With systems operating around us and our lives essentially dominated by systems – systems that are designed by humans for use by humans – why is it, that we seem to struggle to be able to accept this concept and the use of systems when it comes to investing in the share market? People flounder…
Gary Stone Journal
You are surrounded by systems
Systems underlie everything we do, they are everywhere we look and we are in contact with or use them all day, every day. Yet there are many investors who have no system for their share market activities – believing instead that insider knowledge or tips from their broker or reading a newsletter will provide them…
A great truth
Many traders and investors, who have experienced the highs and lows of trading, regularly look for a method or system in the hope that they will discover a “new” hidden truth. A great truth is that there are no “new” hidden truths in the universe of the markets, just “new truths” to individuals that for…
Practical lessons from past drawdown experiences
There is an old Chinese adage that says “that which does not destroy me will only make me stronger”. It refers to the internal battle with one’s self. As we know, trading certainly can be an internal battle but this quote could not be more relevant than when discussing a trader’s psychological mindset and their…
Compounding Profits in the Market – Part 2
Basics of compounding Following on from last week’s Journal post, I felt it very important to continue our discussion on the positive effects that compounding can have on an active investment portfolio. A simple way to look at the effectiveness of compounding is to use a mental maths shortcut known as the “Rule of 72”….
Compounding Profits in the Market – Part 1
Have you heard of the economic term ‘velocity of money’? In effect, velocity of money is the rate at which money circulates, changes hands or turns over in an economy in a given period. High velocity means the same quantity of money is used for a greater number of transactions and is related to the…
The Psychology Challenge of Active Investment Part 2
If you are investing according to a consistent method then all trades are potentially “good” trades. Don’t fret about which one is the best of the “good” trades or which one will be a loss trade. Just do the trade according to the rules of the methodology! The rules are your edge in the market…
The Psychology Challenge of Active Investment Part 1
The reason that you need a Trading Methodology or strategy when investing in the market is to protect you from yourself. You need rules to determine when you should buy, hold, sell and how much capital to commit to a trade. If you don’t believe that human beings need rules to protect themselves then explain…
Psychology of Active Investment
Active investing is very different from passive investing and hence requires a different mindset for decision-making. Indeed, active investing requires a completely different mindset to any other kind of buying and selling that you have done in the past, e.g. household appliances, motor cars, clothes, etc. All your life you have probably been taught to…
Types of Investment Risk
This week we move back onto the subject of “Investment Risk” and specifically the different “Types of investment risk”. As mentioned below in my 6th October 2010 post, there are two main types of risk, market risk and specific risk. Market risk is the downside potential that relates to the entire market or the industry…
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