Monday, November 7, 2011
The market made a nice u-turn late into the trading day for it was pummelled by the bears after the open.
It's a very volatile market and day traders love the market swings.
Investors are having a hard time coping with the high volatility the market brings.
The market is still in the range and it take more sentiments on the part of the participants for the market to go higher.
It's a very volatile market and day traders love the market swings.
Investors are having a hard time coping with the high volatility the market brings.
The market is still in the range and it take more sentiments on the part of the participants for the market to go higher.
Saturday, November 5, 2011
Disclaimer: I realize this topic stirs strong emotions, but I think it’s both interesting and important. Besides, if any group is capable of having a deep discussion about it, it’s Get Rich Slowly readers. You folks are both civil and intelligent.
Long ago, when this site was young, I reviewed Secrets of the Millionaire Mind by T. Harv Eker. Eker believes that we each possess a “financial blueprint”, an internal script that dictates how we relate to money. Our blueprints are created through lifelong exposure to money messages from the people around us. Unfortunately, Eker says, most of us have faulty blueprints that prevent us from building wealth.
In his book, Eker lists seventeen ways in which the financial blueprints of the rich differ from those of the poor and the middle-class. According to him:
- Rich people believe: “I create my life.” Poor people believe: “Life happens to me.”
- Rich people play the money game to win. Poor people play the money game to not lose.
- Rich people are committed to being rich. Poor people want to be rich.
- Rich people think big. Poor people think small.
- Rich people focus on opportunities. Poor people focus on obstacles.
- Rich people admire other rich and successful people. Poor people resent rich and successful people.
- Rich people associate with positive, successful people. Poor people associate with negative or unsuccessful people.
- Rich people are willing to promote themselves and their value. Poor people think negatively about selling and promotion.
- Rich people are bigger than their problems. Poor people are smaller than their problems.
- Rich people are excellent receivers. Poor people are poor receivers.
- Rich people choose to get paid based on results. Poor people choose to get paid based on time.
- Rich people think “both”. Poor people think “either/or”.
- Rich people focus on their net worth. Poor people focus on their working income.
- Rich people manage their money well. Poor people mismanage their money well.
- Rich people have their money work hard for them. Poor people work hard for their money.
- Rich people act in spite of fear. Poor people let fear stop them.
- Rich people constantly learn and grow. Poor people think they already know.
Recently, somebody pointed me to a similar book: The Top 10 Distinctions Between Millionaires and the Middle Class by Keith Cameron Smith. I haven’t had a chance to read this yet (it’s on my to-do list), but I glanced through some of it at Google books. Like Eker, Smith attempts to differentiate between the mindsets of the rich and the rest of us.
His ten distinctions are:
- Millionaires think long-term. The middle class thinks short-term.
- Millionaires talk about ideas. The middle class talks about things and people.
- Millionaires embrace change. The middle class is threatened by change.
- Millionaires take calculated risks. The middle class is afraid to take risks.
- Millionaires continually learn and grow. The middle class thinks learning ended with school.
- Millionaires work for profits. The middle class works for wages.
- Millionaires believe they must be generous. The middle class believes it can’t afford to give.
- Millionaires have multiple sources of income. The middle class has only one or two.
- Millionaires focus on increasing their wealth. The middle class focuses on increasing its paychecks.
- Millionaires ask themselves empowering questions. Middle-class people ask themselves disempowering questions.
Maybe the difference is this: From my experience (and your experience may be different), Eker’s many distinctions hold true (at least in the U.S.). I’ve seen the differences he describes in my own life. But I’m not convinced that the differences Smith lists do hold up.
I know lots of people who talk about ideas rather than things and people, for instance, and I know many folks who embrace change. Many of my friends are continually learning, but they’re not millionaires. And haven’t we seen statistics that show, based on a percentage of income, poor people give more than the rich do? I’m not ready to dismiss Smith’s list outright — I need to read his book to see how he supports his claims — but my initial reaction to his list is skepticism.
But I think both authors are too quick to dismiss systemic causes of poverty. And perhaps neither of them has ever actually been poor. Some of their criticisms make sense, but some are grounded in a mindset of wealth. “Rich people act in spite of fear,” Eker writes. “Poor people let fear stop them.” Why is that? Could it be that the rich can act in spite of fear because they have a safety net?
