50 Unfortunate truths about investing
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50 Unfortunate truths about investing
Posted by Vols&Shaft83 on 3/11 at 3:18 pm
Original posted on The Motley Fool by Morgan Housel

LINK


A few favorites:

quote:

Not a single person in the world knows what the market will do in the short run. End of story.


quote:

Most of what is taught about investing in school is theoretical nonsense. There are very few rich professors.


quote:

Trust no one who is on CNBC more than twice a week.


quote:

The real interest rate on 20-year Treasuries is negative, and investors are plowing money into them. Fear can be a much stronger force than arithmetic.



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Posted by GoCrazyAuburn on 3/11 at 4:31 pm to Vols&Shaft83
Those are pretty good. Love the cnbc one.


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Posted by LSU0358 on 3/11 at 4:32 pm to Vols&Shaft83
27. When someone mentions charts, moving averages, head-and-shoulders patterns, or resistance levels, walk away.

Got to call bull s*** on this one. Technicals are very valuable tools. Should they be the only tools used? No, but they are still very important.

Let me add that the longer term a chart is, the better it is to make decisions off of. Trading from short term charts (1 min, 5 min, 10 min, hourly, and even daily) without using long term (weekly, monthly, and yearly) will cause lots of pain.


This post was edited on 3/11 at 4:36 pm

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Posted by LSU0358 on 3/11 at 4:37 pm to GoCrazyAuburn
quote:

Love the cnbc one.


I do as well. They have some guys on that are very good...but they aren't on that often.



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Posted by Fat Bastard on 3/11 at 4:38 pm to LSU0358
quote:

Got to call bull s*** on this one. Technicals are very valuable tools. Should they be the only tools used? No, but they are still very important.




agreed 100%. Dude has never clearly traded commodities successfully if he thinks those indicators are BS. not to mention 1-2-3 tops and bottoms. double supports and triple resistances also are indicators.



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Posted by LSU0358 on 3/11 at 4:39 pm to Fat Bastard
quote:

has never clearly traded commodities successfully


Agree. Commodities are what I've learned on.

The 50 rules does leave out the most important tool to succesful investing/trading: Risk Managment!



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Posted by Fat Bastard on 3/11 at 4:44 pm to LSU0358
quote:

The 50 rules does leave out the most important tool to succesful investing/trading: Risk Managment!





yep and you need it in the futures markets for damn sure. trading individual stocks is boring to me. commodities is so much more exciting!



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Posted by Vols&Shaft83 on 3/11 at 4:49 pm to Fat Bastard
quote:

agreed 100%. Dude has never clearly traded commodities successfully if he thinks those indicators are BS. not to mention 1-2-3 tops and bottoms. double supports and triple resistances also are indicators.



Housel is certainly not a commodities trader. He's very much a Buffetologist, likes funds, and undervalued stocks. I tend to agree with you guys on this, although I wouldn't recommend the average Joe play in the commodities arena, which I think Morgan intended this article for.



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Posted by Vols&Shaft83 on 3/11 at 4:51 pm to Fat Bastard
quote:

yep and you need it in the futures markets for damn sure. trading individual stocks is boring to me. commodities is so much more exciting!



Lol, I'm sure you wouldn't encourage a casual investor to play with futures, I sure as frick wouldn't. I'd sooner recommend bitcoins



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Posted by foshizzle on 3/11 at 5:01 pm to Fat Bastard
quote:

trading individual stocks is boring to me. commodities is so much more exciting!


If you're doing it for the excitement your bankroll is in trouble.



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Posted by LSU0358 on 3/11 at 5:40 pm to foshizzle
quote:

If you're doing it for the excitement your bankroll is in trouble.


Agree. A guy I'm trying to help has the mental ability/phychological ability to be a good trader/investor, but he sometimes views it to much as a trip to the casino.


This post was edited on 3/11 at 6:02 pm

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Posted by slackster on 3/11 at 6:32 pm to LSU0358
quote:

27. When someone mentions charts, moving averages, head-and-shoulders patterns, or resistance levels, walk away. Got to call bull s*** on this one. Technicals are very valuable tools. Should they be the only tools used? No, but they are still very important.


Technicals are a self fulfilling prophecy. They work for no other than the fact that people expect them to work. The basis for technical analysis is absurd IMO, but it's been around for so long that people who use it have poisoned/influenced their own data.



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Posted by Lsut81 on 3/11 at 6:37 pm to Vols&Shaft83
quote:

bitcoins



But not unicorn farts



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Posted by OFWHAP on 3/11 at 7:05 pm to slackster
quote:

Technicals are a self fulfilling prophecy. They work for no other than the fact that people expect them to work. The basis for technical analysis is absurd IMO, but it's been around for so long that people who use it have poisoned/influenced their own data.



But if they (technicals) work, then they work. It doesn't matter why. If other investors/traders swear by technical analysis, then it's a legitimate factor to take into account when making decisions to invest/trade in the capital markets. In essence our entire economy is based off future expectations. If you expect higher inflation in the future, you raise prices today, making that expected inflation a reality.

If you were a fund manager back in the late 90s during the Dot-Com Bubble who had stayed out of the tech stocks knowing that they lacked value, you would have still likely had to close your fund because your investors would have closed their accounts to invest with fund managers who chose to put money into dot-com ventures.

The gist of what I'm trying to say is that the markets are not rational. Pivot levels, head-and-shoulders, etc. shouldn't exist (but they do). Anomalies, such as the January Effect, 3COM/Palm spin-off, and earnings drift shouldn't occur (but they still do). Don't bash technicals just because you think they shouldn't exist.




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Posted by LSUcam on 3/11 at 7:59 pm to Vols&Shaft83
I read this a while back. I have it posted at work. I'm super lame.


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Posted by LSUcam on 3/11 at 8:00 pm to Vols&Shaft83
I read this a while back. I have it posted at work. I'm super lame.


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Posted by Vols&Shaft83 on 3/11 at 8:04 pm to LSUcam
quote:

I read this a while back. I have it posted at work. I'm super lame.



quote:

I read this a while back. I have it posted at work. I'm super lame.



You can say that again


This post was edited on 3/11 at 8:05 pm

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Posted by LSUcam on 3/11 at 8:06 pm to Vols&Shaft83
I just wanted to make sure my point came clearly across.


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Posted by Bayou Tiger on 3/11 at 8:53 pm to Vols&Shaft83
The following are a great starting points for most people.
quote:

For most, finding ways to save more money is more important than finding great investments.
quote:

If you have credit card debt and are thinking about investing in anything, stop. You will never beat 30% annual interest.
quote:

For many, a house is a large liability masquerading as a safe asset.
quote:

And what Marty Whitman says about information: "Rarely do more than three or four variables really count. Everything else is noise."



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Posted by Fat Bastard on 3/11 at 9:03 pm to Vols&Shaft83
quote:

Lol, I'm sure you wouldn't encourage a casual investor to play with futures


no, of course not learn how to trade them first. But they are not the taboo so many make them out to be.



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