Characteristics of Character

[ducati916]

This should really fall into a *Psychology* sub-forum, but as there isn't one on ASF, I guess this is close enough.

This isn't [from my part] going to be massively in-depth, more of a scratching of the surface and a revisiting of my experiences of the last six years in the financial markets.

With the latest bubble market pulling in latecomers, there are always lessons to be learned;

Adversity;

"Fire is the test of Gold; adversity of strong men"
Seneca

"It is difficulties that show men what they are"
Epictetus

With the latest events in the markets globally, whatever finally eventuates, there will be some who will need to revisit their *trading, investing* strategy.
This is no bad thing, I'm sure everyone who has lasted in the markets has at one time or another required a rethink on methodology, mental approach, risk tolerance, and reward requirements.

Identify what went wrong.
Identify a solution.
Implement.

jog on
d998

 

[rederob]

This should really fall into a *Psychology* sub-forum, but as there isn't one on ASF, I guess this is close enough.

This isn't [from my part] going to be massively in-depth, more of a scratching of the surface and a revisiting of my experiences of the last six years in the financial markets.

If you have been investing in the markets for 6 years then what has happened - and continues to unravel - has happened several times already, and many times before.
Indeed, much worse has happened.
I am not sure why one would now need to revisit their investing or trading strategies any more than they would last month or last year, as one's strategies should be prepared for such contingencies.
Corrections provide the best buying opportunities of all for the investor, and the safest opportunities for technical traders as typical volatilities are largely removed.
These are the times when "good" equities stand out, cyclicals get pounded, and trash confined to market wastelands (until again it becomes another man's treasure!).
What for now remains unresolved is if this "correction" is a portend of worse to come.
If there is worse to come, it will be a function of financial markets failing to "balance" their sophisticated derivative products, and the attendant impact it will have.
There remains nothing wrong with global industrial production and consumer demand generally that gives any cause for concern, let alone alarm.
So my long term perspective remains unchanged, and my holdings intact; with a view to adding during the coming week or two as prices become "oversold".

 

[ducati916]

rederob

If you have been investing in the markets for 6 years then what has happened - and continues to unravel - has happened several times already, and many times before.
Indeed, much worse has happened.
I am not sure why one would now need to revisit their investing or trading strategies any more than they would last month or last year, as one's strategies should be prepared for such contingencies.

True.
But, when you first started investing/trading prior to experiencing it first hand, were you as well prepared as you are now, with several years experience under your belt?

Corrections provide the best buying opportunities of all for the investor, and the safest opportunities for technical traders as typical volatilities are largely removed.

Here I disagree.
Volatility typically increases, and this is what hurts [new] traders particularly badly.

These are the times when "good" equities stand out, cyclicals get pounded, and trash confined to market wastelands (until again it becomes another man's treasure!).

True.
But again, where you as confident within your selections/methodology when you first started?

What for now remains unresolved is if this "correction" is a portend of worse to come.
If there is worse to come, it will be a function of financial markets failing to "balance" their sophisticated derivative products, and the attendant impact it will have.

True.
And even with experience, this issue is one that no one really knows how it will eventually pan out........except it will in all probability be bad. Having said that, it then becomes essential to plan for the worst, while still positioning oneself for the eventual recovery.

There remains nothing wrong with global industrial production and consumer demand generally that gives any cause for concern, let alone alarm.

Here I disagree.
Consumer demand is an area of great concern, and consumer debt is particularly high across the board. If [when] consumer demand falls, there will be a severe contraction in the economy. Will government and/or Corporate spending fill the void?

So my long term perspective remains unchanged, and my holdings intact; with a view to adding during the coming week or two as prices become "oversold"

"Oversold" or undervalued? There is a very material difference.

Nothing I have seen in Australia [granted I don't follow ASX closely] is even remotely undervalued currently.

