TRADERS MANIFESTO

There are no efficient markets

Never have been, and never will be. Most stocks are bought and sold because they are the member of an index. Most economic theory is derived from the efficient markets hypothesis. This provides for huge opportunities to you!

Index Fund Edge?

There has not been any FORWARD LOOKING evidence

presented in the economic/financial literature that stocks rise over time.

Nikkei 225 (over 75% off its high in 1989) NASDAQ (over 50% off its highs in 2000)

Nikkei 225 (1970-2010)

Nothing is new in markets

Not insider trading, high frequency trading, arbitrage, new normal, nothing.

"There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. -Jesse Livermore

Past as Prologue?
Knowing market history alone is not enough to make you

a successful market participant.

Take the time to learn from the mistakes of the past, and

try to make new mistakes as we move forward.

Know your edge

If you dont know what your edge is, you probably dont

have one. Doing the same thing as the crowd is never an edge.

Investment Skill
Alpha is generated from understanding what the crowd

(aka dumb money or beta) is likely to do next.

Alpha is abundant for those who spend the time to

understand markets and learn the analytical skills required to spot patterns amid the noise.

Recommended Reading
Reminiscences of a Stock Operator Jesse Livermore This Time is Different Carmen Reinhart & Kenneth Rogoff The Black Swan Nicholas Nassim Taleb Fooled By Randomness Nicholas Nassim Taleb The Misbehavior of Markets Benoit Mandelbrot The Alchemy of Finance George Soros