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The
Art of Investing or The Science of Destruction Sometimes
your best investments are the ones you don't make. The
destructive character lives from the feeling, not that life is worth
living, I have received numerous emails, now numbering in the 1000’s asking me what is it that helped me become a better trader/investor. I have one simple answer, if you think the answer lies in any one book, you are dreaming. I would go as far as to suggest that you get only one good TA book and throw the rest of your investments books in the toilet. I remember many moons ago when I did exactly that. Half of them I burned, (what an expensive bon fire that was) the others I just dumped I felt too embarrassed to even donate them, least anyone ask how much I spent on that idiotic collection of trash. Why do I tell you this and not just pretend that I was one smart son of a gun all my life, because it would be a lie and one can lie to the world, but one cannot lie to oneself. The biggest tragedy is trying to lie to your self. The other reason is to illustrate to everyone that I view failure as the stepping-stone to success. The only day you can say you have truly lost is the day you give up. Every failure brings us one step closer to success provided that you learn from your mistakes and vow never to repeat them. One of the most important concepts in trading and investing is to understand that investing is way of life and not just means to make money only. If you want to become a better investor, you need to change many of your perceptions. Understand that in order to become a winner, you have to think and believe you are a winner. You have to learn how to love yourself because if you can’t, why the hell should anyone waste time doing something that you have failed miserably in? Most people never plan on how they will spend or enjoy the money they so desperately seek. When they finally get it, they are miserable because they have no clue as to what they should do with it. Remember the saying, be careful what you wish for because it might actually come true. Money is a nightmare if you don’t know what you are going to do with it. After a while those luxury cars, expensive clothes, a lavish house or houses and vacations all lose their luster. The reason you lust for them now is because it is not within your reach. Remember we chase that which is most unattainable and respect that which is attainable the least. Why am I wasting time on this philosophical speech? Simple. I know that many of you will move from 100K range plus into the million range plus before this bull is over (this year 4 of our subscribers moved from the 175K-250K to the million dollar range) But most of you will not be prepared to deal with this new attained wealth. So spend time thinking about what you intend to do with this money. Remember my saying “riches come only to those who seek it” and I will now add this part to it” and poverty to those who chase it.” Desperate people are rewarded only in one way; the little they have is taken away from them so that they can truly understand the meaning of the word desperate. What is the science of destruction? The science of destruction is attempting to always rationalize the market, thinking that you can read a few books and listen to a few intoxicated analysts and viola now you are a top notch trader. The only thing you can look forward to after doing all this is a sharp and swift decapitation. Remember what separates the rich from poor is the obvious money factor. But the unobvious factors are that they are usually in no desperate hurry to seek more money and can take the time to look at things in a cool, cold and calculating manner. So how do we benefit from this? Well if you don’t have the money, the next best thing to do is to emulate their behavioral patterns. The only one of importance is their views on investments. You need to take a relaxed perspective and understand that to the patient man or woman come huge rewards. Patience does not mean waiting 10 years. Patience means not checking your portfolio like a drug addict every day to see if you are up or down. Look at the trend if it is up, stop looking and spend time reading and awakening your mind. The gateway to pleasure and salvation is through your mind; open it and the possibilities are endless. Close it and you will forever wander in a maze of darkness and fear like a mouse searching for a piece of cheese. I could go on this topic forever so I will do this from time to time I will touch on it. Going back to the question as to what helped me become a better investor, I will state this first and foremost. Women are far better investors than men. Notice I said investors and not traders. Women are not crazy like men to go and squander their gains in day trading or taking part in extreme all or nothing plays. They usually take the time to look at investments in detail and then try to go for the ones that have less of a risk. When they do risk money; they do so with money they are prepared to lose. Do all women do this? No they don’t. There are many women out there that invest just as idiotically as most men do. In general women however invest far more wisely then men. Look at my article on our site The Female Investor, to see that my statements have actually been scientifically proven. So rule number 1 if you are not married become friendly with a woman who is involved in some business or if not look for a lady that is much older than yourself and wiser. One of my best advisors is my dear old friend Sister Josephine an 80 year old nun. She does not look her age at all and nor does she act like someone who is 80. She looks and acts like someone who is 60. And at the young age of 80 she decided it was time to learn how to use the Internet and she succeeded with a little help from me. If you are married get your spouse more actively involved in your investments, ask her for her perspective. When you reach a mutual consensus, then do some TA and look at the Mass psychology situation. If all things add up take a position. Spend time learning a bit of mediation and also spend time self-reflecting on yourself. Look at your mistakes and ask yourself questions. What made me do this? Why did I do it? Why did I stay in it for so long? Once you answer them, you are one step closer to never repeating them again. When you can clearly see why you did something you can come up with a plan to make sure you never repeat it. A mistake is not a tragedy if you learnt something from it, however if you made a mistake and it taught you absolutely nothing then you deserve to lose your pants and your shirt the next time round. Spend time looking at different cultures and maybe religions.. I have spent time looking at some of the elements of Buddhism, Hinduism. I even took yoga lessons for a while. I have traveled to Ukraine, stayed in a small village there for 2 weeks with no modern facilities, been to Peru and visited villages where the Indians live the same way they did 1000 years ago, been to the jungles of Africa etc. I have a very diverse group of friends from Russia, Ukraine, Poland, China, India, Taiwan, Singapore, South Korea, Colombia, Ecuador, Peru, Costa Rica, Japan, Ireland, Australia, New Zealand, and Turkey etc. if you don’t have the time to travel then have a diverse group of friends or acquaintances. Get