The Truth of the Market

Thought I am able to maintain a poise and balance emotion even disturbance set it, but some phone calls which are highly charged with emotion motivate me to write an article on the truth of the market. When people started to observe the market so closely, they tend to become over-excited or being scared out of the wits despite only small changes in the KLCI. Over-sensitive leads to over-reaction, and often, leads to wrong judgment.

Truth #1: There are three possible direction of the market, up, down or sideways.

Truth #2: Success is nothing to do with the market itself. Success is solely depends on how you play with the market. The market always moves up or down, but how you interpret it is another matter. Life is, 10% what happen to you and 90% how you react to it. This is so true with the market.

Truth #3: Emotion is inversely proportionate to your trading success. Once emotion set in, you become consistently inconsistent, and soon, being defeated systematically due to unsystematic error.

Truth #4: No body able to catch the tops, although our emotions keep telling us that we had done it before.

Truth #5: The only way to distribute is to distribute when the trend is up. When the trend changes are obvious to everyone else, you don’t stand any chance to do it.

Truth #6: In a bull market, stock is equal sex; in a bear market, stock is equal to shit.

Truth #7: Safety first, makes money later.

Truth #8: 暴利马上套；小损立刻斩。

Truth #9: Whatever heck, when you are uncertain, get out!

Truth #10: Diversification diverse your concentration, and ultimately, you “die” and “worse”.

Footnotes: Diversification is a strategy only for institutional funds, not for individual investors. Many academicians who never play stock themselves could be insisting that diversification is beneficial; never bother to talk with them, they are just dreaming in their own mathematical and statistical world.