Monday, November 28, 2005
How many of you get stuck in your trading? Can't seem to make progress? Well, sometimes the fish just aren't there to catch. You can work as hard as you want and still catch nada. The key is to cast that net until you find fish.
What happens when no more fish are caught? You must move on...because the fish already have.
Tuesday, November 22, 2005
Under the system, you purchase the index on Wednesday (day before Thanksgiving) and sell the Monday after Thanksgiving. How will it perform this year? Ah, should be interesting. Will I invest my hard-earned money? No, probably not. While it's a fun little system showcasing the holiday effect...just too few data points for me. But, with a quick and dirty test on the current Nasdaq 100 stocks...you earn a profit factor of 3.15. Of course, that's not counting commissions and slippage. Still, not too shabby for turkey lurkey day.
Well, gotta get...some more system work to do. Just what kind of stuff am I working on? Hmmm...let's see...it involves a bit of Bill Cara's Value Line Research, Victor Neiderhoffer's Triumph of the Optimist, Michael Covel's Trend Following post, and Ben Bernanke's MO.
I hope all is great with you and yours. Everyone have a wonderful Thanksgiving.
P.S. TraderMike needs to start working on those New Year's Resolutions for 2006! Time is a tickin! Ha ha!
Monday, November 21, 2005
Analysis of over twenty-five thousand men and women who have experienced failure disclosed the fact that lack of decision was near the head of the list of the thirty-one major causes of failure.I believe these quotes are from Think and Grow Rich by Napoleon Hill. But, found them in the MasterMind Forums here.
Procrastination, the opposite of decision, is a common enemy which practically every man must conquer.
Analysis of several hundred people who had accumulated fortunes well beyond the million-dollar mark disclosed the fact that every one of them had the habit of reaching decisions promptly, and of changing these decisions slowly, if and when they were changed. People who fail to accumulate money, without exception, have the habit of reaching decisions very slowly, if at all, and of changing these decisions quickly and often.
These quotes are the type that should be read more than once. Allowed to soak in your brain. Stew over. Or as they say where I'm from, "Chew on for awhile."
And one last one from Hill for dessert:
"You must get involved to have an impact. No one is impressed with the won-lost record of the referee."
Monday, November 14, 2005
"Try a thing you haven't done three times.
Once, to get over the fear of doing it.
Twice, to learn how to do it.
And the third time, to figure out whether you like it or not."
-- Robert Evans (creator of Godfather)
Great words of wisdom. Especially for ADD'ers like myself. Easy to get frustrated with something and cross it off your list forever without ever taking the time to find out whether you truly like it or not.
The quote was from Robert Evans. Ever heard of him? I hadn't before I found this quote a few years back. Evans has lived quite an interesting life. Read this interview for some particulars, and don't miss out on how Evans discovers "The Smile"....aka Jack Nicholson.
Friday, November 11, 2005
Check out his post on The Reminiscences of an Infant Investor. I quite like his behavioral bent to investing/trading.
Favorite lesson from his post? "Lesson 2: You are not as smart as you think you are."
Ain't it the truth.
The site also has several great quotes sprinkled throughout. Such as this one from Pascal: "Heart has its reasons, that reasons don't understand." Nice!
Well, this might not give the old oil rig workers much serenity now...more like the bad memories, nightly sweats from before. :)
Seriously, this is what you had to climb in on if you wanted to do offshore work in the gulf.
My dad is the 2nd on the right. Picture taken in 1954.
Psychologists ran experiments to see how people absorb information. In one experiment they found people who work with racehorses, and asked them to name up to 50 pieces of information they would need [to determine if it was going to be a winner]. They ranked them by order of importance. They took the 10 most important ones out of 50 and looked at the prediction of accuracy to determine if a horse will win a race. Then they took the 20 most important pieces, then the 30. In the end, you had no gain in predictive power beyond the first 10 pieces of information, but a huge gain of overconfidence...
It's the market that creates the indicator, not the indicator that creates the market.
To become Bill Gates you need more luck than skill. But to become a prosperous person, you need more skill than luck.
I believe Warren Buffett has skills, but probably two-thirds of it comes from an environment that helped him.
I am unable to predict markets, but I know it.
The favorite quote being the Bill Gates more luck than skill. I've referenced that type of thinking back in this post on Relativity by Dr. Mike Ott here. I strongly believe that environment makes up at least 2/3 of a person's success. The other 1/3? Ah, that's your edge.
