What We're Reading

I don't actually embrace this headline.  In my experience, yes, emotions exist while paper trading.  It's merely that you can sleep at night knowing your bank account didn't go up in flames but that's just me.  It's also essential in my book that you determine what "type" of trader you want to be.  It's one thing to say you want to invest like Warren Buffett but just what does that entail?  Do you rally know?  It's also super easy to be sucked in by get-rich-quick ads and bloggers who entice you to sign up for their premium edition (none of which I recommend).  Don't underestimate the market.  It's NOT easy, even if you believe you've got a plan and everyone loses.  Everyone.  The trick is not to be fooled.  Ignore the headline newsfeed hype and learn to invest without emotion.  You'll be going up against high-frequency programs and number crunchers with degrees.  Are you truly ready to put up your hard earned cash against them?   Remember, if it were simple, everyone would be doing it

Have you ever believed a trend is about to change but your basic, every day indicators don't quite support your theory so you insert different studies, looking for one or two which could support your thesis? Yes, soldier and scout mindsets affect your decision making when investing but remember, that's your theory.  Does the rest of the crowd believe what you do?

A reader asked the other day, "How much time do you need before you can separate skill versus luck in investing?" 

My answer was "probably 20-30 years," which he found astounding. He thought I'd say five years. But here's my reasoning. 

If a doctor performed one successful surgery, you can be pretty sure he's an expert. If he does one successful surgery every day for a year, he clearly knows what he's doing.

Investing is different. There are thousands of stocks, and at any given time, a fair number of them will be exploding higher. With millions of investors, some will be holding disproportionate amounts of those winners at any given moment. It can take five or 10 years of successful returns for an investor to make a case that results aren't entirely due to chance.

But even then -- with, say a 10-year track record of success -- an investor can't claim expertise. Or at least reliable expertise you'd expect from a doctor or an engineer. That's because the world is always changing, and th

With 50 years at Berkshire Hathaway, I still read in on articles featuring Mr. Buffett.  You just never know what you'll find..

1. “We are limited, of course, to businesses whose economic prospects we can evaluate. And that’s a serious limitation: Charlie and I have no idea what a great many companies will look like ten years from now.”

“My experience in business helps me as an investor and that my investment experience has made me a better businessman. Each pursuit teaches lessons that are applicable to the other. And some truths can only be fully learned through experience.”

Treat an investment security as a proportional ownership of a business!  A security is not just a piece of paper. Not all businesses can be reasonably valued. That’s OK. Put them in the “too hard pile” and move on. 
 

2. “Periodically, financial markets will become divorced from reality.”

“For those investors who plan to sell within a year or two after their purchase, I can offer no assurances, whatever the entry

We've spoken numerous times in Chat about various apps for our smart phones and tablet, but how many apps are truly out there?  Google is alleged to have over 700 apps in Google Play however I've never counted and I'd imagine that number fluctuates continually as old, blah apps are deleted and replaced with hip, upbeat inspirations.  Of course this still does not include apps for Apple iPhones/tablets and those apps just sitting out there on blogs and websites.  It boggles the mind so I began a search and came across this list, which strangely misses tdAmeritrade's Think or Swim app; but what apps do YOU use?  Please add them to the comments below or give us your opinion on those shown.  I'd love to hear from you!

1. CNBC Real-time - Download - Free app that allows you to view real-time quotes before, during and after market hours. Other features include watching CNBC video clips, viewing charts, and managing a watch list.

2. Yahoo! Finance - Download - Yahoo's free stock app offers

So the markets now are driven by the fiscal cliff.  What will happen?  If they don't do something, the markets will plunge.  If they come to some sort of agreement, the Dow would be up 1,000 points. 

Nobody wants to be long on a failure to come up with a solution, and nobody wants to miss the boat on a 1,000 point Dow rally.   OK, 1,000 points is not much.  Maybe I should say 2,000 points.

In any case, this reminds me of a recent Howard Marks interview where he talked about the European situation.  He says there are three things he can say for certain about the situation:

1. He doesn't know what will happen in Europe
2. Nobody knows what is going to happen in Europe
3. If you ask an expert what they think will happen and take their advice, it would be a mistake.

So to apply this to the current situation:

1. I have no idea what will happen in Washington with the fiscal cliff
2. Nobody knows what will happen in Washington with the fiscal cliff
3. If you ask an expert what they think will happen and take the

This has a lot of good information in it. It's in pdf format so you can download it and keep it for future reference..C.pdf