Market Wizards Book Wisdom

Good investing is a peculiar balance between the conviction to follow
your ideas and the flexibility to recognize when you have made a mistake.
-Michael
Steinhardt

I advise you to always use stops. I mean actually put them in,
because that commits you to get out at a certain point. Another thing
is that if a position doesn't feel right as soon as you put it on, don't
be embarrassed to change your mind and get right out.
-Michael
Marcus



I think the leading cause of financial disablement is the belief that
you can rely on the experts to help you. Investing requires an intense
personal involvement.
-Michael Marcus

Fundamentalists who say they are not going to pay any
attention to the charts are like a doctor who says he’s not going
to take a patient’s temperature.
-Bruce Kovner

In a bear market, you have to use sharp countertrend rallies to sell.
-Bruce
Kovner



Place your stops at a point that, if reached, will reasonably indicate
that the trade is wrong, not at a point determined primarily by the maximum
dollar amount you are willing to lose.
-Bruce Kovner



The most important rule of investing is to play great defense, not
great offense. Every day I assume every position I have is wrong. Always
question yourself and your ability. Don't ever feel that you are very
good. The second you do, you are dead. Always maintain your sense of confidence,
but keep it in check.
-Paul Tudor Jones

You need discipline, patience, and courage. You must have a
willingness to lose, but a strong desire to win.
-Gary Biefeldt



Investing is like poker. You should only play the good hands, and
drop out of the poor hands, forfeiting the ante.
-Gary Biefeldt



Fundamentals that you read about are typically useless as the market
has already discounted the price.
-I call them "funny-mentals."
However, if you catch on early, before others believe, then you might
have valuable "surprise-a-mentals"”
-Ed Seykota

Pride is a great banana peel—as are hope, fear, and greed. My
biggest slip-ups occurred shortly after I got emotionally involved with
positions.
-Ed Seykota



I tend to cut bad trades as soon as possible, forget them, and then move
on to new opportunities. The elements of good trading are: (1) cutting
losses, (2) cutting losses, and (3) cutting losses. If you follow these
three rules, you may have a chance.
-Ed Seykota



I have a cousin who turned $5,000 into $100,000 in the option market.
One day I asked him, “How did you do it?” He answered, “It
is very easy. I buy an option and if it goes up, I stay in, but if it
goes down, I don't get out until I am at least even.” I told him,
"Look, I trade for a living, and I can tell you that strategy is
just not going to work in the long run." In his next trade he put
his money in Merrill Lynch options, only this time, it goes down, and
down, and down. It wiped him out.
-Larry Hite

If you want to know where a market is going, all you have to do is this.
(He threw his charts on the floor and jumped up on his desk.) Look at
it, it will tell you!
-Jack Boyd as told by Larry Hite



If you diversify, control your risk, and go with the trend, it just has
to work.
-Larry Hite



I used to try to will things to happen. My attitude was that I figured
it out, therefore it can't be wrong. What is the ultimate rationalization
of an investor in a losing position? "I’ll get out when I'm
even." I became a winner when I was able to say, "To hell with
my ego, making money is more important."
-Marty Schwartz

My Marine training helps in investing. They teach you never to freeze
when you are under attack.
-Marty Schwartz

Generals always fight the last war. Portfolio managers always invest
in the last bull market.
-James B. Rogers, Jr.

I have lived through or studied hundreds, possibly even thousands,
of bull and bear markets. In every bull market, whether IBM or oats, the
bulls always seem to come up with reasons why it must go on, and on, and
on. It’s always the same cycle. My mother calls me up and says,
“Buy me XYZ stock.” I ask her, “Why?” “Because
the stock has tripled.” The whole process repeats itself on the
downside.
-James B. Rogers, Jr.

The biggest public fallacy is that the market is always right. The
market is nearly always wrong. I can assure you of that.
-James
B. Rogers, Jr.

Be aware of change. Buy change. You should be willing to buy or
sell anything. So many people say, “I could never buy that kind
of stock.”
-James B. Rogers, Jr.

If you make 50% two years in a row and then lose 50% in the third
year, you would actually be worse off than if you just put your money
in a money market fund. Wait for something to come along that you know
is right. Then take your profit, put it back in the money fund, and just
wait again. You will come out way ahead of everybody else.
-James
B. Rogers, Jr.

The biggest mistake I made was having a specific target of what
I wanted out of an investment. The target should be determined by market
analysis, not by the amount of money you want to make.
-Mark
Weinstein

I don’t lose much on trades, because I wait for the exact
right moment.
-Mark Weinstein

Your strategy has to be flexible enough to change when the environment
changes. The mistake most people make is they keep the same strategy all
the time. They say, “Damn, the market didn’t behave the way
I thought it would.” Why should it? Life and the markets just don’t
work that way.
-Mark Weinstein

I learned that an opinion isn’t worth that much. It is more
important to listen to the market.
-Brian Gelber

Most traders who fail have large egos and can’t admit that
they are wrong. Even those who are willing to admit that they are wrong
early in their career can’t admit it later on! Also, some traders
fail because they are too worried about losing. I’m not afraid to
lose. When you start being afraid to lose, you’re finished.
-Brian
Gelber

The psychological factor for investing has 5 areas. These include
a well-rounded personal life, a positive attitude, the motivation to make
money, lack of conflict [such as psychological hang ups about success],
and responsibility for results.
-Dr. Van K. Tharp (a psychologist
specializing in working with traders)

The composite of a losing trader would be someone who is highly
stressed and has little protection from stress, has a negative outlook
on life and expects the worst, has a lot of conflict in her/her personality,
and blames others when things go wrong. Such a person would not have a
set of rules to guide their behavior and would be more likely to be a
crowd follower. In addition, losing traders tend to be disorganized and
impatient.
-Dr. Van K. Tharp

Many people actually want to lose on a subconscious level.
-Dr.
Van K. Tharp



The realization that you are responsible for your results is the key
to successful investing. Winners know they are responsible for their results;
losers think they are not.
-Dr. Van K. Tharp

Buy Market Wizards now.