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Trading Wisdom Quotes

Trading Wisdom Quotes

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Published by Peter L. Brandt
A collection of trading wisdom guotes from MercenaryTrader.com
A collection of trading wisdom guotes from MercenaryTrader.com

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Published by: Peter L. Brandt on Jul 13, 2011
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08/20/2013

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Courtesy of MercenaryTrader.comOne of the best sites on the web for great trading wisdom.
1325You are what you do. A man is defined by his actions, not his memory. Total Recall1324If a self-reinforcing process goes on long enough it must eventually becomeunsustainable because either the gap between thinking and reality becomes toowide or the participant's bias becomes too pronounced. Hence, reflexiveprocesses that become historically significant tend to follow an initially self-reinforcing, but eventually self-defeating, pattern. That is what I call the boom/bustsequence. George Soros1323Usually some error in the act of valuation is involved. The most common error is afailure to recognize that a so-called fundamental value is not really independent ofthe act of valuation. That was the case in the conglomerate boom, where per-share earnings growth could be manufactured by acquisitions, and also in theinternational lending boom where the lending activities of the banks helpedimprove the debt ratios that banks used to guide them in their lending activity. George Soros1322Economic theory needs to be fundamentally reconsidered. There is an element ofuncertainty in economic processes that has been largely left unaccounted for... Wemust take a radically different view of the role that thinking plays in shaping events. George Soros1321Classical economic theory assumes that market participants act on the basis ofperfect knowledge. That assumption is false. The participant's perceptionsinfluence the market in which they participate, but the market action alsoinfluences the participant's perceptions. They cannot obtain perfect knowledge ofthe market because their thinking is always affecting the market and the market isaffecting their thinking. George Soros1320If you really want to know yourself, just become a speculator. Trading proverb1319There is no way one could produce results like ours without ups and downs. George Soros1318The real-time experiment turned out to be a very good idea because it stimulatedmy thinking. Having to explain my reasons for making decisions forced me tobecome more coherent; it imposed a certain discipline on me, which was veryhelpful. George Soros1317I felt it was too late to go short, but then I re-read my memo that predicted that theywould go bust and I realized that it could never be too late. It was the only time Imade more than 100 percent on my money on the short side because, as thestocks went down, I kept topping up my short positions. George Soros1316In their worship of logic and rationality, economists are amusingly short-sightedand irrational. Jack Sparrow1315When the California residential home market collapsed, the market thought thecompany might go broke, but it survived the test and we made a fortune. That iswhen I made the rule that one should own stocks when they have successfullypassed a difficult test, but one should avoid them during the test — something thatis easier said than done. George Soros1314I am good at riding the tide, but not the ripples of a swimming pool. George Soros1313...I am particularly keen on investment theses that the market is reluctant toaccept. These are usually the strongest. George Soros1312[The danger in taking risks] stimulates me. But don't misunderstand what I amsaying: I don't like danger; I like to avoid it. That is what makes my juices flow. George Soros1311There is nothing like danger to focus the mind, and I do need the excitementconnected with taking risks in order to think clearly. It is an essential part of mythinking ability. Risk taking is, to me, an essential ingredient in thinking clearly. George Soros
 
