A man who calls himself “Holdtherisk” broached a very interesting subject in the Blogger Network (@ibc_bn). It reminded me of a quote from the late Andrew Carnegie, who incidentally is one of my favorite old school stewards of wealth and wisdom. He said “Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in one basket and watches the basket.” Carnegie said he borrowed that phrase from another great, Mark Twain. Either way, it’s an interesting subject to talk about, with regards to investment philosophies.
I must say, when I was starting out as a young investor, all I did was swing for the fences. I exhibited ZERO discipline. I was like this guy, but with stocks. At the time, my clients loved me–because I was a fucking genius in a raging bull market. I had no fear and nothing to lose, other than other people’s money. I didn’t quite understand the philosophy behind “managing risk” and my returns reflected that.
Back in 2000, I lost a large 7 figure account. He was a CFO of a publicly traded company and could have been a monster client for me, in terms of gathering referrals. Do you know why he left me?
I made him too much money.
I scared him away with my erratic investment style. This was a man of great deportment and prestige. He didn’t need some young 20 something rolling dice at his behest.
If you’re in the business of managing money for other people, listen to me very carefully. You’re never gonna get big playing bullshit stocks for small rips. You will get pigeon holed as “the crazy, fuck you money” guy and will never earn full trust from your clients. In that regard, Andrew Carnegie was a fucking moron.
However, there is something to be said about self directed investors, willing and able to take risk, trying to make it big. I find nothing wrong with it and encourage you to do so, only if you can afford to lose it all. Over the years, I’ve lost immense amounts of money, gambling in oversized positions or fucking around with options. A few years ago, using The PPT overbought/oversold algorithms, I turned 100k into a million dollars. The next year that money was cut in half, stabilized, then I took it out of the market.
Why did I take the money out?
Well, for me, it was a distraction. My business is to manage money for others, not for myself. The volatility of my casino account became a distraction, so I eliminated it. I still have long term investments; but I am sure none of you are interested in boring stuff like that.
If you understand the risks and have an idea that you are passionate about, I say fuck it–go for it. However, if you are an old, crusty man, with limited resources–I forbid you from gambling like a degenerate OTB guy. As for you pikers trying to make it big in the business, get on the phone, smile and dial, and raise some fucking assets. Quit trying to be Gordon Gekko and get to work.
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Yes, fuuck it! Thanks for the high level wisdom.
Threadjack. Sorry.
FLY – This may be of interest.
http://www.bloomberg.com/news/2012-08-23/facebook-director-s-quick-1-billion-share-sale-lacks-precedent.html
This is a great story. I wish others in the Blogger Network that had previous experience as brokers or at exchanges would share their stories. I don’t come from that side of the investment world but enjoy the stories. I cannot fathom managing a 7 figure account for someone else but hopefully that will be mine one day.
I give credit to anyone that goes out on their own and depends on their trading (no trading service income) to live. I personally have a two-pronged account in where I shoot for consistency but also have a ‘are you f’ing high’ allocation where I don’t care if I lose 100% of the trade but that is only because I will make it up through pay/OT at my full time job.
Anyway, its still my goal to do this full-time and work for no one but me.
NOBODY makes a living by short-term trading. It is a loser, just like casino wagering is a loser over the long haul.
If you include SELLING OPTIONS (benefitting from time premium erosion) as
part of your trading, then you can “win” because you then have a “House” edge.
Trading stocks only, you give up a bit on entering and exiting, plus you pay commissions – so you are swimming against the tide. And your “charts” and your “smarts” aren’t worth a shit against the big boys’ computers, collusions, and smarts.
Even the Fly stopped going for it. You will get crustier faster going all in all the time. With a few exceptions, an investing genius is some young kid who got lucky a couple of times. Go all in on your family. A much better long term investment there.
My comment made no sense to me. That is why Fly is blogging and I am not.
Your comment made sense as those with families can get wrapped up in this game neglecting those around them. There’s a fine balance there.
I go for it on my cocaine allocation as it represents very little of my overall account and is my gambling/fun money. I don’t have expensive hobbies or addictions so that’s where I throw some of that spending money.
Well said!
I went big with MRVL into earnings.
ouch
The hallowed halls are deep with plebs of different styles. Longterm investments? Would love to here them. Senor Fly.
What amazes me is how so many people throw money at people to handle that have so little knowledge on how everything is played. In a Bull Market anyone that goes long looks like a genius. In a Bear Market it is a different story. Very few can be great in both directions…
What amazes right now is the private equity scumbags buying houses to “fix up” at thousands at a time to sell to who? If this is what the bankster system of fuckery has come too. It deserves to die. Hilarious, they are contractors now.
The last wall street whorehole will be the IPO of a EBT payments corporation. Cash it in for 30cents on the dollar or buy a newly remoled house in Las Vegas.
They need the houses to sell to all the Chinese CEO’s who are fleeing their country.
