Friday, November 25, 2011

Gambling Mindset

Book title : A guide to investing during bull and bear markets by Dr Othman Yong

This is one good book I trasured and still placed it on my office-table ... as a good reading material. Yes, I have more investing-trading books than Math books now. I will recommend any novices and newbies to buy this simple book for reading. If you benefit from the books recommended here, let me know. Share that with others. Buy a few of them ... and give that as a gift to someone you knew that he/she in markets. Chances are he/she is still losing money. Let him/her knows WHY losing money is a part of the mental-game.

Chapter 22 : Rumour and Speculation(page 130)

Many small investors are always prone to rumours. They seem to place much emphasis on rumours. They tend to forget to give some thought to the idea of 'intrinsic value' of stocks since they are of the opinion that the stock market is similar to a gambling place. As the result, they succumb to the lure of sudden riches from speculating in the stock market.

"An average person on the street might get lured to the stock market after seeing his neighbour suddenly driving a brand new two-door luxury sports car one day. He begins to ask his neighbour about some stocks that would make a kill. His other neighbours are also interested in doing the same. They all scramble to contact their stockbrokers. Often, by the time the slow-acting neighbours enter stock market, it might be too late. The market could have peaked, and short-term wanting-to-get-rich-quick neighbour speculators are forced into becoming very long-term investors. That is because the stock market game is a game that often, like many other games, involves proper TIMING, the winner buys at a low price and sells when it is high. On the contrary, the loser buys when it is high and refuses to sell when the prices are coming down.


Livermore's advice can be re-written as the following simple rules :

1. You should always limit your losses to only small ones.

2. You should limit your trading activities to only four or five times a year.

3. Do not be in stock market when the market see-saws under the influence of unknown forces, especially if you are an amateur.

4. You should understand that the stock market mirrors the economic situation, and thus cause and effect run from economy to the stock market and not vice versa.

5. Do not try to enrich yourself quickly from stock market investment; exercise patience and be willing to wait for two or three years rather than two or three months.

With the above excerpt, and wise words ... I do hope that those going into forums to yak-yak realise that they are wasting precious TIME where they could actually learn. For those paying to get tips ... hope you will survive another day of senseless speculating and punting.

While it is FUN to be in a group that speaks your 'language', they are harmful to your future progress(if you ever think of being in markets for long). It is about time to say 'no'. It is about time that you get REAL and have a check on your gambling-emotions.

If only stock-market investing/trading is so simple ... subscribe to a tips-giving forum, they will tell you buy XXX at one level and sell after huge profits. If only they is such system ... you and me ... and everybody do not need to work and just punt into get-rich counters. Yeah right ... are you sure you are educated enough to use your common sense?

Buy a 'jade', place on your forehead ... stick a "SERAI" or "PANDAN" leaves on your ears ... then with a magical charm, the stock you bought will shoot high. Believe me, I done that ... it works well. Good luck

11.01 am : KLCI down 13 points. You need to consider how KLCI was artificially pump-up yesterday la. Taking that 10 points away, KLCI is still resilient!!

Muhibah : Reversal seen ... are you in peace and harmony?

TDM : Flying to new high ... TSH testing RM4 level again.

Glove-Rubber : Supermax and Latexx ... showing signs of reversal again ... TopGlove at 4.25.

3.30 pm : Just came back ...

Glove-stocks occupying my top-winner spots as KLCI down by 15 points while HSI down another 200 points. I will like to post HSI chart for days now. May be tonight will be good to bring it up for my cohort-1-2 to analyse the chart ... while using HSBC to discuss(as I am eyeing to buy soon).

Malton-wb : Short-trip ... bought 0.335 and cleared 0.350 today.

Mudajaya : Doing ok at 2.24 level.

TSH : Done at 3.84 moments ago. It tested RM4 level again today.

DiGi : AT 3.54 .... will retrace further from here? When to collect?

MHB and MISC : The 'bad news' about MISC exiting shipping container is out ... I see that as good for the company. Why would MHB down 5% then?

5.05 pm : KLCI down 16.44 points. Cool ...
AMMB : At 5.64, back to 5.51 ... my cost price this morning!!

BJToto : Went down to 4.11, closed at 4.16.

As of today, AMMB is ahead of BJToto. Yeah ... it is like a race. I was thinking of AMMB at 5.50 or BJToto at 4.10 ... and opted for a faster AMMB.



Anthony Law said...

Hi. Thanks for your daily sharing. You wrote about walton-wb today. How much do you actually make? Couple of hundreds? Tell us more. Is day trading your preference?

CP said...


Malton-wb? Earn just enough for my dinners.

day-trading is NOT my preference but this is a volatile market. I do not want to be overly exposed.

I do have AMMB and MudaJaya ... which I dont think so I will do contra.

But the profits from Malton-wb could cover my mistakes in my BJCorp cut-loss.

That is all.


Remnant 888 said...

You're absolutely right to say our market is pumped up.. held up by the invisible magic hand..

Remember the "pump and dump" strategy by syndicates..?

Happy trading in this volatile market...