About Me

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A Leo. Others perceive me as arrogant, pompous, aggressive, dominating, disparaging, unforgiving, demanding, impatient, obnoxious, loud and uncouth, intimidating, poor listener, generous, kind, intelligent, and open. Agree with the attributes as perceived by other. See or portray myself as original, flexible, skeptical, philosophical, logical, rational, analytical, interesting, hardworking, knowledgeable, keen learner, mischievous, worldly wise. Self aware of short coming and trying to change. Progress slow.

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Safety First

Safety

There is no absolute safety.  Any investment is safe at the right price but risky at too high a price.
Is not about what you must do but also what you must not do.
Zweig’s 3 cardinal rules
 
(1)   You must not risk any money that you cannot afford to lose
(2)   You must not take any risk that you need not have to
(3)   You must not take risk unless it is most certain to reward you



Never confuse the unlikely with the impossible
 “Good Reputation does not ensure safety”
Inflation
Over the long run, the corrosive power of inflation is the major problem for investor, not the daily or cyclical changes in prices that investor fret about.
The biggest risk to your future lifestyle is the chance that your savings will not kept up with rising prices over the intervening decades.
 Zweig, J. (2010). The Little Book of Safe Money. John Wiley & Son Inc.

In a taped interview, Bianna Golodryga asks Buffett for his "top three pieces of advice for average Americans who want to grow their savings and keep their money safe."
In this venue, there's no mention of intrinsic values, durable competitive advantages, or even buy-and-hold.
    Buffett's response:
1) If it seems too good to be true, it probably is.
2) Always look at how much the other guy is  making when he is trying   to  trying to sell you something.
3) Stay away from leverage. Nobody ever goes broke that doesn't owe money.
Warren Buffett's Top Three Investment Rules for the Average American
Alex Crippen, Friday, 10 Jul 2009 http://www.cnbc.com/id/31849504/Warren_Buffett_s_Top_Three_Investment_Rules_for_the_Average_American

Prepare for the worst rather than hoping for the best

I'm not a pessimist, but a realist. And as with most elements of trading, hoping for the best won't do as much as preparing for the worst.

 Hoenig, J. (8 Apr 2002). The Blue Chip Penny Stocks. Smartmoney-Tradecraft , http://www.smartmoney.com/investing/stocks/the-blue-chip-penny-stocks-12652/.

A trader should be a realist, not an optimist.

 Hoenig, J. (8 Jul 2002). It's time to cut your losses. Smartmoney - Tradecraft , http://www.smartmoney.com/investing/stocks/its-time-to-cut-your-losses-13053/.
Focus on not losing money
But the truth is that nobody knows exactly where the markets are going. No matter how airtight your analysis, something is always going to go wrong within your portfolio. Every trade can't be a winner.  The trick is to make sure that a soggy trade doesn't sink your entire portfolio. Trading the appropriate product relative to your capital, and the right position size relative to the product, ensures that the inevitable losing trades are an annoyance, not a death sentence.
Hoenig, J. (26 Aug 2002). Risky Business. Smartmoney - Tradecraft , http://www.smartmoney.com/investing/stocks/risky-business-13256/.
Focus on limiting loss and not upside return

Finally, when it comes making money, you're best served not by trying to target big returns but by limiting large losses - limit the potential for catastrophic, double-digit loss..

Jonathan Hoenig (August 15, 2005)  , Dude, Chill Out. Smartmoney - Tradecraft ,
http://www.smartmoney.com/investing/stocks/Dude-Chill-Out-18056/#ixzz0hhLkflxK

Pinning your hopes on penny stocks could leave you penniless
This notion is based on the fallacy that there is more room for appreciation and more opportunity to own more stock. If a stock is at 10 cents and rises by five cents, you will have made a 50% return. This, together with the with the fact that a $1,000 investment can buy 10,000 shares, convinces investors that micro cap stock are a rapid, sure-fire way to increase profits.  Unfortunately, people tend to see only the upside of penny stocks, while forgetting about the downside. A 10 cent stock can just as easily go down by 5 cents and lose half its value. Most often, these stocks do not succeed, and there is a high probability that you will lose your entire investment.

Investopedia. (2003). The Lowdown on Penny Stocks. Investopedia , http://www.investopedia.com/articles/03/050803.asp.

Permanent irrevocable losses

The Madoff and Iceland experiences are both different from the global market meltdown in one profound way – their loses were permanent; gone forever
Markets, on the other hand, do recover.  The great risk to investors is not the market can plummet but that investor may be frightened into liquidating investment at or near bottom and miss all the recovery; making the loss permanent.
Flight to safety is like locking the barn door after the sheep had run off. 
Ellis, D. C. (2010). Winning The Loser's Game. McGraw Hill

Position size
Trading is not about taking risk, but avoiding it. To that end, I am always reluctant to commit too much capital to a single position. Not because I don't believe in my flair for stock picking, but because sometimes the best way to manage risk is not to take it in the first place.
….And while security selection gets all the headlines, it's money management — namely position size — that ultimately has the biggest impact on your bottom line.
…. Size kills. Position size is what did in Nick Leeson, the kid whose huge bets took down Barings, England's oldest merchant bank. It's also what trashed Long-Term Capital Management, whose wagers almost took down the global financial system. No matter what sort of analysis you use, nothing will wreck a portfolio faster than putting too much of your assets in one particular holding. Despite the misconception that traders love to take big rolls of the dice, the truth is that large positions grow large, they don't start out that way.
Hoenig, J. (1 Mar 2001). Size Matters. Smartmoney - Tradecraft , http://www.smartmoney.com/investing/stocks/size-matters-10098/ .