On the psychology of trading:
Most market participants are looking for instant gratification and a 100% success rate. When they lose money a few times in a row, they just jump on the next “big” thing; never spending enough time to specialize in one particular setup.
- Ivanhoff Capital
there's a big difference between understanding how experts think and being able to think like an expert
- Jonah Lehrer Author of How We Decide
On the popularity of investing via index funds and ETFs:
You may be wondering how the Russell 3000 index can have an overall positive rate of return if the average annualized return for all stocks is negative. The answer is mostly a function of the index construction methodology [...] capitalization weighted indexation is like a simple trend-following system that rewards success and punishes failure.
- Eric Crittenden and Cole Wilcox (Blackstar Funds) The Capitalism Distribution p. 3
The paradox of efficient markets is that if every investor believed a market was efficient, then the market would not be efficient because no one would analyze securities. In effect, efficient markets depend on market participants who believe the market is inefficient and trade securities in an attempt to outperform the market.
- www.investorhome.com/emh.htm
On forecasting versus listening to the message of a stock or stock-market:
Question to Darvas: Would it be at all possible for you to keep in touch with me, giving me your opinion on 'hot stocks' from time to time?
Darvas Replies: [...] A sudden splurge of a stock can be due to many circumstances. Therefore, the question should be rephrased, "How long will a stock be 'hot'?" And that, no one can answer.
- Nicolas Darvas in How I made $2 Million in the Stock Market p.179
Your attitude is more of a gambler's than of a man who is concerned strictly with money-making. My experience is that the less you jump in and out and try to find sophisticated gambling refinements and short-term advantages, the better your chances to make money.
I also learned to stay out of bear markets unless my stocks remain in their boxes or advance.
Although I congratulate you on the success of your "predictions," I believe in analysis and not forecasting.
- Nicolas Darvas in How I made $2 Million in the Stock Market p.185
Question to Darvas: Would you please be so kind as to suggest to me the real champions, not the sprinters for the short dash, and a hint as to when to get rid of them? Any suggestions and help you can offer will be greatly appreciated.
Darvas Answers: Anyone giving you a 'real champion' is guessing. A stock is a 'real champion' as long as it behaves like one.
- Nicolas Darvas in How I made $2 Million in the Stock Market p.186
To make money trading, you do not need to forecast the future. You have to extract information from the market and find out whether bulls or bears are in control. You need to measure the strength of the dominant market group and decide how likely the current trend is to continue. You need to practice conservative money management aimed at long-term survival and profit accumulation. You must observe how your mind works and avoid slipping into greed and fear. A trader who does all of this will succeed more than any forecaster.
- Alexander Elder in Trading for a living: psychology, trading tactics, money management p.67
On trend-trading in stocks:
Trend trading means retaining your initial position through thick and thin. You are fishing for very big fish, and you need plenty of room. One of the reasons so few people make big money from big trends is that they become anxious and hyperactive and forget to hang on.
- Alexander Elder in Trading for a living: psychology, trading tactics, money management p.191
On trading with a plan:
An exit plan must be identified for every investment before the investment is made. This plan should cover all possible outcomes of the trade, both profit and loss.
- Braden Glett in Five Minute Investing
You could make your investing life as complicated as you want it to be, but the degree of complexity is not positively correlated with market returns.
-Ivanhoff Capital
On fundamental analysis:
In the vast majority of cases, a basic rule does apply, and this is: progressing earning growth sooner or later shows up in advancing prices. Yet, sometimes the market overlooks all other aspects but the current fad.
- Nicolas Darvas in How I made $2 Million in the Stock Market p.181
Prices don’t change when fundamentals change. Prices change when expectations and perceptions change.-Ivanhoff Capital
On patience:
Stocks are like taxis, another one will come along in five minutes
- Joe at upsidetrader.com
The stock market is an opportunity machine
- Ivanhoff Capital
On money:
Money is like alcohol. It makes you more of what you are. If you're an asshole, it makes you a bigger asshole
- Jordan Belfort
