How To View Stock Market Formulas Professionally
Topics: stocks, stock market, stock trading
A famous Wall Street story concerns a young man who was in the early stages of learning to be a professional speculator. He had a problem, so he went for advice to an elderly sage noted for his shrewd investment judgment. The fact was, the young man said, that he had taken on quite an extensive line of stocks, but the market looked high – maybe too high – he thought possibly his position carried with it too many risks, and wondered if he shouldn’t perhaps sell. He was so worried about this, he said, that he couldn’t sleep nights.
The old man’s counsel was simple and direct: “Sell,” he said. “Sell back to the sleeping point.”
Although there is no doubt that this advice smacks of imprecision, there is a good bit of wisdom in it. We may fairly assume that neither the young man nor his adviser knew for sure which way the market was going, but both were aware that the market was sufficiently shaky to cause legitimate worry. Translated into somewhat more orthodox investment terms, the advice meant: “Sell enough of your stocks so that a market collapse won’t destroy you, but keep enough so that if your fears turn out to be groundless, and the market rises, you’ll still profit to some extent; in the meantime, get some sleep.”
At first glance, it may seem cynical on the old man’s part not to outline for his protege an exact and detailed course of action. But he could not honestly guarantee that he knew exactly what action might turn out to be best. Furthermore, the young man didn’t want someone to tell him precisely what to do. All he wanted was some help in easing the pressure at a critical point, and the help he got seems eminently sensible.
In a real sense, the investment formulas are designed to help you in the same way that the old man’s advice helped his young friend – they inject an element of caution in your investing when caution seems advisable, they reduce the provision for caution when risks seem relatively low, and permit you to benefit from rising prices for common stocks. Moreover, once you incorporate a formula into your investment program, it works more or less automatically, thus allowing you to sleep nights in the knowledge that you are continuously hedging against various possibilities.
But just as the investment sage left it up to the young man to decide exactly what the “sleeping point” might be in his particular case, you can select a formula appropriate to your own temperament, financial circumstances and proclivity to insomnia. As will be made clear in later pages of this book, any of the formulas can be adjusted to suit the needs and preferences of any investor.
Although formulas are designed to give unhedged and unambiguous indications for action, the investor should not feel that he is therefore giving up all personal control over his investments when he adopts a formula, since he selects it himself to fit his own requirements. A formula does not try to tell you what to do – it merely helps you do what you are already doing more profitably.
For example, formulas cannot tell you which stocks to buy. This book assumes that anyone interested in formulas is already a relatively sophisticated investor and knows what kind of stocks he wants to buy, how to select them and where to go for advice in his particular areas of interest. But – by supplementing his knowledge of which securities with considerations of the equally important questions of when to own them and in what quantity – formulas can supply a valuable added dimension to his investment results and help put the management of his portfolio on a more professional level.
If You Trade Stocks And Are Tired Of Spending All Day With Your Nose Glued To The Computer, Then You Have What It Takes To Unearth These Step-By-Step Trading SECRETS!
Click here for FREE online ebook!
Previous Articles Highlighter:
How To Choose A Bow That Can Land You A Prize Buck (1)
As with any other sport, good form is gained through practicing the correct procedure at all times. Scores will not improve just by shooting. Technique is most important, and it is gained through observing the performance of skilled archers on the shooting line, seeking personal advice and instruction.
Tips On Becoming A Billiard Champion (2)
Believe it or not the position of your arms and elbows can make or break your game. Here`s How To Play Billiards Like Eddie Charlton And Sink Every Ball Like You Were Born With A Cue In Hand FREE For A Limited Time www.billiardtip.net
Discover Tips And Tricks To Explode Investment Club Market Profits (3)
You may want to start by learning about the different types of stock analysis, and getting a feel for how the many different tools are used. There may be times when you want to ask a guest speaker to your meetings to give you first hand experience of the investing world.
World Renown Builder Reveals Top Secret Free Ways To Learn How To Build Your Home (4)
These will only be approximate, as they must all eventually be fitted into the completed house blue print. You might begin with something like this: Living Room: 350 to 400 square feet carpet floor fireplace large picture window space for grand piano wall space for furniture quiet corner for reading Continue the list until you have included the things you consider essential to a satisfactory house for you and your family.
