Warren Buffet and Jesse Livermore had said more than a dozen times in their memoirs that position sizing is what that differentiate them from the rest. Even, the legendary speculator George Soros also claimed that
War:
A great general always knows that espionage is essential in warfare - whether spy, swallow or even drone. Currently, it is cyber warfare. "Direct war without knowing your terrain is suicidal" - Sun Tzu Art of War. That's important of scout in Position Sizing.
Early 19 Century scenario (Jesse Livermore):
The stock market was blooming and Jesse recalls an incident whereby someone gave JP Morgan tips that General Motors is going up. Do you know what JP Morgan do after the tips, he sells down 20K share of General Motors, 3 times consecutively and General Motors still being able to absorb well the selling pressure. The tipsters were blunted and walk away but JP Morgan said that he will give him a profit of 5K share and later Morgan covered his 60K short and bought 300K share of General Motors. Jesse comes to the conclusions that man of greatness does not trust whatever anyone says unless proven by his own conviction.
Asian Financial Crisis (George Soros):
During the Asian Financial Crisis, George Soros tested his "scout" on the vulnerability of the Asian economy in Bangkok several times and he found out that there was a limited buyer. So, he asked his lieutenant to "go for the jugular" or in other words "go for the killing." But, he tested his "scout" in China and Brazil and they failed badly. So, he stopped. That's why he still a billionaire today (even though he started off with welfare fund during university days) and Long Term Capital Management (LTCM) with 2 Nobel Laurette and Trillions of dollar failed all due to position sizing.
Current Scenario (Warren Buffet):
Do you know that Warren Buffet owns every counter in Dow Jones and Nasdaq, but albeit in small size? Why? Because he liked to used position sizing to his advantage. Warren Buffet would always send "scout" for his stocks and if his scout dies, he just forgets about it. He concluded that it is not worthwhile to invest in such a company after all. If his scout succeeded and he likes it, he would pay more of it and wack to his heart desire, this happens to Coca-Cola in the '90s.
Comments:
It's better to have a very small position in everything and when you are very very sure "go for the jugular." as "the money sitting idle will be ready to accomplished something great when the time has come."
"There is time to buy, time to sell, time to go on holiday." - Jesse Livermore.
Good Luck! Amigo!
Yours Sincerely,
Dr. Lion.
War:
A great general always knows that espionage is essential in warfare - whether spy, swallow or even drone. Currently, it is cyber warfare. "Direct war without knowing your terrain is suicidal" - Sun Tzu Art of War. That's important of scout in Position Sizing.
Early 19 Century scenario (Jesse Livermore):
The stock market was blooming and Jesse recalls an incident whereby someone gave JP Morgan tips that General Motors is going up. Do you know what JP Morgan do after the tips, he sells down 20K share of General Motors, 3 times consecutively and General Motors still being able to absorb well the selling pressure. The tipsters were blunted and walk away but JP Morgan said that he will give him a profit of 5K share and later Morgan covered his 60K short and bought 300K share of General Motors. Jesse comes to the conclusions that man of greatness does not trust whatever anyone says unless proven by his own conviction.
Asian Financial Crisis (George Soros):
During the Asian Financial Crisis, George Soros tested his "scout" on the vulnerability of the Asian economy in Bangkok several times and he found out that there was a limited buyer. So, he asked his lieutenant to "go for the jugular" or in other words "go for the killing." But, he tested his "scout" in China and Brazil and they failed badly. So, he stopped. That's why he still a billionaire today (even though he started off with welfare fund during university days) and Long Term Capital Management (LTCM) with 2 Nobel Laurette and Trillions of dollar failed all due to position sizing.
Current Scenario (Warren Buffet):
Do you know that Warren Buffet owns every counter in Dow Jones and Nasdaq, but albeit in small size? Why? Because he liked to used position sizing to his advantage. Warren Buffet would always send "scout" for his stocks and if his scout dies, he just forgets about it. He concluded that it is not worthwhile to invest in such a company after all. If his scout succeeded and he likes it, he would pay more of it and wack to his heart desire, this happens to Coca-Cola in the '90s.
Comments:
It's better to have a very small position in everything and when you are very very sure "go for the jugular." as "the money sitting idle will be ready to accomplished something great when the time has come."
"There is time to buy, time to sell, time to go on holiday." - Jesse Livermore.
Good Luck! Amigo!
Yours Sincerely,
Dr. Lion.
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