Stock-Market-Observations

I know old traders, and I know bold traders, but I know no old and bold traders! - Anonymous as retold by Jeff Saut

“The essence of investment management is the management of risks, not the management of returns. Well-managed portfolios start with this precept.” - Benjamin Graham

The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell. - John Templeton

Buy on the cannons, sell on the trumpets. - Old French Proverb

Rule#1: Never lose money. Rule #2: Never forget rule #1 - Warren Buffett

The four most dangerous words in investing are "This time it's different". - John Templeton

"This time it's different" was prevalent during the bubble of 2000. In 1929 it was called "New Economics". - Bob

History always repeats, only the details change. - Edson Gould

"Whenever you find hope or fear warping judgment, close out your position" - Richard Wyckoff

If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks. - John (Jack) Bogle

Stock are bought on expectations, not facts. - Gerald Loeb

Emotions are your worst enemy in the stock market. - Don Hays

Herd Mentality: Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one. - The Book "Extraordinary Popular Delusions and the Madness of Crowds"

Herd Mentality: Cases such as Tulipomania in 1624--when Tulip bulbs traded at a higher price than gold--suggest the existence of what I would dub "Mackay's Law of Mass Action:" when it comes to the effect of social behavior on the intelligence of individuals, 1+1 is often less than 2, and sometimes considerably less than 0. - The Book "Extraordinary Popular Delusions and the Madness of Crowds"

I made money by selling too soon. - Bernard Baruch

If all you have is a hammer, everything looks like a nail. - Bernard Baruch

The main purpose of the stock market is to make fools of as many people as possible. - Bernard Baruch

Buy the rumor, sell the news. - Anonymous

The hardest part of a bull market is staying on. - Anonymous

A bubble is a bull market in which you don't have a position. - Anonymous

A buy and hold strategy is a short term trade that went wrong. - Anonymous

Markets can remain irrational longer than you can remain solvent. - John Maynard Keynes

Return of principal is more important than the return on principal. - Anonymous

Hope is your worst enemy in the market. - Anonymous

Don't catch a falling knife. - Anonymous

Spend at least as much time researching a stock as you would choosing a refrigerator. - Peter Lynch

When you realize that you are riding a dead horse the best strategy is to dismount. - Sioux Indian Proverb

Don’t ever make the mistake of telling the market it is wrong. - James Dines

Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes. - Jesse Livermore

Let Wall Street have a nightmare and the whole country has to help get them back in bed again. - Will Rogers

Bulls make money, bears make money, pigs get slaughtered. - Retold by Bob's Grandfather

Never buy a stock that won't go up in a bull market. Never sell a stock that won't go down in a bear market. - Anonymous

Nobody is more bearish than a sold-out bull. - Anonymous

The public is right during the trends but wrong at both ends. - Humphrey Neill

Never sell a dull market short. - Anonymous

“I sell euphoria and buy panic.” The way he determines that is to wait until prices start gapping in the charts. Gapping on the upside is euphoria, while gapping on the downside is panic. - Jimmy Rogers courtesy of Jeff Saut

Cut your losses and let your profits run. - Anonymous

Don't marry a stock. Every stock must be sold. - Anonymous

Often times WHEN you take a position can be more important than WHAT you take a position in. - Anonymous

"If Santa fails to call the bears will roam on Broad and Wall" - Lucien Hooper

CLEVER QUIPS

P/E ratio - The percentage of investors wetting their pants as the market keeps crashing. - Anonymous

Those who can . . . do
Those who can’t . . . teach
Those who can’t teach . . . work for the government. - Anonymous

Wall Street is a street with a river at one end and a graveyard at the other. - Anonymous

Never check stock prices on a Friday, it could spoil your weekend. - Anonymous

Money talks, but all mine ever says is "goodbye" - Anonymous

Don't gamble. Take all of your savings and buy some good stock and hold it until it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

October, this is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, June, December, August and February. - Mark Twain

Economists have predicted 14 of the last 3 recessions. - Anonymous

Market Correction - The day after you buy stocks. - Anonymous

In 2008 stocks were a good buy . . . . . Goodbye Mercedes, goodbye yacht, goodbye vacation home, goodbye . . . -Ed Hart (modified for today)

"No matter what we all know today, it’s not going to be true in 10 or 15 years."
Jim Rogers

"Most successful investors, in fact, do nothing most of the time."
Jim Rogers

"Stock Market Observations" uses several proprietary technical indicators discovered by the author. The object of this blog is to allow you to understand the author's thinking as he executes trades for his own portfolio.

