Burton Pugh, a well known trader, market commentator, and writer in the 1930s wrote numerous books, one of which discussed his trading methodology and the psychology behind it. Even after 87 years some things never change and most likely never will. Here is a list of some of the great nuggets of wisdom found in his book A Better Way to Make Money.
1. The secret to losing money in the market is to know why. “The losers “were ‘playing the market’, not using it intelligently. The fellow at the other end of the deal, who was using it intelligently, not ‘playing the market’, is the one who got the money.”
2. “It is an undeniable fact that indiscriminate trading in a hectic market will send one to financial oblivion quicker than any other known process.”
3. “The most careful preparation-a systematic plan-is one of the essentials of success.”
4. “Market action is not complex but surprisingly simple. Yet it is often made to appear complex by newspaper forecasters and market letter writers.”
5. “Market action is human nature in action.”
6. All market movements are based on “two deep-seated and entirely natural emotions: the desire for gain and the fear of loss.”
7. “So anxious are people to find some talisman, some magic wand, that will help them secure the hidden riches of the market, that they will try anything from coin-flipping to crystal gazing to secure the desired assistance.”
8. “What marvelous results could be attained in the business of making money if those who buy stocks would take a little time to learn a few simple facts about the market in which they are blindly reposing their faith.”
9. “Market students are continually diverted from making true evaluations of securities and commodities because they study the statistics made by prices instead of the psychology of prices.”
10. “Adopt one system of trading and stick to it, just as you employ and stick to one physician in whom you learn to have confidence.”
11. “One of the most important points in your market education is to learn as early as possible that the customary and supposedly weighty market news is of very small importance. The news only looks important.”
12. “Don’t trade just because you can afford to lose.”
13. “Practice makes perfect is an old copybook adage that works well in the market place.”
14. “If a trade fails to come out right, the error will be found in the operator-not the market.”
15. “Trading is simple another form of business. Treat it as such.”
16. “Trend to the investor is like the vein of gold to the miner, who must follow the vein faithfully if he expects to get the yellow metal.”
17. “Stocks are made to buy and sell…not to be bought and held.”
18. No matter what a thing costs, stocks or otherwise, “it is worth only what you can somebody to pay for it.”
19. People will always be prone to be extravagantly optimistic or dolefully in the slumps and “in this action is unlimited wealth for the men who realize this fact and will use it with confidence and decision.”
20. “Success is the most desirable thing in the world, but it is an eliminating contest. It may trample the thoughtless trader into the dust, but it will pour large treasure into the laps of those who work in sincere harmony with its laws.”
Bernard Baruch on inside information: “The longer I operated in Wall Street, the more distrustful I became of tips and “inside” information of every kind. Given time, I believed that “inside” information can break the Bank of England or the United States Treasury”.
Baruch adds that most “inside information” is designed to mislead the gullible and that corporate insiders are just as likely to be led astray by their “infallible” informational advantage and belief in the company. His comments closely resemble Jesse Livermore’s sentiments on stock tips and insider information.
Trading on tips: Echoing Joseph Kennedy’s anecdote about the stock-tipping shoe shine boy of 1929, Baruch relates his own tale of taxi drivers, shoe shine boys, and beggars offering hot stock tips and market analysis.
Since President Trump’s election, global equity markets have added more absolute value than at any time in history (around $12 trillion) – surpassing the front-running exuberance that started when Bernanke hinted at QE2 in 2010.
The value of global equity markets reached a record high $76.28 trillion yesterday, up a shocking 18.6% since President Trump was elected. This is the same surge in global stocks that was seen as the market front-ran QE2 and QE3
Of course, some might say this is driven by animal spirits. Still others will proclaim this is all Trump as Obama’s suppressive boot on the throat of business is lifted.
However, there is another explanation… a $1.4 trillion addition to global central bank balance sheets seems to have a curiously strong correlation to the gains…
When Donald Trump arrived in Paris for his first official visit to Emmanuel Macron ahead of Bastille Day celebrations, the media was fascinated whether their “sequel” handshake would be another white-knuckle affair of the “not too innocent” kind, as Macron described his famous first handshake with the US president. In retrospect, it was a bit of a letdown, perhaps because since then the two had several opportunities to work on their greetings and appeared both more at ease, although questions did emerge about Trump’s handshake with Brigitte Macron, which among other things, afforded Trump the opportunity to say the first lady was in “great shape.”
But if the introductory handshake was less than remarkable, nobody was ready for the most recent Trump-Macron poignee de mains, which the Independent described as a “strange, shifting, exruciating coming together that appeared to have a life of its own.”
Many who witnessed the handshake, as the men walked down the Champs-Élysées, said it looked bizarre, however it appeared anything but for the US President who was so at ease with his French host and the Bastille Day crowds, that the handshake lasted no less than 30 seconds.
Twelve seconds into the handshake – with both men on the move at this point – Trump put one hand on Macron’s chest and, a few moments later, placed his left arm on the shoulder of Ms Macron, while still holding on her husband with his right. Then Trump briefly takes the French First lady with both hands, while Macron keeps holding onto Mr Trump’s right hand as well. Finally, with the timer on 28 seconds, Mr Trump grips Mr Macron’s hand once more, taps his fingers and finally lets him go. A full half-minute of presidential flesh-pressing has taken place.
Meanwhile, it was difficult to decipher what Melania Trump made of this manual ménage à trois: she stoically watched and smiled a full 30 seconds before her husband and the Macrons appeared to realize she was there. Then they finally held hands with her too. Ultimately, the event was deemed sufficiently dramatic for CNN to create a “second-by-second” analysis of the Trump-Macron handshake.
US banks remain under scrutiny next week as Bank of America and Goldman Sachs report results, while overseas, investors are likely to watch the latest growth figures out of China and the European Central Bank’s monetary policy meeting.
Here’s what to watch in the coming days.
After the conclusion of China’s National Financial Work Conference, held once every five years, investors turn their attention to Chinese GDP data due Monday (local time). Economists estimate the GDP growth ticked up in the second quarter, rising 1.7 per cent from the first quarter, when it was up 1.3 per cent.
However, growth is expected to have cooled to 6.8 per cent year-on-year, compared to 6.9 per cent in the first quarter.
The European Union’s Brexit negotiator, Michel Barnier, meets his UK counterpart David Davis in Brussels on Monday for their second round of divorce talks. The talks come as Mr Barnier has grown frustrated with Britain’s approach.
Foreign secretary Boris Johnson said the Europeans could “go whistle” over their “extortionate” claim for a financial payment on leaving the EU. In response, Mr Barnier noted, “I don’t hear whistling, just the clock ticking”.