Actually, they’re not going to sell it to anyone. The plan is to rent them out, but also to revise rental agreements and codes so that renters are responsible for upkeep. Rentcroppers is what they’re going to become. Absentee landlords in the full sense of the word.
Welcome to the new America.
Very few can predict the price trend over the next month.
OEW Daily Recap:
>> The market opened lower today, bounced around under the SPX 1413/15 area, and then hit 1407.
Yesterday we noted that SPX 1407/10 was an important area to watch. If broken Minor 3 may have completed at SPX 1427.
There was no break today before the afternoon rally. However, we are maintaining a tentative green Minor 3 label on the hourly chart until either SPX 1407 is broken or 1427 is exceeded.
If the market does break through SPX 1407, there is good support between 1392 and 1396 for a Minor wave 4 low.
Breaking that support area, and then SPX 1375 would suggest the uptrend ended at 1427.
For now, this 20 point pullback looks quite normal for an ongoing uptrend. <<
Silver and Platinum both have a Minor B wave uptrend underway.
Well done…
I was warned about the market in 2006 by close friend and went to all cash near the top in 2007,
Saved myself a 60% hit but lost the gains in 2009-2011.
Overall, I am probably close to even but its a reminder about why no one should go all in.
I really want to go all in AGQ this week. Seems a little late though?
If you are going all in, make sure you are going in the same direction of the momentum; NOT averaging down for crying out loud.
And make sure you get the FUCK out with your profit while others are still drooling over their paper gain.
BUT you have to WAIT for the “calling” for this all-in play. If you don’t hear the calling (aka intuition), you have no business going all in. Otherwise, you are simply playing Russian roulette…
Twain went bankrupt following his advice
50% of my port in gold.
Looks like gold and silver stocks will have a good day!
Lucky you!
its been a long time comming. but safe for me. i look at charts but trade the news. my best play this year was wprt, i cashed out at 47.5 and then bot back in at 33ish with just the profits. i bot vxx a few days ago as i thought we could get a correction(small pos)+2.4%
Long oil/energy , PMs, miners.
“I still have long term investments; but I am sure none of you are interested in boring stuff like that.”
Dr. Fly…I likes me some boring stuff; so I would be interested in what you’re doing long term with your $$$$.
I am with Clock. As someone who has multiple accounts to physically separate long term assets from ‘trading’ assets I’d be an avid follower of The Fly’s long term comments.
Nice post Dr.
Good Post Fly. Question though. Isn’t your present strategy to take concentrated positions in a few stocks? And how does it differ from what you used to do?
On occasion I take big positions. But I’ve been doing this forever and feel I can deal with the punches.
My YELP was 40% of assets, only after big appreciation. Normally, 20% is my size limit.
All in is 100-200% in one or two stocks.
Right on. Just wanted to make sure. And thanks for the reply.
if you do decide to surf bullet trains to the land of milk and honey do not use leverage –
sometimes the train is late, and sometimes the goddamn conductor decides to “see what she’ll do” through a hairpin turn –
BULL SHIT ! If you want to make it in this business it absolutely essential that you hit a few out of the park .
Singles hitters inevitable end up working in bullpen .
Dr. Fly, I am extremely interested in your long-term holdings.
I am in the process. I enjoyed this post indued.
AGQ..I like it!!
Make it a V.King Day! Every Day!!!
I managed to lose all of my money in a bull market swing-trading weekly ETF options. Shocking, 300% weekly returns after you’ve already lost 90% of your portfolio really doesn’t mean dick.
I’ve blown up completely and been reduced to semi-passively managing family IRAs.
A fine experience for a young man to have, but never again will I put more than 10% of my portfolio in one position since getting any part of a whole complex chain of events and moves wrong results in abject poverty. Even if you can be right 75% or even 95% of the time, of the time, if you keep going in a double or nothing manner without limits or discipline, losing everything becomes a mathematical certainty. Taking money off the table is the only way to prevent this, and if you have gains/losses in excess of 20% for the year, taking half of it out is probably the smartest thing to do.
The time to set the 10-100 baggers is when the world is looking fucked
You need to have studied and understood that your project will emerge first from the winter and get capital backing in the next breath of enthusiasm- it must truly be of merit – in mining parlance you need scale and grade, the capex drought just give you the opportunity to get set – IN SIZE
Outside of lucky sperms – to make proper coin you need to study like crazy for years to find a monster that is only being held back by time, fashion and risk tolerance of the vast majority of capital.
The richest men I know only made ‘real money’ 1 – 3 times in their life – ‘trading’ is only to keep us degenerates making a bit of coin while we deal with the boredom of finding some real coin and away from the race track
Not many people have the mental setup for this type of investing – you need to invest plenty of time and the rewards are not regular
Forget trying to have ‘clients’ in such a model
The Fly is a super business coach
Great posts and replies here, thanks to all.
selling vxx pos+ 4.3%