1310Risk taking is painful. Either you are willing to bear the pain yourself or you try topass it on to others. Anyone who is in a risk taking business but cannot face theconsequences is no good. George Soros1309I am outside. I am a thinking participant and thinking means putting yourselfoutside the subject you think about. Perhaps it comes easier to me than to manyothers because I have a very abstract mind and I actually enjoy looking at things,including myself, from the outside. George Soros1308Most of the time we are punished if we go against the trend. Only at inflectionpoints are we rewarded. George Soros1307I watch out for telltale signs that a trend may be exhausted. Then I disengage fromthe herd and look for a different investment thesis. Or, if I think the trend has beencarried to excess, I may probe going against it. George Soros1306The prevailing wisdom is that markets are always right. I take the oppositeposition. I assume that markets are always wrong. Even if my assumption isoccasionally wrong, I use it as a working hypothesis. George Soros1305Being so critical, I am often considered a contrarian. But I am very cautious aboutgoing against the herd; I am liable to be trampled on... Most of the time I am atrend follower, but all the time I am aware that I am a member of the herd and I amon the lookout for inflection points. George Soros1304Are you gonna bark all day, little doggie, or are you gonna bite? Reservoir Dogs1303I come from the water, that weren't no easy thing... It's more than nature, it's likemy destiny... The Toadies1302'Get a hunch and bet a bunch.' Trading proverb1301When everyone 95% agrees on something — home prices will never decline,China can't be stopped, commodities can't go down, etc. — there is real risk of'everyone' taking a frying pan to the face. Jack Sparrow1300To others, being wrong is a source of shame; to me, recognizing my mistakes is asource of pride. Once we realize that imperfect understanding is the humancondition, there is no shame in being wrong, only in failing to correct our mistakes. George Soros1299I look for conditions of disequilibrium. They send out certain signals that activateme. So my decisions are really made using a combination of theory and instinct. Ifyou like, you may call it intuition. George Soros1298I work with hypotheses. I form a thesis about the anticipated sequence of eventsand then I compare the actual course of events with my thesis; that gives me acriterion by which I can evaluate my hypothesis. George Soros1297I would put it this way: I do not play according to a given set of rules; I look forchanges in the rules of the game. George Soros1296Making money in commodities is easy -- but just try to keep it. Trading proverb1295If you want to make a birthday cake from scratch, you must first create theuniverse. Carl Sagan1294That is the nature of pattern recognition, asking 'What can I infer about thissituation based on similarities to what I already know and trust that I understand?'There is less emphasis on trying to reason out things on the basis that they arespecial because they are unique, which in a financial context is perhaps thedefinition of a speculation... It creates an impulse always to connect newknowledge to old and to primarily be interested in new knowledge that genuinelybuilds on the old. Alice Schroeder1293People who are psychologically and financially invested in a stock work very hardto resolve any newly arisen cognitive dissonance in favor of their vested interests. Alice Schroeder1292As humans, our brains aren't really wired to make good probabilistic decisions.(Actually, this is a huge understatement; many of us never fully grasp the ideas ofprobability and expectation at all.) Dan Harrington
 
1291But of course there is no secret; there is only the doing of all those little things,each one done correctly, time and again, until excellence in every detail becomesa firmly ingrained habit, an ordinary part of one's everyday life. Daniel F. Chambliss1290In the pursuit of excellence, maintaining mundanity is the key psychologicalchallenge. In common parlance, winners don’t choke. Faced with what seems tobe a tremendous challenge or a strikingly unusual event, such as the OlympicGames, the better athletes take it as a normal, manageable situation ('It's justanother swim meet,' is a phrase sometimes used by top swimmers at a majorevent such as the Games) and do what is necessary to deal with it. Daniel F. Chambliss1289Athletes move up to the top ranks through qualitative jumps: noticeable changes intheir techniques, discipline, and attitude, accomplished usually through a change insettings (e.g., joining a new team with a new coach, new friends, etc.) who work ata higher level. Without such qualitative jumps, no major improvements(movements through levels) will take place... Daniel F. Chambliss1288Superlative performance is really a confluence of dozens of small skills oractivities, each one learned or stumbled upon, which have been carefully drilledinto habit and then are fitted together in a synthesized whole. There is nothingextraordinary or superhuman in any one of those actions; only the fact that theyare done consistently and correctly, and all together, produce excellence. Daniel F. Chambliss1287Every generation has its characteristic folly, but the basic cause is the same:People persist in believing that what has happened in the recent past will go onhappening into the indefinite future, even while the ground is shifting under theirfeet. George J. Church1286A great company could be a terrible investment if its price rise has already morethan discounted the bullish fundamentals. Conversely, a company that has beenexperiencing problems and is the subject of negative news could be a greatinvestment if its price decline has more than discounted the bearish information. Jack Schwager1285When to get out of a position is as important as when to get in. Any marketstrategy that ignores trade liquidation is by definition incomplete. Jack Schwager1284Risk control should not be confused with fear of risk. A willingness to accept risk isprobably an essential personality trait for a trader. Jack Schwager1283One of the greatest tragedies of life is the murder of a beautiful theory by a gang ofbrutal facts. Benjamin Franklin1282Even great traders sometimes have completely wrongheaded ideas when theystart. They ultimately succeed, however, because they have the flexibility tochange their approach. Jack Schwager1281Define a target, a strategy consistent with the target, a set of disciplines to follow,and risk management guidelines. Then trade, track, and evaluate yourperformance. Ari Kiev1280The objective of setting a target is not necessarily to reach it, but rather toestablish a standard against which to measure your performance. If you are notreaching your target, it forces you to focus on what you are doing wrong or whatyou may not be doing that you should. The target holds you to a higher standard ofperformance. Ari Kiev1279Believing that an outcome is possible makes it achievable. The classic example isRoger Bannister's penetration of the four-minute mile mark. Before he ran his subfour-minute mile in 1954, this feat was considered an impossible barrier that wasbeyond human physical capabilities. After he ran his so-called magic mile, manyother runners suddenly began breaking this once seemingly impossible barrier. Ari Kiev

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