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Wednesday, 11 September 2013

Mind, Money, and Method - Part 1

Once upon a time, when I was in the monkey see; monkey do mode of trading (come on, we all start out that way!), I noticed a funny thing.

I own similar stocks as the person I am mimicking, but the results are not the same. Why?

One day, I chanced upon this excellent book by Alexander Elder: Trading for a living.

Ah! It's the 3 Ms:

Mind

Money
 
Method


For those who have watched the movie Crouching Tiger, Hidden Dragon (卧虎藏龙), you may recall the shock and anguish the Emerald-eyed fox had when she discovered she has only copied the strokes of the Wudang swordplay manual (due to her illiteracy) while her disciple has learnt the breathing techniques (心法).

Most beginners in investing also fall into this trap. Focusing only on finding the "right" method. Often having intellectual debates for the sake of it. 

Fundamental investing is better! 

No! Income investing better! 

You both wrong! Technical charting is the  way to go!

Wrong wrong wrong! Passive dollar cost average works best!

Blah, blah, blah...


Method is important. You don't want to bring a knife to a gun fight!

But it's still merely a tool. A bit like debating whether bows and arrows are more superior than swords and sabres. It depends on whether you prefer ranged (long term) or melee (short term) combat.

I'll not talk about method. There are lots of resources and literature out there. You choose your own poison.

Sharing my own poison won't help either. You are you; you are not me. And I not you.

In the next 2 posts, I will discuss more on Money and Mind.


Before throwing rocks at me for wasting your time on this post, you may want to spend sometime reflecting how you "stumbled" or "chose" your existing method?

Was it something you actively experimented and found, or was it more a case of monkey see; monkey do?


 


26 comments:

  1. Many people follow the strategies of Benjamin Graham, Warren Buffett, Soros and other renowned investment gurus in order to find success. There is no one right method. Once you have found the right method then stick to it. Anyhow "hantam" - now, is that a method you can use in investing or trading. Possibly yes, if one have tested it out and have been successful all the times using the "hantam" method even though it will definitely raise many eyebrows.

    ReplyDelete
    Replies
    1. Money Honey,

      Hantam bola works!

      I've seen it in practice when I spent my off days many moons ago at Philips retail trading arcade at Raffles Place (now no more liao).

      There was this uncle around 50s who every morning play the top 30 volume stocks. Zero in on the high momentum stock of the day - quick in; quick out.

      When I asked him what company is that? He says no clue?

      Took me quite sometime to understand he is trading a ticker symbol; not a company's stock.

      I tried his method. Made a mess of myself!

      Now I know one method not suitable for me.

      LOL!

      Delete
  2. Method? What method?
    The one that usually makes money for you is the method.

    ReplyDelete
    Replies
    1. temperament,

      Exactly! That's why I don't have to talk about Method. Even newbies can out argue me here ;)

      Just thought it might help to share some trading techniques to those who only so far have only worked with "investing" concepts.

      Delete
    2. Method?

      Anyone who got $X,XXX can buy "proven" method.

      Clueless?

      Google for trading blog

      Delete
    3. CW,

      And that's why I "pass" on method ;)

      It appears "important" as like you say, people are willing to part with $x,xxx to get their hands on it.

      Method is the "easiest" to acquire. Be it free (from library books or internet or sharing from friends), or paid for in the form of classes or seminars.

      But then why do majority of retail investors lose money in equities (yes, unrealised loss is a loss)?

      That's where Mind and Money comes in.

      We can buy knowledge; but we can't buy wisdom.

      Delete
  3. method in trading is like the different style of "kongfu", you got what, many thousand upon thousand of style or group or club or clan.

    can all be use in fighting, ofcos can. who is the best style? you go and figure out yourself.

    ReplyDelete
    Replies
    1. thats why i love bruce lee, as long as it is useful, which all are, use it!

      Delete
    2. coconut,

      And that's part of the problem. For a newbie, with so many kung fu out there, how to choose the "right" method for us?

      Lucky are those fellows who found the "right" method from day 1.

      It took me a few lost years in the desert before I found my own "voice".

      Delete
    3. where got right method one?

      you got 2 hands, so as the opponent. you got 2 legs, so as the opponent.

      you learn when you are 20 earliest, the opponent has been here since before you were born, before everyone were born, how to win!!??

      "you can't beat the market" should be the correct attitude being a trader. you can't beat/win it but doesn't meaning you can't profit from it, there is a world of different between winning and profiting.

      Delete
    4. i wonder why i'm so into the origin!

      http://www.youtube.com/watch?v=Mf_wCAkhZ30

      wow so original, i love it! oh don't show me the tersa teng again, i have enough already haha.

      Delete
    5. coconut,

      Words of wisdom indeed:

      I can't beat the market; that doesn't mean I can't profit from it.

      We agree to disagree on Teresa Teng ;)

      Delete
    6. my favorate female chinese artist is this one actually, fall in love with her since young haha.

      http://www.youtube.com/watch?v=OCPcu0PjFMY

      shes the best, next to 周璇 ofcos!

      Delete
    7. coconut,

      You are one generation above me :)

      Delete
  4. Hi SMOL

    People sometimes called me speculator while some called me an investor. To me, as long as I meet my objective at the end of day, I am fine with either methods if investing.

    I don't mind bringing a knife to a gun fight too if that makes me a winner :)

    ReplyDelete
    Replies
    1. B,

      You practical kind! I like!

      Colour blind good. Don't care whether the cat is white or black.

      I think you have watched too many kung-fu movies liao... It's never wise to bring a knife to a gun fight!!!



      Delete
    2. Bring knife to a gun fight?

      You are likely drop dead few feet before reaching your enemy.

      LOL!

      Delete
    3. hey, you know why in the past, officer/commanders carry sword (not knife) instead of rifle? so who say you can't carry a knife to a battle?

      the officer job is not to shoot the enemy, their job is to command the troops.

      and the generals only carry binoculars to the battle field!



      Delete
    4. coconut,

      You are so right!

      Like I say, never bring a knife to a gun fight.

      The officers and commanders are not fighting, they are "directing" the fight ;)

      Delete
    5. must bring! thats why we were issue bannet in SAF.

      cos just in case you forgotten to bring bullets!

      Delete
    6. know why we are all "hanging" around?

      Delete
    7. cos we are waiting for your next post! i got my cannon standby haha

      Delete
    8. coconut,

      Shoot away!

      Many readers have already commented the comments are more interesting than my posts :( and LOL!

      A 2 way exchange is much more fun!

      Cannot hit below the belt and don't touch the face. Anywhere else is game on!

      Delete
  5. Hi SMOL,

    A few years back, I read Alexander Elder's Trading for a living too! My bro 'forced' me to read cos he thought I was out of my Mind doing what I did! LOL~

    We still argue quite a bit over my risk management and he cannot comprehend my 'buay kia see' attitude. There are things that are hard to explain to others. Super like what you said! You not me and I not you! End of the day, we must learn to understand ourselves and our motivations. $$ KPI is but a number. What can be measured may not count and what may count cannot be measured! Ya right, great excuse to feed my gambling instincts to hamtum big time! Hahaha.

    No no no, I'm a lot more measured these days. Still need to live to fight another day. :D

    ReplyDelete
    Replies
    1. Endrene,

      Whatever makes a girl happy! And no one should stand in the way ;)

      We all take what we want from the markets.

      The Mind is part 3. Shh...

      Delete
    2. When is Part 2? Part 3 so far. :-)

      Delete

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