Financial / Investing / Markets

Bulls make money, Bears make money–Pigs get slaughtered

ImageOkay, you’ve been following my blogs and advice on saving, anticipating, avoiding scams, being opened to new ideas and opportunities. But most of all, you followed Grace Century’s predictions for a weaker dollar, higher rates, strong real estate, and higher equity markets over the last two years:

Now what?
One of the biggest thieves of profit is greed. The saying in the business is “bulls make money, bears make money, and pigs get slaughtered.” You must follow some simple guidelines and trading rules when in the investment arena:

  • You will never buy the bottom or sell the top. The idea is to make money; you can never go broke “ringing the cash register.”
  • Know where you will get out if you are wrong, before you get in!
  • As your investment starts to make money, protect the profits you make with trailing stops or predefined levels that you will exit. You can usually always get backbull and bear in.
  • Ego has no place in investing.
  • The Market is always right.
  • It isn’t yours until you exit.
  • Anything above 10% in a position, especially an equity position, is a windfall and unusual in a year. Some stocks have tripled not only in the run from the bottom, but from the beginning of the year. Ask yourself, “Am I closer to the bottom or the top?” Like the selling rates on U.S. bonds, my downside is at 1%. My upside is around 6% (just to normalcy). I will take that scenario all day long.
  • Never risk more than you can lose.
  • Never risk more than you expect to gain. To risk $1 to make $1 doesn’t make sense. That’s why we don’t recommend gold, not because we don’t think it will go up, but because if we are wrong; the downside risk is as much as the upside potential.
  • Never turn a winner into a loser.
  • When you are buying or selling, you are doing so from someone who has an opposite opinion. If they didn’t, why would they buy or sell from you? When everyone has the same consensus, that’s usually the top or the bottom as the last people who could buy or sell have done so already. It’s imperative to keep an ear on market consensus.
  • Never add to a loser. If you entered properly under the original scenario and the position has moved against you, your original assumption is probably wrong. Get out and reassess.

Investing cannot be a hobby if you expect to succeed. You are competing against professionals who are seasoned and treat it as a business. If you have followed our advice; congratulations and thank you.

If you haven’t, tomorrow is a new day!

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