With the New Year fast approaching it probably is a good time to reflect on how you have performed. The question all traders on HC have to answer is, “where are you on the traders’ food chain?” Unfortunately, far too many are just the bait. By the bait I mean traders who do no research & come to a trading situation well after it has run, only to later sell at a loss because everyone else has dumped & you finally get dragged into the dump as well. Here are a few ideas that may lower the chance of you being a victim in a Day traders Dump: 1. Try & develop your own independent research methods & have some original ideas (or at least ones not plastered over the Day traders Thread). Remember nothing beats original research, yes it is time consuming but it is the only way to get better at this game. Research is what gives a trader a competitive advantage in this game. If you can’t see yourself developing some competitive advantages in this game may be you would save your money by leaving this game. 2. Pareto Law would imply 20% of the traders on HC make 80% of the winnings while 80% are unsuccessful over time. Remember Michael Jordan in basketball was making 160 times the lowest paid professional player in his competition & he was obviously worth it to his club in terms of revenue generation. So HC doe have a few Michael Jordan players but remember they may not post a lot or even at all. If you follow the “I’m in”, one liner on HC you certainly are bait. So be very careful in finding posters for your Favorite’s List. Remember they don’t have to post a lot but they must know their stuff & hopefully originate threads. By the way always confirm their research. 3. Be careful of the stock that receives numerous posts on HC! Just because it has been mentioned 10 plus times in the day doesn’t make it a buy. You need to think, was I in this stock before the “mob” arrived or after. 4. At some stage we are all going to finish up holding “The Mob Stock of the Week/Day”, but we do need to develop a trading strategy to learn how not to be greedy & lock in our profits before the “Mob” exit & leave the pain. 5. When reading HC posts, ask,” is this poster providing some genuine input/information/research or are they only looking after their self interest in the current ownership of the stock posted on?” 6. Perhaps the most important rule is: “no one is going to tell you when to sell until well are the event has occurred”. Solution develop you own exit policies to suit your needs. 7. In research for ideas look for stocks with few or infrequent posts on threads that way you will know the “Mob” hasn’t arrived yet. 8. Become a great collector & storer of information including HC posts, ASX presentations & reports. 9. Be wary of newspaper & tip sheet reports, remember you were not the first or only person to read them. This year I have been pleased that on 3 occasions, I have researched & held these 3 small caps companies before a new known newsletter “discovered them”. 10. By the way newsletters/newspapers tipping illiquid stocks don’t put you ahead of the pack but more likely in the pack especially when you want to exit. Hope, some of these ideas may make you a more successful trader/investor. Regards Buffett PS No investment advice offered please do your own research.
