psychology of tippers

(reminiscences of stock operator)



"i sometimes think

that tip-takers are like drunkards.

there are some who can't resist the craving

and always look forward to those jags

which they consider indispensable to their happiness.

it is so easy to open your ears

and let the tip in.

to be told precisely what to do to be happy.

it is not so much greed made blind by eagerness

as it is hope bandaged by the unwillingness to do any thinking."

opening and closing ceremonies

the olympics

start with a opening ceremony

and

end with a closing ceremony.



but bull runs

and bear runs

don't start or end

with any such ceremonies.



in the words of jesse livermore



"market does not culminate

in one grand blaze of glory.

neither does it end

with a sudden reversal of form.

a market can and does often cease to be a bull market

long before prices generally begin to break."



why does this happen?



this particularly suits the oeprators.

any sharp start

or end

would rob them of the opportunity

to distribute and accumulate.

not a friend in need

"what does a man do

when he sets out to make the stock market

pay for a sudden need?

......he merely hopes.

.....he gambles.

he, therefore, runs much greater risks

than he would

if he were speculating intelligently,

in accordance with opinions or beliefs

logically arrived at

after a dispassionate study of underlying conditions.



to begin with,

he is after an immediate profit.

he cannot afford to wait.

the market must be nice to him at once, if at all.

he flatters himself............

.............it certainly is no way to trade. "



- reminiscences of a stock operator

die early, die rich!

recently

i came across a phrase

which initially disturbed me.

"trader who died rich

is the one who dies early."

even livermore died broke!

--

what's the logic behind the above
seemingly un-nerving phrase?

should we not trade?

is trading useless?

i don't think so.

i searched for a suitable answer.

and after some deliberation

i found one.....

---------

if one makes millions from trading

and keeps trading like jesse livermore

he is bound to succumb to

some unguarded moment

and lose it all.

but

on the other hand

if a successful trader

after making millions

was to turn into an investor

he is assured of dying rich

(if at all he ever dies).

never buy too cheap too easily

while going thru

"reminiscences of a stock operator"

i came across a line

"i don't buy any stock too cheap too easily".

i was surprised!

i tried but couldn't digest it.

how can someone say no to buying something too cheap and too easily?

the more i tried to understand the reason behind this

the more it eluded me!

had the statement come from a modern-day business-channel expert

i would have moved on long ago.

but since it came from

"boy plunger"

after traversing some 100 years

i was desperate to get behind the veil of the statement.

i kept wrestling with the question

and finally cracked it.

--

why do we buy a stock?

so that it goes up

and we finally sell it at a higher price

and make profit.

--

what livermore wanted to say was

that till the falling stock actually stopped falling

consolidated

and started to climb again

there was little chance that it wouldn't fall more!

and hence, no point buying it.

and when it finally showed strength

and started to move up

it would be a worth buying.

but by then

it wouldn't be at its cheapest price

besides being less comforting a buy

than when at its lowest!

--------

to quote livermore further

"stocks are never too high to buy or too low to sell."

and

"it is surprising

how many experienced traders there are

who look incredulous

when i tell them

that when i buy stocks for a rise

i like to pay top prices

and when i sell i must sell low or

not at all."

fed-up with trading mistakes?

fed-up with trading mistakes?

read this

"if a (trader) is both wise and lucky,
he will not make the same mistake twice.
but he will make
any one of the
ten thousand brothers or cousins
of the original (mistake).

the mistake family
is so large
that there is always one of them around........."

- reminiscences of a stock operator

----------

forget about unintentional mistakes

just like

great tennis players forget about

unforced errors.

even champions tennis stars can't eliminate unforced errors

just like champion traders can't eliminate mistakes.

focus, instead,

on forced winners

and triumph!

thank god, they are not like traders!

have you ever tasted
himachal apples?

juicy, crisp, tasty!!!

it is july
and by the end of this month
first batches of apples
will start arriving in the markets.

the other day
i was wondering
what would happen
if apple orchardists
behaved like amatuer stock traders?

let me explain.

flowers appear on apple trees
by april end.
gradually
buds pop out of these flowers
and start growing into apples.

during this four month journey
from flowering to full grown apples
there is always a danger of the tiny fruits
getting knocked down
by hail storms.

on an average
four to five serious hailstorms come
in these four months.

everytime
it appears
that the upcoming fruits will be destroyed by the hail bullets
and yet
almost always
they survive
and finally grow into
red or golden balls of juice
having weathered many a storms!

i wonder
what would happen
if out of fear of hailstorms (corrections amidst secular trends)
the orchardists
like amateur traders under panic
were to pluck (square-off)
all their apples
while they were still
of size less than lemons!

they would obviously be left with
apples fit only for
pickles!