Way back in the late 1980s I was younger, riskier, and was quite into the stock market. In 1987 I stopped my trading ways and took to the “buy and hold” approach. For those of us who remember 1987, there was quite the stock market crash in October of that year. That scared me off from actively trading, much to the chagrin of my broker who was doing quite well with all my buying and selling.
A few years ago, I moved to sunny Florida to become the managing editor of a financial newsletter that covered “momentum” equities trading. It was an insanely high pressure job (twice daily email reports and a monthly printed newsletter) but an incredible learning opportunity. I didn’t do any trading myself yet I saw how a consistent investing/trading methodology could be applied successfully.
I have always been curious about the mechanics and psychology of stock prices and how individuals use the various forces in the stock market to make good trading decisions. Of course there are different methodologies and approaches to investing and trading. There are contrarian, value, blue chip, as well as the momentum approach. I could certainly see benefits to each approach.
This brings me to a question for those in the Manosphere. If you are in the stock market, what is your approach? As this blog’s readers are a logical and rational bunch, I am hoping to get some very thoughtful and intelligent responses.
As my familiarity with trading methodologies is mostly limited to momentum trading (the CANSLIM approach, for those in the know). I see quite a few similarities to Game. A stock has solid fundamentals – earnings, new product, new management, etc. – and is looking all ready to be scooped up by the alpha investors, the big institutions. Big purchases by institutions prove a stock’s higher trading value and suddenly everyone wants in. Psychology and investing is compelling stuff, hence the ability to use the Game analogy.
When I was writing about momentum trading, I saw that individual investors (traders, in actuality) did quite well when they bought a stock just on the cusp of institutional investing. Of course, that required some serious analysis on our part to identify those stocks but that’s why the subscriptions were rather expensive. For the most part, it worked quite well but required some serious emotional discipline, just like Game. There is no “oneitis” when trading stocks. If the value of a stock starts declining before any profits are yielded, that poor stock is dumped like a fat girl once the beer goggles come off.
I might once again get more involved in the stock market to build up my retirement account and find another enthusiasm. Now that I know Game, perhaps I am more prepared for the experience.
NMH
/ April 1, 2011Most of my money is locked up in a 401 K where I can determine how much of the money I have in stocks, bonds, or something akin to a savings account which get a certain percent interest.
When I retire I think what happens is my account will have a certain value, which then becomes a lifetime annuity.
What I am trying to do is some very basic market timing. Although I am aware this technique usually faiIs, I have about 50% of my money in the Stock fund and its clear that this year may be a good time to transfer the money over to the fixed account before the stock market crashes again. I make these kind of decisions by following the profits of each account on a spread sheet
My father has some of my money and he invests in stocks, but he is pretty good but Im not sure what his strategy is.
wingman
/ April 2, 2011Well PM, your post regarding the stock market hits home – success in the stock market and in game are, I believe, fairly strongly related. It’s definitely worth it to try and figure out why, so here goes:
For the record, I spent many years as a broker and then had the good fortune to become a portfolio manager of mutual funds investing in international markets, which was a blast. I got to travel the world, meet many CEO’s and government figures, and had my finger on the trigger of a $1billion fund. Currently I’m trading my own account and working on what may or may not become a new business. In all I’ve played in markets for almost 30 years, and have the scars to prove it.
Connection to game? Success in stocks I believe, depends on 3 major drivers: 1) choosing a particular approach (read system), 2) being disciplined about following the rules within your system, and 3) the confidence to take risks (courage of your convictions). You need all three. Any missing element of each part will without a doubt cause you problems, and that’s why most people struggle to win in the markets. Sound familiar?
So which of the 2 is easier to master? I say game. I’ve seen countless superior intellects flailing at markets in complete misery, but the system of game raises the capabilities of thousands. Why? Game is a rules-based ‘system’ that’s essentially one-on-one. In the stock market, you’re always competing against a large number of more experienced and better-armed ‘players’. It’s like making an approach to a woman at a bar, and at that very moment 400 better-looking dudes make the same move.
To succeed in both, you need to know in advance how you will approach a (woman/stock), how you will react to the unexpected (rebuffs/bad earnings announcements) and where you plan to take it (your place/a target price). It’s all in the discipline and then in the experience gained from consistently trying.
As far as stocks are concerned, I follow a value approach while looking for concrete catalysts. This means buying stocks that are undeniably inexpensive(in valuation not actual price), and looking for the specific events that will get other investors to hop aboard. More recently I’ve been applying that to shorter-term time horizons, but the jury’s out on that idea.
theprivateman
/ April 3, 2011One of the best comments I have read.
I think it’s fascinating that you think Game is easier than investing/trading on the stock market. Your point about more experienced folks is well put. This subject requires further analysis.
Lockeford
/ April 3, 2011Both require an edge based on statistical knowledge, courage, and a systematic approach.
The competition in markets is utterly fierce, and unlike with women who want subconsciously to find the right guy (even if just for a night), there is no comparison because in the markets your decimation is the other guy’s paycheque for a trip to Monaco.
Game is easier.
suzena
/ June 17, 2011Students who participate in the The Stock Market Game program learn more than investing. As they progress, they learn core academic concepts and skills that can help them succeed in the classroom — and in life.
Starting with a virtual cash account of $100,000, students strive to create the best-performing portfolio using a live trading simulation. They work together in teams, practicing leadership, organization, negotiation, and cooperation as they compete for the top spot. The setup is engaging, and the learning is a natural part of the experience.
Richard
/ November 27, 2011I learned the hard way (unfortunately losing thousands of dollars in the stock market NOT from greed but from bad timing with the stock market collapse/corruption that I have not completely recovered from YET) that buying and holding (that was supposed to be disciplined and “GOOD”) TOO long (in not all cases such as if a business is just starting out that will be a future lead horse, but in many cases) someone (like me in 2001) will be left holding the bag with NOTHING in it because someone else TOOK it. I will never continue to hold until a stock goes below the buy price ever again!