If the stock is right and timing is off, a short-term move higher can trigger a margin call. Beautiful as is optimism, we must beware of it. H Disappointing investments are often written off as bad luck, but the author of this investment guide holds the keys to making your own luck. A highly successful speculator shows how to use your skills as an amateur psychologist and a student of human nature to make money through the stock market. Likewise, if the majority of us were cagey enough to sell the instant that stocks are priced beyond their worth, then peak prices would never be reached.
But three more walked out. If you know a few crucial facts about a lot of companies, but not all crucial facts, selling your weak investments and redeploying into your strongest performers may make more sense. Readers must also understand that Kelly was a trader, not necessarily an investor, but many of his thoughts transcend into investing. In the pages that follow, I am going to try to tell what appear to be the mental hazards that make most people lose. This book should be read by anyone who is serious about investing in the stock markets. A highly successful speculator shows how to use your skills as an amateur psychologist and a student of human nature to make money through the stock market.
People take comfort in doing what others are doing, even when its wrong. Studying average investor mistakes presents a guide to future dangers. Certain mental traits that we nearly all have are barriers to success. And that is why success is so difficult. At every step, one is tempted to do that which seems logical, but which is nevertheless unwise.
But while he waited for the twelfth turkey to return, two more walked out on him. During World War I, Kelly served briefly as special agent for the Federal Bureau of Investigation. What do you do if a stock you are in falls significantly? You can make a profit in the market only by outwitting the majority of other people. That often leads investors to sell profitable, winning stocks, while holding on to losers. Most people, being less smart than a few people, invariably mistake a trend of these waves and therefore buy and sell stocks at the wrong time. After the war Kelly bought and operated a farm in Peninsula, Ohio where he continued to support himself as a free-lance writer. Kelly Language : English Grade Level : 1-2 Product Dimensions : 8.
A highly successful speculator shows how to use your skills as an amateur psychologist and a student of human nature to make money through the stock market. Investing in a stock with huge potential but trading at a premium to underlying value, requires faith that the subsequent growth will be sufficient to overcome the deficit, plus some. I learned that men win or lose not so much because of economic conditions as because of human psychology. I think that investors with a lot of money have a disproportionate influence on security values, and that in general they tend to be more informed and intelligent than the average investor. Analytical ability becomes crucial and you work hard at truly understanding a company.
I never even suspected that good news about a stock is likely to lower its price. It dawned on me that my behavior was almost exactly the same as that of an old man I knew in boyhood. If emotion, and the security falls, buy more. A few find bargains only because the majority never recognize bargains. Speculation can be worthwhile only when a few are taking advantage of the stupidity of the many. Safety in numbers is only partially true, except in investing it refers to a feeling, not an outcome. Kelly Free Acces Fred C.
My ice cream suddenly seems more valuable to you and you offer me, say, twelve cents for it. When enough turkeys had wandered inside the box, my friend would jerk away the prop and let the door fall shut. More importantly, I should have added something about interplay. Thus I confirmed my suspicions that most of what one hears about stocks is untrue. For a long time I studied market trends, business cycles, industrial conditions, reactions, rallies, various causes and effects.
Was it because people were inclined to buy poor stocks or because they merely bought good stocks at the wrong time? Greed is an enemy of patience. They tend to be intelligent accomplished people. You need principles and a structural framework to help you make decisions at crucial junctures. Even after disregarding information from irresponsible people, or those who seemed unlikely to know what they were talking about, if I had bought ten shares of each stock I was advised to buy, I would have lost heavily. Most people look back rather than forward… The average speculator thinks that the stocks which went up in the last bull market are the ones most likely to go up in the next one.
Kelly proposed that by acting counter — contrarian — to the general tendencies of most market participants, one avoids most typical mistakes, and succeeds at investing. A highly successful speculator shows how to use your skills as an amateur psychologist and a student of human nature to make money through the stock market. I think the analogy to the stock market is close. At least, it is fair to assume that you are average. But this is simply because human nature in different individuals is so much alike and can stand just so much strain. Then Bill, who had intended to order ice cream, makes you an offer of thirteen cents.