I’m the father of two young children, a 5 year old son and a 2 year old daughter and I’m acutely aware of my responsibility to teach them all I know. I want to place them on my shoulders. I want them to learn from my mistakes and benefit from my successes.
To that end, I’m preparing a list of actionable information to assist them in their investing endeavors. I intend to share this gift with them when I feel they are ready to absorb the knowledge. Until then I will share the list with you dear reader.
#1 Every investment decision made on my trading desk begins and ends with the following thoughts: 1) Will this action place us on the right side of statistics and probabilities? 2) Is the Reward potential from here worth the risk being taken?
#2 “You miss 100% of the shots you don’t take” Wayne Gretzky
#3 Reaction to the news in infinitely more important than the news itself
#4 Believe nothing of what you hear/read and only ½ of what you see
#5 Determine investing plan when markets are closed, and the TV is off. Then execute plan ruthlessly during trading hours
#6 Fight the Powers of Greed. Use investing Algorithms to direct your execution. The world’s worst investment adviser… the EGO!
#7 There is a step between Long and Short…it is called CASH!
#11 Don’t let volatility get you off the bus
#12 Spend less time focused on the why and more time focused on the how to
#13 Don’t relive the same loss over and over. If asset opens down 1% that loss has already occurred don’t lament all day. Figure out how to respond to what happens next
#14 Stock prices move dramatically higher when institutions build positions.Getting in front of that wave is the key to investing success
#15 Watershed events usher in wave of institutional buying
#16 Everything that rises must converge. Be patient and wait to add to successful positions on weakness
#17 Position size is one of the most important aspects of successful investing and trading
#21 If it is so obvious everyone can see it then it is not a good investment. E.g.Buying Home Depot in front of a hurricane
#25 3 Day 3% rule Trends are only broken if they are violated for 3 days or more than 3%. If either if these actions occur it is time to reassess the trend
#27 In a down trend the stock market can have two strong rally days at any time. 2 days means nothing 3 days means a trend change may be developing
#29 Invest ahead of broad institutional acceptance of investment theme. Institutional buying programs are the driver of multi-year asset price appreciation
#30 Don’t talk to me about PE talk about IP
#51 Gap downs offer buying opportunities. Gap ups offer selling opportunities
#55 When SPY is down 1% and QQQ down 2% start looking for Long Day trades to lock in Alpha generated by starting day cash position
#57 Bad news gets bought in a Bull Market and conversely Good news gets sold
#71 Beware of Billionaires offering political advice