100 Secret Strategies
Chapter 1 — Markets
1.1 Fear the market.
1.2 Markets are more efficient than generally acknowledged.
1.3 Market opportunities are disappearing.
1.4 The markets can overwhelm government intervention.
1.5 The market is strengthened by speculation.
1.6 Respect the market not the experts.
1.7 Most professionals are not outguessing the market.
1.8 Listen and read very critically.
1.9 Understand recent history.
Chapter 2 — Comparative Advantages
2.1 Everybody is a hero in a bull market!
2.2 Never stray from your comparative advantages.
2.3 A small percentage advantage is enough to outperform the market.
2.4 Test the advantage over time and make changes slowly.
2.5 Financial markets advantage #1: Information.
2.6 Financial markets advantage #2: Original analysis.
2.7 Financial markets advantage #3: Brokers and bankers have extra information and free insurance.
2.8 Financial markets advantage #4: Understanding market behaviour.
2.9 The Rules are based on six types of market behaviour:
- There remain patterns and anomalies in the markets.
- Markets are slow to react to structural influences.
- Small companies offer more opportunities.
- Markets go further than generally expected.
- Markets move in underlying trends.
- A view on the fundamentals can be combined with price movements to manage trading positions.
Chapter 3 — Risk
3.1 Good ideas can lose money.
3.2 Asymmetry has fooled a lot of investors.
3.3 Wild swings and losses are uncomfortable, but they may offer the best rewards.
3.4 Diversify.
3.5 Assess risk - and then double it.
3.6 Risk adjust results after the trade.
3.7 Qualities of the successful trader.
3.8 Trading pressure increases with amount at risk.
3.9 The trader's dilemma - the stop loss?
Chapter 4 — Patterns And Anomalies
4.1 Choose the right markets.
4.2 The share market dilemma.
4.3 Crisis situations almost always provide an opportunity.
4.4 Short term interest rates will tend toward the inflation rate plus the economic growth rate.
4.5 Government bond markets for the major economies are not prone to crashes.
4.6 Currencies: two economies and fact or fashion?
4.7 Some markets are driven by supply.
4.8 Property prices often lag stock prices.
4.9 Chartists are the astrologers of the markets.
Chapter 5 — Big Ideas
5.1 Look for the next Big Thing.
5.2 Ignore obscure theories and observations.
5.3 Only invest in the broad markets when they are in line with the prevailing economic environment.
5.4 Be methodical - use a checklist to quantify and add rigour to a view.
5.5 Buy stocks when economic growth is strong and inflation is weak.
5.6 Buy bonds when inflation and economic growth are both weak.
5.7 Buy commodities when inflation and economic growth are both strong.
5.8 Few assets benefit when inflation is strong and economic growth is weak.
5.9 You are unlikely to out-analyse the analysts.
Chapter 6 — Small Companies
6.1 The quality of a company's management is by far the most crucial factor in determining its success.
6.2 Determining the fair valuation is more difficult with small companies.
6.3 Clearly identify the comparative advantages.
6.4 Be sure the business is sustainable.
6.5 Good products don't always sell.
6.6 Growth puts strains on small companies.
6.7 Be sure of a route to exit and adequate cash resources.
6.8 Shareholders can help unlisted companies.
6.9 Be pragmatic with due diligence.
Chapter 7 — Prices Go Further Than Expected
7.1 Forget the old price.
7.2 People often misjudge probability and logic.
7.3 A price is an average of possibilities.
7.4 The probability can be asymmetric.
7.5 Be nervous when a market doesn't rally on good news.
7.6 Don't day-trade!
7.7 Avoid trading in options if you do not understand their pricing.
7.8 Back your hunches with at least a small investment.
7.9 Features of good trading models.
Chapter 8 — The Understanding and Use Of Trends In Prices
8.1 Trends operate across commodities, currencies, interest rates, stocks and property.
8.2 Trends have been in operation for a long time.
8.3 It is not true that markets usually over-react.
8.4 Trends are resistant despite being well known.
8.5 Trends represent the gradual dispersal of information.
8.6 Price reaction is delayed by inertia and scepticism.
8.7 A rising price attracts buyers.
8.8 Economic cycles breed market cycles.
8.9 News against the trend is often ignored.
Chapter 9 — Market Timing
9.1 Ignore the noise in price movements.
9.2 Don't be a hero - do not buy falling markets.
9.3 Trade with the trend - wait for the trend before you enter the market.
9.4 Add to winning trades, not losing trades.
9.5 It is safe to be with the consensus.
9.6 Do not use price targets or time limits.
9.7 If the fundamentals have changed, adjust the position accordingly.
9.8 You will not get the high or the low.
9.9 A powerful model shows probability is on your side.
Chapter 10 Avoiding Temptation
10.1 Identify what is difficult about the existing environment. It may change.
10.2 Monitoring trends may alert you to opportunities you wouldn't normally find.
10.3 With success, bank some profits.
10.4 Negotiation is an art.
10.5 The evolution of the con-artist.
10.6 Wealth preservation is not simple.
10.7 Be sceptical of sophisticated retail products.
10.8 Management and brokerage fees should be minimal in a passive portfolio.
10.9 Follow these rules and be part of the hedge fund (r)evolution.
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Companies
See the companies that Richard has invested in over the years.Got ideas?
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