Pros Tips For Building A Boat (5)
All parts are glued. The stem is next in line. This is cut from two-inch stock and braced on each side with one-inch stock. Be careful to cut the notch for the keel square.
Taking On Acting One Step At A Time (6)
The people in wardrobe, hairdressing and make-up departments know how the actor should appear in relation to a production as a whole. With their specialists' eyes, they "see" the actor as he can rarely see himself.
Who Else Wants To Understand The Secrets Of Forex Charts And Spreads? (7)
A good example of this is when your screen shows a tight spread, but your trade is filled a few pips in the wrong direction, or is mysteriously rejected. When this occurs repeatedly, it means that your broker is showing tight Forex charts and spreads but is effectively delivering wider Forex charts and spreads.
The Advantage Of Renting Apartments (8)
Garbage collection, water, heat, and sometimes electricity are all included in the monthly rent. Only one bill to pay and nothing that requires a thought on your part, and no responsibility for the looks or upkeep of the place.
Options: How A Million Dollar Options Trader Sets His Stops: Underhanded Tips And Tricks (9)
And second, what is the time frame for the trade? On a quick day trade, tight stops are a good idea. On a position, you expect to hold for a week or two for a trend play, tight stops may or may not be a good idea depending on other factors that you`re aware of.
Who Else Wants To Learn How Landscaping With Rocks Can Make Your Garden Look Wonderful (10)
Start with the larger rocks in a variety of shapes, look for some that have natural dips or depressions in them, as you will be able to fill them with soil and plant moss or sedum (a ground cover plant with pink or yellow flowers).
Newer Articles Highlighter:
How To Pitch A Tent Well (1)
And don't camp in the middle of a hollow where the rain water can collect. Loose, sandy ground is warm and comfortable. It is pleasant to have a wooded area or a rise in the ground to protect you from the storm side.
Build Your Own House Quickly And Easily (2)
Discover How To Build Your Own House Quickly And Easily Using Our Easy To Follow Blueprints... Even If You`ve Never Built Anything Ever Before! - FREE For A Limited Time - www.houseblueprint.net
How To Have A Finished Basement That Looks Great In Less Than 30 Days (3)
Once you have the ideas all drawn out you should begin by cleaning out the basement and getting it ready to begin the work that you want to get done.
How To Start A Good Conversation (4)
Don`t worry about your viewpoints. There will be ample opportunity to express them! Hobbies, sports and games are well nigh indispensable as backgrounds for general conversation. Talking about your recent visit to the exotic Bahamas, your recent golf game or your hobby of playing the piano can be a very good conversation starter.
How To Build Various Types Of Huts (5)
This hut has the advantage of actually growing. The network of branches will get thicker and thicker and will soon look so natural that anyone not in on the secret will not guess the existence of the hut.
Weighing Your Personal Situation When Investing In Stocks (6)
"I've had one order in the last three years." "You call that good?" said the first. "Well," answered the other, "you see, I sell suspension bridges." Like the salesmen, the investor must have a clear notion of his goals and expectations, must realize that what is normal and acceptable to someone else might not be what he would choose for himself.
Who Else Wants Quick And Easy Blueprints To Make Just About Anything Out Of Wood (7)
Use a jack plane to take off any rough surface, later a smooth plane will be needed to smooth out previously straightened edges. Squaring up Squaring up is leveling up.
Safety Tips For Fishing On Rowboats And Outboards (8)
It ought to be seven to ten horsepower. Don't settle for any that's less than five. Never leave the livery without first taking the necessary safety precautions. Here are the musts of rowboat-outboard fishing.
Johnston's Contribution To Calligraphy (9)
This was a very thin reed or cane chewed so that the frayed end became a small flat brush. This Egyptian brush had been in use since about the year 4500 B.C.
Seeing 1,000 Items And Creating One Picture (10)
The necessity for elimination of extraneous detail is one of the great discoveries you must make. Your medium cannot possibly translate all the detail of nature, and therefore you should try always to make a synthesis, a summary of the things before your eyes.
Permalink to How To View Stock Market Formulas Professionally