The Death of Trader Joe

To be a disciplined trader, you need to know how, why and when to enter the market, when to exit the market and have all your important money management techniques in place at all times.

Manage your risk to maximize your cash flow.

Ensure that any trading strategy you design or lease from others includes entries, exits, stops and specific risk management techniques.

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Trader Joe can teach us all a lesson or two: trade a focused strategy with adequate risk parameters fully aware that without the two living to trade another day may not be an option.

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Top 10 Reasons Why You May Need a Trading Sabbatical

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Do You Need A Trading Sabbatical?
Here are the top 10 signs you might need a trading sabbatical
  1. You catch yourself talking to ticker symbols
  1. You are diagnosed with Trader’s Elbow
  1. Any time you hear a bell ring your mouse finger begins twitching
  1. You seriously contemplate adding more screens to your 6-screen trading workstation
  1. You think hooking yourself up to an IV treatment is a good way to “multi-task” while trading
  1. Fat finger trades have become a daily routine because your fingers have really become fat
  1. You get out of bed in the middle of the night for updates on overseas currency and futures markets
  1. Your Rip Van Winkle beard keeps getting caught in the keyboard
  1. You just received an award from your broker for the most trades ever made by a live human being
  1. You just paid the phone bill in gold-adjusted dollars
In all honesty, most of us need to take a break once in a while. The great thing about doing this for a living is that most of us who trade full-time on our own can take time off to work on other things and get away from the markets for awhile. Constant focus and dedication to trading at a very high-level can only be maintained so long as you do take much-needed breaks along the way to avoid burnout, overtrading, and achieve some much-needed balance.


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Daily Sketch: Trying to Invest Like Harvard

How many times do you think to yourself: “If that is such a good idea, why doesn’t Harvard do it that way?”

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Trying to Invest Like Harvard

I had a discussion recently with somebody who was unhappy with the results of his investing strategy. (Surprise!) We discussed one way he could do it differently and he asked me, “If that is such a good idea, why doesn’t Harvard do it that way?”
I get this question a lot, and I understand why people ask it, given that endowment managers like David Swenson from Yale have tried to explain to individuals what they can learn from their own successes. But I still think it’s the wrong question entirely. Since investing success is often about asking the right questions, here are a few for consideration and discussion:
1) How do we know Harvard doesn’t do it that way? We know quite a bit about how many of the large university endowments invest, but there is still plenty that we don’t know.
2) Why would you want to do what Harvard or Yale’s endowment has done? The question isn’t whether Harvard’s endowment has done well or poorly; the question is what does it matter? Your investing goals as an individual or family will be different from the goals of a large university endowment.
3) There’s a lot we can learn from the successes and failures of the largest university endowments, but can we really get the same kinds of deals as they can? One practical implication of this reality is reflected in the fees we pay for access to alternative investments and hedging strategies, for those of us who use them. They cost us individual investors a lot. And we should never forget that those fees make an enormous difference in our performance.
This is a little bit like Groucho Marx saying that, “I refuse to join any club that would have me as a member.” If high fees are our only option, we may be better buying certificates of deposit. But that is not the case with Harvard.
4) You and your portfolio are not the same thing as a university endowment. Expecting that the same investing strategies will work for you is a little bit like shopping at a big and tall store if you’re only 5 foot 9. It isn’t a good fit.
I understand the temptation to try to replicate the investment process of any large institutional investor, but I think it is much better to focus on finding the investing strategy that works for you and your life, and not what has worked for Harvard.