Tuesday, January 1, 2013

Break Your Own Rules

Looking for some inspiration on this First day of 2013 and came across this docmentary posted by another blogger ASSI. Warren Buffett made his Billions without a computer nor a calculator, sit in his office reading whole day, yet make consistent returns of 20% since 1965.



Is it easy to make 20% a year?  It's possible.  How many can be consistent year after year?  Probably only the top 1% of the traders can do it. What make Warren great?   It's the size of the funds he managed.

Warren is a investor, not a speculator or a trader like what most of us call ourselves, and admit it, for those 90% who are losing money, you are simply just a gambler!

What's the risk to make that 20% return a year?  Warren buy into a bussiness and own part of the businness with no leveraging and tell us not to get into debt.  He hold onto his investments for years.  He considers Derivatives trading as weapons of mass destruction.  He buys into value and his risk is low compared to traders like us.

We may not be able to follow what he is doing because we don't have the resources, we can't compare ourselves to Warren but we can learn from him. He want us to think independently, to allocate Capital efficiently and sometimes just have to break our own rules.

For that, I am going to try for 20% return this year, but I must admit my risk is definitely very much higher.

 

20 comments:

coconut said...

"The first principle of peak performance is to put fun and passion first. Get the performance pressures out of your head. Forget about statistics, percentage returns, win/loss ratios, etc. Floor-traders scratch dozens of trades during the course of a day, but all that matters is whether they’re up at the end of the month.

Don’t think about TRYING to win the game!"

by Linda Bradford Raschke (hey i like this guy (or lady?)).

coconut said...

"The second principle of peak performance is confidence. in yourself, your methodology, and your ability to succeed...and Self-confidence comes from developing a methodology that YOU believe in."

also by Linda Bradford Raschke.

coconut said...

"The third important ingredient for achieving peak performance is attitude. Attitude is how you deal with the inevitable adverse situations that occur in the markets (drawdown or losses)

again by Linda Bradford Raschke.

coconut said...

someone better change his perception and attitude fast!

happy new year fat and everyone else.

coconut said...

oh what the hell? read the whole article haha,

http://www.traderslog.com/Mental-Aspect-of-Trading.htm

coconut said...

success in trading is not necessary means winning big.

in december, i made the lowest profit for the entire year (excluding one losing month) but profit nontheless. consider the market is going against me most of the time, i keep cutting and putting my shorts out again and take profit on the long to cover the shorts.

i think its the best month (not in terms of monetary gain) for me so far despite making very little. i really do.

Fat88Trader said...

Have been very busy spending time renovating my new house. Maid request to go back home because son is very sick. Mind is blank to concentrate on trading or writing.

Peak Performance? Haha, I am far away from it now. Mind is not settle and so can't focus, just watching the market going up and down and not doing anything.

coconut said...

wow new house! must be spending a lot on renovation. haha if i'm buying a house or apt, i will look for those live in condition with minimum alteration. safe money and time.

my bro (the one who is a remiser) spend almost 600,000 renovation on his semi, what a con-cum! and during the period of renovation about 6 months, he was staying in my house, what a nusen haha.

coconut said...

actually i recall you did have a good last month making some money, i'm very surprise you did not capitalise them, meaning keep on going.

like a good golf swing, its very difficult to start from a static, cold position, but once you get going, you shouldn't just stop! you lost all the momentum.

remember the good old days on the floor? once you start, you can't stop isn't it? i think its should be the same.

coconut said...

wah lan! same goes to my blogging as well, can't stop already haha.

Fat88Trader said...

Hahaha, probably the 600k renovation sponsored by you.

Going through some of my stock trading records over the years and realised that I have contributed so much comm to SGX, especially those days when my comm was 1%, my goodness. I must be crazy then trading those type of size and the risk I have taken, it's more like gambling to me now.

I am not rushing into any trade for the moment and just patiently waiting and planning more travelling this year.

Just keeping my stock portfolio for some passive dividend income to get me through.

coconut said...

in deed in deed, thats why i never shy of going to his house and chipping some grass off the turf, practicing my chipping haha.

anyway, the renovation was done years ago before i get into stocks trading. my "contribution" comes later haha.

coconut said...

one thing i learned from stock trading since the crises is that i should never mix investing with trading.

i started with investing in mind, ended up trading around them. its fine if we have a bull market but very different in a bear market or correction.

i never good in investing, be it properties or stocks even i don't really lost money in them.

currently all blogs i encounter are investing, none really forcast on trading professionally. i got suck into it as well.

now i'm clear, do what i do best, trading. i don't care about yield or dividends or returns, i only care about my trading performance. if i can't make money in trading for a prolong period of time, i will consider put my money into investment.

coconut said...

last month was my best performance so far and the lowest profit so far haha. can't immagin some one would agree.

i'm holding a net short in the market and it charging at me all month long and it didn't get me at all, thats a big win for me.

oh yes, the comms was probably the highest in that month too haha.

coconut said...

in fact i shouldn't be bother whether i make money last month or not. if its a losing month, as long as the losses is small and managable, its still the same.

i knew what the market does, i knew where are all my positions, and most of all, i knew where my equity came from and where it is likely to go, i already knew whether i'm performing well or not.

not losing in the month is just a phycology win thats all.

coconut said...

but the most important thing that happen last month was i finally, finally agree to let my dentist do what she need to do to my teeth.

its a loss that i hold almost my entire life, now that i finally ready to cut the big lost.

half of them need to be extracted and i will be putting implants to fill up the gaps.

estimated cost 50k - 60k! but its a big "win" for me too, a very phycology one haha.

coconut said...

haha what a shame.

Fat88Trader said...

I just don't know how you manage with those bad teeth all these years, amazing.

Yes some people are good in trading and some investing, as long as both can make money, it's fine.

As a short term trader before, the opportunity to make big money now trading short term is over.

A new trader's chances of succeeding in short term trading is almost zero.

coconut said...

yes i agree, got to go for longer term trading.

oh bad teeth. thats very easy, no need to manage hahaha.

knn, i'm so afraid to go to the dentist that i never did until i have problem eating properly recently, my daugther had to escort me to the dentist and stay with me the whole time, really!

its really the biggest failure in my life, beside trading. really shameful to disclose haha.

coconut said...

oh by the way, i had chosen to put me to sleep while the dentist do his stuff on me. more like an operation done in a hospital.

thats why it cost so expensive plus the implants.

don't ask me haha, its much much easier for me to be kill trying to catch a falling knife then go to the dentist.