used to looking at the world from a different perspective Spend time reading as much as you can and make sure that it has very little to do with the stock market or investing. Some Authors I like a great deal are Herman Hess ( very old, many people don’t even know who he is anymore). Rollo May a great psychologist, he has written some great books. Some very good books to read are Popular delusions, the lord of the Flies, and the virtues of selfishness. The Coming battle and the creature from Jekyll Island are also great books. All these books are available from our bookstore, once more we are not selling you the books we have just put links to the sites that will sell them to you. http://tacticalinvestor.com/page7.html Spend time understanding that being a contrarian does not mean you look to become a member of a contrarian club, where all of you clap and sing praises. No being a contrarian is viewing things with cold calculating eyes and taking a position against the crowd once the TA and the sentiment indicators are in extreme zones. Example buying Gold stocks from Nov 2002 to approx march 2003. Then taking positions in natural gas stocks and oil service stocks as we did about 1 ½ months ago. Refusing to short the market because every top analyst and his cousin were negative on it. I am using these as examples to show you the thinking behind our positions and also to illustrate to you it is something that you to can learn in time. Remember nothing good ever comes easy or fast. If it does that means it was not worth having in the first place My main point here is to show you the means to expand your mind so nothing seems impossible. Once you expand your mind you then become open minded, when you become open-minded you are more receptive to new ideas. When you are receptive to new ideas, you are able to spot new investment opportunities before the masses even can get a faint whiff of it. The stock market is really a mental asylum, where you have millions of deranged minds trying to make a quick buck. It is your job to be the ultimate psychologist and spot the freaks from the sane. The market is driven by greed and therefore it can never be predicted using rational means. You are dealing with the most irrational animal in the world. “Fellow investors”. As I have stated before you have to learn how to think like a moron but act like a genius with this info. Its only when we descend into the pits of hell that we can truly appreciate the benefits of paradise. Perhaps that is why the stock market was invented, to punish all the greedy foolish individuals out there. One final rule, always be happy when you sell a stock and it goes up, this way you can say hey I gave that chap a chance to make a buck. Look at TIE, Purw, etc they all continue to go up, but we made huge gains on them so I don’t care where they go now. The money we made was redeployed. So always be happy when you sell and it goes up. The masses have still not awoken to the opportunity in natural gas and independent oil exploration and drilling sectors. This represents a great contrarian play. All our positions are up significantly and we will continue to add to them. I am looking at some new plays in this sector, as soon as they give buy I will send out emails. Remember at the Tactical Investor we don’t waste time looking at our portfolio every day. Once a week is usually good enough for us and as we are going for the Jugular Vein. When you go for the Jugular you have to wait patiently for the opportunity and when it comes bite and lock your teeth and do not let go no matter what. Sit and wait and let the rewards come to you. We are getting a ton of emails asking us, when will we add to our positions in Gold. Answer when the Gold sector exposes its jugular vein we will be ready to bite until then we do nothing. We took significant positions earlier this year and late last year so we are in no rush to add more, till our indicators give a new buy. As I have repeatedly mentioned from time to time we do not care what the outside world is saying, who the analyst maybe or how respected he or she is. We only care about one thing. We have to get a bargain and our indicators must say buy, all of them not just 1, or 2 or 3 but all of them. If one of them say’s no, than we do not buy. While we wait for Gold to give a new buy signal we can play the other commodity sectors that are being completely ignored. Our long-term portfolios in Gold are doing very well and we will not add to them till the Gold bugs start getting decapitated. Once you start to witness a massacre in the Gold bug arena than it will be time to take positions. Just remember bugs of any kind almost always get squashed. It is the human tendency to squash a bug and the market will do the same with them. The Internet bugs were vaporized beyond recognition. There is no rush, don’t you think its worth it to wait and sit patiently for 200-300% gains, rather than chase the possibility of small gains and risk 5 times as much. We won’t do that, but if you are eager to jump off a cliff, then there are plethora of advisory services out there who are only to eager to help you lose your hard earned money. We do not engage in momentum trading, or news based trading, or trade because some market guru makes a new prediction or some top brokerage house comes out and starts quacking loudly. In fact we look forward to such opportune moments because we will usually take an opposing position. The Tactical Investor is an organization that keeps in touch with many radical thinkers in all fields, most of which are not even known by the outside world. We subscribe to the principle that everyone is equally mentally handicapped so we do not need to handicap ourselves any further by listening to the most handicapped of them all, the Wall Street analysts. You can down load this Free “Traders Black Book” from my colleague John. www.Infognome.com/FREE.html I’m not the only one out there who has a total lack of respect for those mega salaried smucks. In the coming weeks I will look at the Far East as a new source of power, in particular I will focus on India, it is truly the ultimate wild card. I will also look at the rising power of females and how many people have failed to pay attention to it. Just some small tit bits, for the first time ever last year women purchased more BMW’s then men. Women are the fastest growing group in the individuals entering the 3 million plus money bracket. Women are increasingly entering the stock market in greater numbers; they now constitute 47% of all investors. To bad there is not some female index one can invest in, it makes the ultimate contrarian investment. The only other investment that would be an even better play and has never seen a bear market is idiocy. I feel sorry for the macho and chauvinistic male; he is indeed an endangered species. The Tactical Investor is probably one of the first advisory services to have taken a lead step and recognized the powerful force women as a group represent. I have surrounded myself with as many wise women as possible and I listen to what they have to say with great interest. I don’t always agree, but I do take the time to evaluate their perspectives and many times I end up improving on my original idea. More on this in the future. ©
2003 Sol Palha, Tactical Investor CONTACT
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