Thursday, November 10, 2005
Not much happening on the homefront. Busily evaluating a trading idea....while the list of new ones rapidly pile on my desk. Speaking of desk notes...I have to really thank one of the commentors on this blog for recommending EverNote. I was very reluctant at first especially since it involved organizing my thoughts from the scattered scraps of paper and journals to a forum that's neat, tidy, and structured. But, I've really grown to like this little product. I'm slowly but surely beginning to keep everything stored in EverNote and the pile of notes are becoming electronic in form. Kinda cool. At least my wife thinks so. :)
This weekend? Somehow got wrangled into installing ceramic tile in my dad's kitchen. Hows' that for a howdy-do? But, it should be fun and filled with adventure. I'm just afraid the rest of the family will see the results and want more of the same. They'll just have to wait because dad has bigger plans for this computer geek...hardwood flooring!
One last thing...check out the movie Dreamer with Kurt Russell, Dakota Fanning, and Kris Kristofferson. I was really surprised...my wife and I saw it on our date night and I thought it had chick flick written all over it. That might be...still a good heart-warming movie that showcases the struggle of safety and stability against risk and opportunity.
Enjoy your weekend!
Monday, November 07, 2005
Boy, Albert, I sure hope you're right. Cause I've been trying to figure out this market for a heck of a long time!
Question is...how long should you stay with the problem versus cutting your losses and moving on to something else? How many other Einstein's have stayed with the problem til' their dying day...never solving the problem?
To test this theory out...
Try picking stocks and setting a profit target of 50% and don't sell until they hit it. Only two possible outcomes to this test: Stock will hit the profit target Or it won't. Time is removed from the equation except for the length of your lifespan. If the profit target is hit...you'll have found an Einstein.
Same Test as above but exit the stock if 50% target is not reached within a year. Same possible outcomes as the prior test but Time is added to the equation.
Are you better for your Sticktoitiveness or for Cutting Losses Short?
P.S. Would be interesting to see how many stocks bought the day of their IPO acheive their profit target and go on to become Einstein's? Would we consider 50% gain worthy of Einstein status? 100%? 300%?
Friday, November 04, 2005
"The Heights by Great Men Reached and Kept were not Attained by Sudden Flight, but They, while their Companions Slept, were Toiling Upward in the Night." -- Henry Wadsworth Longfellow
Maybe I'll try to post a Quote of the Week every Monday.
Have a good weekend everybody! My plans? Well, I plan to put my daughter to work. She received a rocking chair from her Papa on her birthday. And she would like it finished the color purple. So, her and I will sand and prime the chair this weekend. Should be fun.
Wednesday, November 02, 2005
Also, check out Jon Tait's discussion on Profit Factor and his sneak peak of his backtesting project.
System Analyzer - FathersDay Edge
Funny, how it has taken many hours/weeks and brain-fried late nights in order to input, process, output into the simple little HTML table above. Reminds me of a story about the Y2K problem.
I was working around the clock for hours, weeks, and months on end in order to get our administrative systems ready for Y2K. For those few who don't remember...the Y2K issue centered around the fact that legacy systems used the 2 digit years instead of the 4 digits. And year calculations and comparisons drive a multitude of systems. So, if you compare the year 05 against 99...you get issues. Capisci?
Anyways, while I was burning the midnight oil getting everything in order...either converting everything to 4 digit years or windowing the problem...I got a call from a friend of mine.
Friend: "Hey, have you heard about this Y2K crap? Everybody is just making this Y2K stuff up, I tell ya. You watch...when January 1, 2000 gets here...nothing will happen."
Me: "You're right, nothing will happen because programmers like me have been working our butts off trying to make sure nothing will happen."
Me: "Listen, it works like the George Soros Reflexivity theory. If all the programmers know there's a Y2K problem then the Y2K problem grows less of a problem as more of the problem is understood and worked on by those programmers. So, you are correct, when January 1, 2000 gets here...nothing will happen."
Friend: "Huh? Are you telling me Y2K is or isn't a problem."
Me: "Ah, Forget it. I gotta get back to work."
Friend: "Whatcha working on?"
Me: "The Y2K problem...[hangup]"
Six months later my friend calls me up on January 1, 2000 after I had stayed up all night to ensure our batch systems ran correctly and was still in the process of verifying their results.
Friend: "Hey, Happy New Year! I don't mean to rub it in...but I knew it, I knew it, I knew it! That Y2K was just a bunch of mumbo jumbo! Like I told you before...here it is Jan 1, 2000 and nothing...NADA...happened!"
Me: "Happy New Year yourself. And yes, there was a Y2K problem and we fixed it so nothing happened like I told you before!"
Friend: "Huh? Now, Mike, how can it be a problem if nothing happened!"
Me: "Ah, forget it...go watch your football games...I gotta get back to work"
Friend: "Work? Work? On New Year's Day? What the heck? What they got you working on now?"