obvious truth is that no one really knows that outcome. As wise investors, we must not be fooled by the convictions or credentials of any expert and their opinions. What matters in the area of stock market advice is only the accuracy of the thinking and wisdom of the philosophy behind it.
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Comment: In terms of market analysis, you want to get to the point where you have enough experience working with the key internal indicators that you can trust your own decisions. Understand that when you are in an emotional state of uncertainty, you will be inclined to be swayed by what other people think and do. However, the one place where other people’s opinions matter is when you see a consistent pattern to cause you to look at them as “contrary indicators.”
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“It’s not the bulls and bears you need to avoid — it’s the bum steers.”
Chuck Hillis ` Portfolio Manager at Hillis Partnership
Categories: Market Analysis Tags: buy low sell high, investing, investments, Investor, market timing, stock market, stock market timing, stock trading, stock trading tips, stocks, time the market, trading, trading tips, wall street, wall street craps, winning
MANAGE YOUR TIME WISELY: Spend 80% of your time on deciding “when” to buy. Spend another 15% on “how much” to buy. And spend only 5% on “what” to buy. The majority of amateur investors spend the bulk of their time in search of the few great individual stocks to buy.
The Wall Street Craps approach calls for buying the general market with broad-based Exchange-Traded Funds for proper diversification and liquidity. Therefore, little time is necessary for researching specific stock candidates. Instead, the bulk of time allocated to stock market investing is spent on gauging market indicators and allocating funds appropriately. This strategy alone will free up plenty of time for engaging in other important non-investing high-priority activities in your life.
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Comment: Jim Cramer, a popular media investment figure, likes to say that an investor needs to spend at least one hour per week studying each stock that they own. He also maintains a model portfolio of 25 stocks for his private subscribers. This means that each investor should spend about 25 hours a week studying their stock portfolio. This seems like way too much time for the average person. And besides, what exactly are these investor going to be studying? In most incidents, it means simply going on the Internet and reading other people’s opinions. Again, this is a big waste of time.
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“You must think ahead, plan your actions, and have the discipline to adhere to your plan. Never ever underestimate what the market can do.”
Dean Lundell ~ Author of Sun Tzu’s Art of War For Traders And Investors (1997)
A Savvy Investing Take: There are two steps that go into making any type of decision. When you’re presented with evidence from the environment, the first step is to determine “What does this mean?” The second step is to decide “What should I do?”
When it comes to stock market trading and investing, the natural tendency for most investors is to skip the first step in the decision-making process and go straight to the question, “What should I do?” However, in order to make wise investment decisions with serious money, a savvy investor must first determine “what things mean” with the highest possible degree of accuracy. That’s where the importance of thorough market analysis comes in.
If you want to be successful at playing the stock market, your first step is to develop a fundamentally sound process of evaluation in order to gauge the meaning of the evidence that the market presents. Only then can you move confidently to the next step of deciding “What should I do” when the stock market environment is signaling a time for immediate action.
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In order to achieve above-average investment results over the long run, you must develop an objective process for making sound decisions. And many stock market strategists contend that the approach you choose should also be somewhat different from what the majority of other speculators and investors follow. The Wall Street Craps approach, as described in this book, offers a unique approach to both money management and stock market trading. It’s one that many individual investors can understand and master on their path to achieving overall financial success.
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“To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”
Warren Buffett ~ Legendary American investor & philanthropist
market analysis:
1. the ability to decipher the clues surrounding the stock market in the effort to make more intelligent investment decisions.
2. the process of evaluating past and present evidence related to the stock market and making high-probability correlations to future price performance.
3. the key prerequisite to timing your stock market moves successfully when playing Wall Street Craps for fast money with less risk.
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“No matter what the stock market does, people want to know how it did it, why it did it, and why it didn’t do something else.”
Richard Saul Wurman, Alan Siegel, & Kenneth M. Morris