There’s no question that wealth brings opportunities, both in the U.S. and in other countries. Those with money have more choices. The rich can take risks, and they’re often rewarded for taking them. (Thus, “the rich get richer”.) I have so many more options now than I ever did when I was a boy, when my family was poor. I’m one of the lucky ones who has managed to make good. Yes, a lot of that was through hard work, but there’s no question that I’ve been lucky. And I think this element of “luck” is something that both Eker and Smith miss.
There are differences between the mindsets of the rich and the poor, of this I’m sure. But I think they’re closer to Eker’s list than to Smith’s. (And, really, they’re probably closer yet to the attitudes described in The Millionaire Next Door.)
What do you think? From your experience, what are the differences between the rich and the poor? How do the rich think differently? What behaviors to the poor and the middle-class have that the rich do not? Or is it even possible to create distinctions like this? Does it all just come down to luck?
Note: I think Eker and Smith are talking about the rich and the poor in the U.S. Globally, the differences between the rich and the poor are myriad and complex. Don’t get me started about the long-lasting effects of European colonialism…
The market (YM Futures) drop in the regular (Friday) open but barely recover from its slump after lunch break.
As can be seen from the chart (the 5-min.) below, it consolidates tightly for almost three hours between 11800 to 11850 level.
It formed the classic cup with a handle pattern.
It is still a bearish sentiment on the part of the participants because it did not finish/close with the high of the day which is the 12000 level.
Unless a favorable news event that will develop before the market opens on Monday from Europe especially from the Greeks, a potential bear trend is possible.
But overall indications on the daily chart points to a bullish trend, it is just showing a slight pullback.
The participants are already used to the news driven market, and traders especially the short termers are on the cloud.
As for the investors (the longs), they are positioning slowly.
Let's just trade what we see this coming Monday.
As can be seen from the chart (the 5-min.) below, it consolidates tightly for almost three hours between 11800 to 11850 level.
It formed the classic cup with a handle pattern.
It is still a bearish sentiment on the part of the participants because it did not finish/close with the high of the day which is the 12000 level.
Unless a favorable news event that will develop before the market opens on Monday from Europe especially from the Greeks, a potential bear trend is possible.
But overall indications on the daily chart points to a bullish trend, it is just showing a slight pullback.
The participants are already used to the news driven market, and traders especially the short termers are on the cloud.
As for the investors (the longs), they are positioning slowly.
Let's just trade what we see this coming Monday.
Friday, November 4, 2011
The C=L U=M Principle
Most
people like to stay within a range of relative comfort; a range that is self
imposed. This is known as your comfort zone. For most of us, the grand majority
of our experiences and daily life’s routines are within the limits of what we
already know; the boundaries that we set, the fence that we build around us to
feel safe.
We tend to ignore the outer limits of this circle of comfort almost all of the time. The unknown is a scary proposition for most. The CLUM principle simply states that COMFORTABLE = LESS OPPORTUNITY AND UNCOMFORTABLE = MORE OPPORTUNITY; C=L U=M
The simple fact is: opportunity is in the areas that few are willing to venture. In the circle of humanity, you’re part of the circle. And, in order for you to take advantage of inefficiencies in the so-called system, you must go outside the system. You must, at some point, be a lone wolf. This requires you to be a little different than the “norm.”
You will need to go beyond what you know the outcome is going to be. That’s right; you need take some risks and go outside your comfort zone. It won’t be easy, because most people will tell you you’re crazy or it can’t be done. However, you will likely notice that most of the people who try to discourage you are usually not very successful and the ones that encourage you are generally the more successful people.
Now if you want to be successful and achieve your dreams, this will require a new way of thinking that entertains the idea that we have a much greater capacity for living, for accomplishment and enjoyment; that we can enjoy things that may seem unenjoyable at first glance. And, that we have the capacity to stretch our comfort zone to new limits and dimensions.
When you stretch your comfort zone to a new limit, it never returns back to its old dimension; it becomes your new comfort zone, ready to challenge you to go beyond its limits or walls once again.