Oversold, is simply a technical bounce. I assume on an "overbought" basis you would then resell the purchases?

jog on
d998

 

[Sean K]

If you have been investing in the markets for 6 years then what has happened - and continues to unravel - has happened several times already, and many times before.
Indeed, much worse has happened.
I am not sure why one would now need to revisit their investing or trading strategies any more than they would last month or last year, as one's strategies should be prepared for such contingencies.
Corrections provide the best buying opportunities of all for the investor, and the safest opportunities for technical traders as typical volatilities are largely removed.
These are the times when "good" equities stand out, cyclicals get pounded, and trash confined to market wastelands (until again it becomes another man's treasure!).
What for now remains unresolved is if this "correction" is a portend of worse to come.
If there is worse to come, it will be a function of financial markets failing to "balance" their sophisticated derivative products, and the attendant impact it will have.
There remains nothing wrong with global industrial production and consumer demand generally that gives any cause for concern, let alone alarm.
So my long term perspective remains unchanged, and my holdings intact; with a view to adding during the coming week or two as prices become "oversold".

Rederob, I think Ducati has a point as I don't believe most punters truly learn a trading lesson unless they're smashed in the face with it. Some do of course.

Also, I'm not sure if the market will get to 'oversold' on this pulback/correction. Maybe closer to some fair value, but I think it's running ahead of itself due to the amount of cash floating around in the world. It's chasing up the price of everything IMO.

Back to the topic of 'Character', I do agree that adversity is where we see the true self emerge, as painful as that can be. I'll have to sort through my books to find some good quotes....

 

[tech/a]

True.
But again, where you as confident within your selections/methodology when you first started?

For me --- YES and still am.

Here I disagree.
Volatility typically increases, and this is what hurts [new] traders particularly badly.

Agree with Rerob.
Volitility increases but price action deviates as does volitility way skew of the mean that opportunity becomes more prevelant.

True.
But, when you first started investing/trading prior to experiencing it first hand, were you as well prepared as you are now, with several years experience under your belt?

At any one time it is highly probable that a market condition/s will appear that you have never traded and may not ever again and did not include in any testing.For me the answer as you know is to shut down my trading methodology if it trades outside of its trading numbers/blueprint.Ofcourse no Blueprint---no alert to trouble.

 

[wayneL]

I think some are missing the point.

The original post seeks to examine the development of character in relation to the financial markets, rather than folks boasting of their own superior character.

FWIW

 

[ducati916]

kennas & enzo

Glad to see someone followed the general gist.

Fear of Failure

"When men are ruled by fear, they strive to prevent the very changes that will abate it"
Alan Paton

"Oh, I thought about getting beat, especially when I was just starting out scared. After I won the title, I didn't worry about it no more. Oh I knew if I kept fighting, some guy would come along and take the title away from me, but not this guy, not tonight."
Joe Louis

Intresting contrast for the financial markets.
Too frightened to get back in, or so overconfident that the risk was off down the road somewhere.

Of course, somewhere in the middle is required. Risk must be assumed, but never marginalised to some indeterminate point.

jog on
d998

 

[2020hindsight]

these are just quotes about "attitude" after a setback, possibly even just opiate for underachievement, but I post em anyway.

The man who never made a mistake, never made anything.
It is better to have tried and failed than to have failed to try.

Heck if I keep talking like this, I'll be putting the third mortage on the lowliest and unlikeliest penny dreadful tomorrow first thing

THEN THERE WAS THAT QUOTE ABOUT ONE'S ABILITY TO CHANGE THINGS ANYWAY...
Joe Bjelke's version lol
"You can lead a horse to drink but you can't make him water"
translates I guess as "you can do all the research you like, but you can't make the bludy stock go up".

 

[wayneL]

This turned up in a marketing email in my inbox, I'm sure some of you got it as well, but it happens to be an excellent portrayal of character IMO.

I'm not sure if it applies to the markets, but it's good.

http://www.youtube.com/watch?v=-vB59PkB0eQ

 

[2020hindsight]

Rocky XV?
as someone said the other day - Rocky 7 (or 8? ) being made - "what's he fighting this time? Rheumatism? - must be closing in on 70?" lol

 

[rederob]

I think some are missing the point.

The original post seeks to examine the development of character in relation to the financial markets, rather than folks boasting of their own superior character.

FWIW

Wayne
Learn to read what is posted, rather than what you prefer to read between the lines.
If you can find "boasting" in the posts that preceded yours, please quote the remarks.
Ducati could not find a thread on "psychology" so inserted one on "character".
However, ducati posted just a few quotes on adversity and then focussed on methodology or "strategies".
The juxtaposition is somewhat perverse, so taking the thread to any reasonable extreme shouldn't be an issue.

