Ten Lessons to Be Learned from the Market Decline
Hedge fund manager Doug Kass gives people some needed reminders:
1. Above all, do your own homework! Do not rely on television commentators, strategists, biased money managers (who are talking their book!) in your decisions. Do your own research. Use the significant resources on the Internet to accomplish this.
2. Use old-fashioned common sense! If things look too good, they probably are and will turn down. If things look too bad, they probably will turn around and improve.
3. Don't be afraid to be a contrarian -- in small doses! When everyone (and their entire family) is long a sector or is avoiding a sector (and is exceptionally glib about it), it should be a sign to go the other way.
4. Let your gains run and stop your losses! -- Don't average down.
5. Be a cynic and remain skeptical even when the good times are apparent! This especially true as it relates to government statistics.
6. Let speculation be your guide! If investors all around you are losing their heads, don't lose yours.
7. Read and reread the classic books on investing! In bull markets, the historical perspective is disregarded. But in bear markets, or volatile markets, the history lessons are invaluable as market conditions/influences are nearly always repeated.
8. When times are tough (like the present), do not press your investments and do not overtrade! Mr. Market will be back up and running tomorrow ... and the next day.
9. In uncertain times do a simple piece of homework: Reassess why you own each investment! Omega Advisors' Leon Cooperman taught me to draw a line in the middle of a page and list how you view the assets and liabilities for the markets and for each individual investment.
10. Do not forget point #1!
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Source:
Ten Lessons to Be Learned in
the Recent Market Decline
Doug Kass
Street Insight, 10/6/2005 7:43 AM
EDT
http://www.thestreet.com/i/_htmlsi/dps/te/20051006/theedge1.html#entryId10245970
Sunday, October 30, 2005 | 10:45 AM | Permalink
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The Big Picture has a list of reminders for a market downturn. Here it is: Hedge fund manager Doug Kass gives people some needed reminders: 1. Above all, do your own homework! Do not rely on television commentators, strategists, biased [Read More]
Tracked on Oct 30, 2005 9:09:48 PM
Comments
what are the Financials telling us? -- the S&P Financial sector is at 6 month+ Relative Strength highs
Posted by: bill | Oct 31, 2005 8:16:43 AM
The link to "classic books on investing" goes to membership website. How about a list of some books for the noob investor? Especially, on how to succeed at rule #1--doing your homework. In other words, what do I look for in the research?
Posted by: steve | Oct 31, 2005 1:09:04 PM
#3 is debatable. One of the toughest lessons i've learned is when everyone is bullish, then you become bullish too....don't fight the trend. Just know when to get out before the reversal kicks in. The MACD is a very good short term momentum indicator and of course volume, RSI and the A\D on reversals.
Posted by: TonyTheTiger | Nov 1, 2005 1:16:48 AM