"Stock Market Observations" is published on an irregular schedule. The author tries to issue an update when a stock market inflection point is near.

The content on this blog is meant to be entertaining information and should not be construed as investment advice.

No statement by the blog's author should be interpreted as a recommendation to buy or sell any security, financial instrument, or to participate in a trading or investment strategy.

Any investment decision by anyone that results in losses or gains based on information from this blog is not the responsibility of the blog's author.

The blog's author will make statements about buying or selling investments. These statements are the author's opinion, and/or investment decisions regarding his own investments. These statement or opinions are never to be construed as investment advice.

I began my investing career by speculating in the stock market in late 1957. I bought my first stock, Ampex at 44. It promptly went down to 40 and sat there for several months. Then it began jumping several points every day and before long it was going straight up. I sold it in the first half of 1958 at 120 (bought my first car). WOW! This is easy.

So in 1958 I had dreams of never working again, because I was a stock market genius. Why should I bother working? I can just buy and sell stocks the rest of my life.

I had just committed one of the Cardinal Sins of Wall Street:

"Never confuse genius with a bull market".

Naturally reality set in before too long.

After college I bought a fast food franchise and was making good money but continued to work at my real job, the stock market.

After voraciously reading all the technical analysis books I could find during the 1960s, I quickly realized that most of these methods had inconsistent or high failure rates.

At this time I considered a book a success if I could learn just one good idea. Usually I could wring an idea out of a book, but it was difficult because the author's premises frequently weren't valid because they lacked consistency.

By the early 1970s I had began creating some of my own indicators and had accumulated some methods that were crudely effective. But I still lacked that "killer" method that could accurately predict a market turn before it took place.

I had originally believed that Edson Gould's market letter was restricted to institutional clients only. But I found out that if I forked out $500 per year, I could subscribe to Gould's market letter. This was the equivalent of $2500 in today's dollars.

So in 1973 I subscribed to Edson Gould's "Findings and Forecasts" and was learning from the greatest technician of the 20th century. At the time I thought it was going to be money well spent. What an understatement!

After a few years of reading Gould's advisory letter, he had explained the irrational volatility of markets and how to predict a change in the market's primary direction.

Uncovering Gould's proprietary methods, which wasn't easy, allowed me to predict the market's behavior in the years to come. Gould never overtly told you how his favorite indicators worked or what they were. This was where I had to read between the lines and figure out, how he arrived at this conclusion.

But after 6 years, I knew in advance what each issue of Gould's market letter was going to say and my learning process had stagnated. I knew it was time to move on.

But I'll never forget that Edson Gould was the GREATEST technician of all time. I learned more from him than anyone else. I owe a great debt of gratitude to him.

Thank you Edson.

During the 1960s I had also tried Elliot Wave Analysis and initially had high expectations. But I began to realize that there were too many exceptions to predict effectively. But from a combination of Elliot and Edson Gould I did form my own version of wave counting. One that was simpler, more effective and not full of exceptions, it was a method of KISS. This method is briefly explained in the Glossary (Read Me First).

Frequently traders will see my blog for the first time and immediately tell me that my wave counts are all wrong. They are banished to the corner to reread the glossary until they get it.

I do welcome comments from readers that ask why I counted something one way and not another. Those are great questions and are very constructive for myself and other readers. After awhile you may find there appears to be a degree of art in what I do, but it's just decades of experience with "gut" feelings showing. I often have feelings about the market that can lead the logic thought process.

To really understand my methods, one must follow along closely to get an idea of how things are coming together. Sometimes you'll see my ideas form far in advance of a turn, while other times I'll have a eureka moment. You wouldn't believe how often eureka was the norm in the 80s.

After 56 years of speculating, trading, studying and investing in the stock market, I am sharing "some" of my experiences and knowledge by writing this stock market blog.

I won't tell you about the vicious blood-letting moments that I've experienced in the market. Anyone who says they haven't had that happen is a liar. The one caution I would advise is to be wary of leverage. It works great in your favor, but can kill you when going the wrong way.

I'll drop a hint or two along the way that should show you my methods of revealing tops and bottoms before they take place. Unfortunately some people just want someone to tell them where the market is heading. That will never get you to the pot of gold unless you really understand what you're doing . . . and that requires a LOT of hard work.

For me . . . understanding the future and acting accordingly is what it's all about.

Incidentally, this is an impossible job to do correctly. Many people try and everyone fails. I just hope to be successful more often than I'm wrong (otherwise I'll be pissed).

Enjoy the ranting of "Stock Market Observations".

Bob