Like a game of golf; you’ll never shoot a perfect game of eighteen holes in one. However, you keep trying to improve and stretch your game to new limits and the game is always challenging.
Whenever you hit a limit, whenever you hit a wall or you feel nervous or scared in the face of a challenge or a new idea, view these situations or experiences in life as the chances that you’re given to succeed and reach your true potential. These are the times that you could look back on and say “that was my big break” or “that was when I should have done x”. It’s your choice.
These moments happen all through your life and give you a multitude of great opportunities to accomplish and to achieve your desires if you’re willing to take the risk of going beyond what you already know and try new things. It’s at those specific moments that you are asked to go beyond your limits and stretch your thinking that will, in the long run, define your success.
So, next time you’re faced with a tough decision or a challenge, look at it from a new perspective; tell yourself that this is one of those great moments that life is offering me; a chance to be all that I can be. This is one of the great gifts of life; the natural call to arms. It may not always work out, but these are the moments that offer you the opportunity to be different than most; to be a winner.
Mark Minervini
We tend to ignore the outer limits of this circle of comfort almost all of the time. The unknown is a scary proposition for most. The CLUM principle simply states that COMFORTABLE = LESS OPPORTUNITY AND UNCOMFORTABLE = MORE OPPORTUNITY; C=L U=M
The simple fact is: opportunity is in the areas that few are willing to venture. In the circle of humanity, you’re part of the circle. And, in order for you to take advantage of inefficiencies in the so-called system, you must go outside the system. You must, at some point, be a lone wolf. This requires you to be a little different than the “norm.”
You will need to go beyond what you know the outcome is going to be. That’s right; you need take some risks and go outside your comfort zone. It won’t be easy, because most people will tell you you’re crazy or it can’t be done. However, you will likely notice that most of the people who try to discourage you are usually not very successful and the ones that encourage you are generally the more successful people.
Now if you want to be successful and achieve your dreams, this will require a new way of thinking that entertains the idea that we have a much greater capacity for living, for accomplishment and enjoyment; that we can enjoy things that may seem unenjoyable at first glance. And, that we have the capacity to stretch our comfort zone to new limits and dimensions.
When you stretch your comfort zone to a new limit, it never returns back to its old dimension; it becomes your new comfort zone, ready to challenge you to go beyond its limits or walls once again.
Like a game of golf; you’ll never shoot a perfect game of eighteen holes in one. However, you keep trying to improve and stretch your game to new limits and the game is always challenging.
Whenever you hit a limit, whenever you hit a wall or you feel nervous or scared in the face of a challenge or a new idea, view these situations or experiences in life as the chances that you’re given to succeed and reach your true potential. These are the times that you could look back on and say “that was my big break” or “that was when I should have done x”. It’s your choice.
These moments happen all through your life and give you a multitude of great opportunities to accomplish and to achieve your desires if you’re willing to take the risk of going beyond what you already know and try new things. It’s at those specific moments that you are asked to go beyond your limits and stretch your thinking that will, in the long run, define your success.
So, next time you’re faced with a tough decision or a challenge, look at it from a new perspective; tell yourself that this is one of those great moments that life is offering me; a chance to be all that I can be. This is one of the great gifts of life; the natural call to arms. It may not always work out, but these are the moments that offer you the opportunity to be different than most; to be a winner.
Mark Minervini
Volatility Will “Crush the Stock Market” Says Ben Stein
In no particular order Ben Stein has been a speechwriter for Presidents Ford
and Nixon, an actor, the host of "Win Ben Stein's Money," an economist, a
columnist specializing in corporate fraud for Barron's, a novelist, a
screenwriter, a trial lawyer, a poverty lawyer, a professor, and this
guy. The man is a walking bucket list.
His latest book is "What Would Ben Stein Do?" Breakout being a financial show, I started asking him what he would do with his money. Specifically, what would Ben Stein do if he were 30 years old and trying to build a nest-egg in a world where stocks have been dead money for as long as anyone can remember and there's a growing sense that the financial world is rigged in favor of Big Money?