The reality seems to be that the market has fallen significantly, and many have suffered actual cash losses, or just paper losses for now: Either way, the picture is not pretty.
So what to do with it?
Is it a test of character?

On the issue of "character", or psychology, ducati appears to lean towards the theme of learning a lesson. His quotes, however well intended, are only marginally applicable to the sentiment. So here's one on the "lesson":

Some luck lies in not getting what you thought you wanted but getting what you have, which once you have got it you may be smart enough to see is what you would have wanted had you known. Garrison Keillor

My thesis would be that it is a test of "capacity" - the capacity to learn and change on'es behaviour if that's what is needed.
We all learn differently, and most that read this stuff here probably trade/invest differently as well.

I take ducati's point that the longer we are in the game the more we can learn: The more important issue is that we do learn.

 

[wayneL]

Wayne
Learn to read what is posted, rather than what you prefer to read between the lines.

Thank you for this advise. I trust your motives are altruistic in giving it?

May I likewise extend some altruistic advise to you? Learn do do the same.

Thank You.

Carry on.

 

[rederob]

Thank you for this advise. I trust your motives are altruistic in giving it?

May I likewise extend some altruistic advise to you? Learn do do the same.

Thank You.

Carry on.

I am sure you meant "advice".
In the spirit of altruism (given that firefox can't underline that in red).
As if!

Learn do do the same.

Don't we have some interesting "character" issues, Wayne?

 

[wayneL]

I am sure you meant "advice".
In the spirit of altruism (given that firefox can't underline that in red).
As if!

Don't we have some interesting "character" issues, Wayne?

Yes you do.

 

[cuttlefish]

I agree with kennas - first hand experience is a strong teacher. I'm pretty sure I've learnt a lot of the ways to lose money on the stock market and am also sure there's some I haven't come across yet. Have learnt some ways to make it as well. Always enjoy learning more and happy to take a few risks or do things differently to try to extend the learning process.

First hand experience of being smashed in the face as kennas so eloquently puts it (sporadically spans about 20 years of market time - commencing early 80's).

* buying into wildcat oil wells without understanding the risks
* buying hot stocks on 'dips' to see them delist and go into administration
* averaging down on the above
* buying blue chips at the top of a cycle and holding them
* buying on fact after ramping on rumour
* getting emotionally attached to a particular stock and holding when objective decision making would have indicated otherwise
* losing due to impatience (in selling and buying)
* thinking a share's price is the price I can buy or sell it for

On the counter side - positive experiences that have made or saved me money.

* buying in bear markets based on strict ben graham style value methodology
* buying into sectors in favour during bull markets
* buying genuine value on dips
* following runs with trailing stops
* buying on fact
* avoiding the dot com boom/bust due to past lessons
* picking up genuine value from the scraps of the dot com boom
* realising strict money management lets me invest larger amounts
* learning that a share's price is not what it seems


Hopefully thats not too egotistical for wayne ... maybe I'm a bit confused about the topic as well.

 

[ducati916]

rederob

My thesis would be that it is a test of "capacity" - the capacity to learn and change on'es behaviour if that's what is needed.We all learn differently, and most that read this stuff here probably trade/invest differently as well.

I take ducati's point that the longer we are in the game the more we can learn: The more important issue is that we do learn.

Agreed.
The catalyst being; adversity.

Body Language

"By the husk you may guess at the nut"
Thomas Fuller MD.

Possibly stretching the analogy somewhat, but, through whatever form of analysis that you wish to utilize, this is [or should be] the goal.

jog on
d998

 

[2020hindsight]

Rederob: Some luck lies in not getting what you thought you wanted but getting what you have, which once you have got it you may be smart enough to see is what you would have wanted had you known. Garrison Keillor

I'd give that one 10/10 !!

"I am glad I didn't listen to all that advise given to me as a youngster, if I had I would have missed out on my most valuable mistakes."

different theme.."Most of the things men fear never happen" - (guess we'll find out soon enough ). PS Is it a particular test of character applicable to Aus that we are one of the first markets to open, and we have a whole weekend to contemplate "what might happen" and worry (or not as the case may be)? lol.

 

[rederob]

Yes you do.

Congratulations Wayne!
3 out of 3:
1. Reading what is not written
2. Not writing what you mean, and
3. Scoring points in a non-existent competition

Certainly character there