The Young Lincoln

Abraham Lincoln was the 16ᵗʰ President of the United States, and arguably one of the greatest leaders of all time. He was well-known for his leniency towards his opposition and his patience with his subordinates. For example, during the Civil War, many of Lincoln’s generals did their jobs horribly, and half the nation condemned their incompetency, but Lincoln showed no malice towards them. In another instance, when others spoke harshly of the southern people, Lincoln replied: “Don’t criticise them; they are just what we would be under similar circumstances.”

Investigate Later

The Legendary George Soros famously describes his approach to the market as “Invest first, Investigate later” (Soros, 2003). Many investors are not unable to understand this quote. Is it not much logical to do a thorough research about a company first and only then decide to invest in it or not? Why does Soros say something which completely reverses the process?

To understand the reasoning behind Soros’ famous quote, it is useful to consider a little anecdote by another famous investor, Nicholas Darvas (1960).

The Perfect Speculator

There are many books in the investing literature which do not get their deserved attention, usually due to awful writing and poor presentation. The Perfect Speculator by Brad Koteshwar (2005) is exactly a case like this, in which many great ideas are buried by the clumsiness of the author. That being said, if you look beyond the messy surface, you can find a lot of useful points for speculating in the stock market, especially if you are a fan of Nicholas Darvas (1960), William O’Neil (2009) or Mark Minervini (2013). Below are key messages from the book―

True Breakouts

Most traders have experience drawing trend lines on a chart to identify support and resistance, but they usually do not draw those lines with an objective method, much less to employ them scientifically in a trading decision. To tackle this problem, Thomas DeMark (DeMark 1994, 1997; DeMark & DeMark, 1997, 1999) laid out a set of rules to determine not only how trend lines are drawn, but also how to qualify a breakout, and how to project a price target in case of such a move.

Bullish or Bearish?

Nassim Nicholas Taleb is a famous writer and statistician as well as a former financial trader and hedge fund manager. Many of his books are bestsellers which are praised by well-known figures in the business world (e.g. Gladwell, 2002), and one of them was even picked by the Sunday Times as “one of the best twelve books since the Second World War” (Appleyard, 2009). In the first book, Fooled by Randomness (Taleb, 2005), Taleb shared a story which shaped his entire philosophy of investing.

Investing the Poké Way

The recent virtual reality game Pokémon Go has taken the world by storm. Lots of people, from early twenties to late thirties, are staring at their phone on the streets like zombies in order to catch Pokémon. In addition to the creation of numerous business opportunities, there are a few things that an investor would like to learn from a Pokémon trainer. In the following, the commonalities between catching Pokémon’s and investing in the markets will be explored in details.

Know Your Rules

It is often said that the best traders often have a well-researched system. Famous trading psychologist Brett Steenbarger (2003) wrote, “One unexpected finding from our survey, however, was that a disproportionate number of the successful traders—about half—reported utilising mechanical trading systems.  Of the unsuccessful traders, none were mechanical traders.  When I subsequently interviewed the successful traders, it turned out that even the ones that were not systems traders were basing their trades on patterns that they had carefully researched.  Conversely, almost to a person, the unsuccessful traders lacked such grounding in patterns and research.”