"If I were 30 I'd put a third in short-term Treasuries, very short-term," he tells me in a voice I can only describe as Ben Stein-ish. "Then I'd put two-thirds in the broadest possible index, which would be the VTI, the Vanguard Total World Stock Market Index (VTI) and I'd just add to it every month, even when people were in deep fear."
Buy and hold?!? Dollar cost averaging? Dump more money into this ticking time bomb of a financial system? Stein is ready and more than able to debate every point of the erosion of the global economy, but his trump card for owning equities is simple: "There's no alternative." No, gold bugs, he doesn't think being long commodities is a long-term solution, either. He's actually terrified of gold.
Noting that investors who bought gold as long ago as 1978 would still be "licking their wounds" on an inflation-adjusted basis, Stein says it'll likely be the Chinese who pull the rug out from under gold this time. If and when the Chinese realize hoarding the barbaric metal has been a mistake "that will be the end for gold."
So we're back to stocks as the only place for real savings but it's hard to be very happy about it. I've spent most of my adult life in the markets and even I find it disturbingly frenetic lately. I frankly can't understand why anyone who didn't already have money to spare would be comfortable buying and holding an asset as volatile as equities.
Stein doesn't entirely disagree, saying volatility "is going to crush the stock market as a vehicle of investment for the ordinary citizen... at least for a while." Regardless, he still thinks investors are stuck with equities if they want real returns.
That being the case, Stein would spread his portfolio of stocks "across asset classes, geographically, industries, sectors; the broadest possible diversification." He'd try to minimize his correlation to any specific market and put away 10% of his gross wages every month. "Tithing for yourself," if you will. The goal is self-reliance in your old age, and as Stein sees it, the stakes couldn't be higher.
"Human beings are not that nice," says Ben Stein. "You don't want to have to rely upon them for survival in your old age. You want to rely on money. Money is sometimes cruel, sometimes nice, but don't try to rely on people. Rely on what you've got saved up."
His latest book is "What Would Ben Stein Do?" Breakout being a financial show, I started asking him what he would do with his money. Specifically, what would Ben Stein do if he were 30 years old and trying to build a nest-egg in a world where stocks have been dead money for as long as anyone can remember and there's a growing sense that the financial world is rigged in favor of Big Money?
"If I were 30 I'd put a third in short-term Treasuries, very short-term," he tells me in a voice I can only describe as Ben Stein-ish. "Then I'd put two-thirds in the broadest possible index, which would be the VTI, the Vanguard Total World Stock Market Index (VTI) and I'd just add to it every month, even when people were in deep fear."
Buy and hold?!? Dollar cost averaging? Dump more money into this ticking time bomb of a financial system? Stein is ready and more than able to debate every point of the erosion of the global economy, but his trump card for owning equities is simple: "There's no alternative." No, gold bugs, he doesn't think being long commodities is a long-term solution, either. He's actually terrified of gold.
Noting that investors who bought gold as long ago as 1978 would still be "licking their wounds" on an inflation-adjusted basis, Stein says it'll likely be the Chinese who pull the rug out from under gold this time. If and when the Chinese realize hoarding the barbaric metal has been a mistake "that will be the end for gold."
So we're back to stocks as the only place for real savings but it's hard to be very happy about it. I've spent most of my adult life in the markets and even I find it disturbingly frenetic lately. I frankly can't understand why anyone who didn't already have money to spare would be comfortable buying and holding an asset as volatile as equities.
Stein doesn't entirely disagree, saying volatility "is going to crush the stock market as a vehicle of investment for the ordinary citizen... at least for a while." Regardless, he still thinks investors are stuck with equities if they want real returns.
That being the case, Stein would spread his portfolio of stocks "across asset classes, geographically, industries, sectors; the broadest possible diversification." He'd try to minimize his correlation to any specific market and put away 10% of his gross wages every month. "Tithing for yourself," if you will. The goal is self-reliance in your old age, and as Stein sees it, the stakes couldn't be higher.
"Human beings are not that nice," says Ben Stein. "You don't want to have to rely upon them for survival in your old age. You want to rely on money. Money is sometimes cruel, sometimes nice, but don't try to rely on people. Rely on what you've got saved up."
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