This article and excerpt caught my eye
“The [mutual fund] industry sets targets that are far too high and then says, ‘Gee let us help you hit that target — put your money in stocks,’” he says. “It is true that the probability of making your target will go up, but the probability of having a really bad outcome — like losing your principal — will also go up, and so will the fees charged for management.”
Its never about just putting your money in any asset “long only”. Once you decide on the asset class you need a plan for buying and selling before you ever lay one dollar on the table at risk.
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I posted this recently on author Alexander Elder. A response to that came in from a reader
The Turtles, if I read your book correctly, were winnowed down out of about 1000 applicants, and given a two week or whatever intensive tutoring, and watched over like hawks. Most traders, investors, or weekend punters, do not have the advantage of intensive training by the turtle trainers, or by a Warren Buffett , for that matter. Possibly Dr. Elder’s advice is more in tune to the “working man”.
The working man. What a term. What a silly term! If you make too much (whatever that number is exactly) you are no longer working? As for the Turtle view presented above clearly this reader only made it through certain parts of my book “The Complete TurtleTrader”. He only absorbed the parts that buttress the view he wants to have. How can anyone read Chapter 11, 12 and 13 and come to his view?
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People are seduced by the bling and dazzle of pro athletes. I bet the average guy thinks pro athletes are swimming in cash set for life (some think that about all original Turtle traders, but clearly that is not true either!). Not so fast. Consider this excerpt from a recent ESPN article:
Filing for bankruptcy is a long-standing tradition for NBA players, 60% of whom, according to the Toronto Star, are broke five years after they retire. The other 40% deliver the Toronto Star.
Can you believe that? Guys who are paid monster sums of money go broke shortly after their careers end. In a round about way it’s why I always find the “starting capital” question (”How much do I need to start trading mister?”) so silly. Ed Seykota’s answer to that question is still the best. Seykota answers the starting question by asking, “how much money would you need to stop trading?”
It’s never really about how much you have, but rather it is about what you do with the limited capital you do have (and, yes, we all have limited capital).
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New Michael Covel blog can be found here.
I have setup an Online Afterword for "The Complete TurtleTrader" that adds even more detail. These are insights, nuggets, and narrative pieces not in my book, but only presented online.
The first ever film documentary to really analyze investor behavior along with the winners and losers in the market is underway.
