Você está na página 1de 69

Courtesy of MercenaryTrader.

com
One of the best sites on the web for great trading wisdom.

1324

You are what you do. A man is defined by his actions, not his memory.
If a self-reinforcing process goes on long enough it must eventually become
unsustainable because either the gap between thinking and reality becomes too
wide or the participant's bias becomes too pronounced. Hence, reflexive
processes that become historically significant tend to follow an initially selfreinforcing, but eventually self-defeating, pattern. That is what I call the boom/bust
sequence.

George Soros

1323

Usually some error in the act of valuation is involved. The most common error is a
failure to recognize that a so-called fundamental value is not really independent of
the act of valuation. That was the case in the conglomerate boom, where pershare earnings growth could be manufactured by acquisitions, and also in the
international lending boom where the lending activities of the banks helped
improve the debt ratios that banks used to guide them in their lending activity.

George Soros

1325

Total Recall

1313

Economic theory needs to be fundamentally reconsidered. There is an element of


uncertainty in economic processes that has been largely left unaccounted for... We
must take a radically different view of the role that thinking plays in shaping events.
Classical economic theory assumes that market participants act on the basis of
perfect knowledge. That assumption is false. The participant's perceptions
influence the market in which they participate, but the market action also
influences the participant's perceptions. They cannot obtain perfect knowledge of
the market because their thinking is always affecting the market and the market is
affecting their thinking.
If you really want to know yourself, just become a speculator.
There is no way one could produce results like ours without ups and downs.
The real-time experiment turned out to be a very good idea because it stimulated
my thinking. Having to explain my reasons for making decisions forced me to
become more coherent; it imposed a certain discipline on me, which was very
helpful.
I felt it was too late to go short, but then I re-read my memo that predicted that they
would go bust and I realized that it could never be too late. It was the only time I
made more than 100 percent on my money on the short side because, as the
stocks went down, I kept topping up my short positions.
In their worship of logic and rationality, economists are amusingly short-sighted
and irrational.
When the California residential home market collapsed, the market thought the
company might go broke, but it survived the test and we made a fortune. That is
when I made the rule that one should own stocks when they have successfully
passed a difficult test, but one should avoid them during the test something that
is easier said than done.
I am good at riding the tide, but not the ripples of a swimming pool.
...I am particularly keen on investment theses that the market is reluctant to
accept. These are usually the strongest.

1312

[The danger in taking risks] stimulates me. But don't misunderstand what I am
saying: I don't like danger; I like to avoid it. That is what makes my juices flow.

George Soros

1311

There is nothing like danger to focus the mind, and I do need the excitement
connected with taking risks in order to think clearly. It is an essential part of my
thinking ability. Risk taking is, to me, an essential ingredient in thinking clearly.

George Soros

1322

1321
1320
1319

1318

1317
1316

1315
1314

George Soros

George Soros
Trading proverb
George Soros

George Soros

George Soros
Jack Sparrow

George Soros
George Soros
George Soros

1310

1309
1308

1307

1306

1305
1304
1303
1302

1301

1300

1299

1298
1297
1296
1295

1294

1293

1292

Risk taking is painful. Either you are willing to bear the pain yourself or you try to
pass it on to others. Anyone who is in a risk taking business but cannot face the
consequences is no good.
I am outside. I am a thinking participant and thinking means putting yourself
outside the subject you think about. Perhaps it comes easier to me than to many
others because I have a very abstract mind and I actually enjoy looking at things,
including myself, from the outside.
Most of the time we are punished if we go against the trend. Only at inflection
points are we rewarded.
I watch out for telltale signs that a trend may be exhausted. Then I disengage from
the herd and look for a different investment thesis. Or, if I think the trend has been
carried to excess, I may probe going against it.
The prevailing wisdom is that markets are always right. I take the opposite
position. I assume that markets are always wrong. Even if my assumption is
occasionally wrong, I use it as a working hypothesis.
Being so critical, I am often considered a contrarian. But I am very cautious about
going against the herd; I am liable to be trampled on... Most of the time I am a
trend follower, but all the time I am aware that I am a member of the herd and I am
on the lookout for inflection points.
Are you gonna bark all day, little doggie, or are you gonna bite?
I come from the water, that weren't no easy thing... It's more than nature, it's like
my destiny...
'Get a hunch and bet a bunch.'
When everyone 95% agrees on something home prices will never decline,
China can't be stopped, commodities can't go down, etc. there is real risk of
'everyone' taking a frying pan to the face.
To others, being wrong is a source of shame; to me, recognizing my mistakes is a
source of pride. Once we realize that imperfect understanding is the human
condition, there is no shame in being wrong, only in failing to correct our mistakes.
I look for conditions of disequilibrium. They send out certain signals that activate
me. So my decisions are really made using a combination of theory and instinct. If
you like, you may call it intuition.
I work with hypotheses. I form a thesis about the anticipated sequence of events
and then I compare the actual course of events with my thesis; that gives me a
criterion by which I can evaluate my hypothesis.
I would put it this way: I do not play according to a given set of rules; I look for
changes in the rules of the game.
Making money in commodities is easy -- but just try to keep it.
If you want to make a birthday cake from scratch, you must first create the
universe.
That is the nature of pattern recognition, asking 'What can I infer about this
situation based on similarities to what I already know and trust that I understand?'
There is less emphasis on trying to reason out things on the basis that they are
special because they are unique, which in a financial context is perhaps the
definition of a speculation... It creates an impulse always to connect new
knowledge to old and to primarily be interested in new knowledge that genuinely
builds on the old.
People who are psychologically and financially invested in a stock work very hard
to resolve any newly arisen cognitive dissonance in favor of their vested interests.
As humans, our brains aren't really wired to make good probabilistic decisions.
(Actually, this is a huge understatement; many of us never fully grasp the ideas of
probability and expectation at all.)

George Soros

George Soros
George Soros

George Soros

George Soros

George Soros
Reservoir Dogs
The Toadies
Trading proverb

Jack Sparrow

George Soros

George Soros

George Soros
George Soros
Trading proverb
Carl Sagan

Alice Schroeder

Alice Schroeder

Dan Harrington

1291

1290

1289

1288

1287

But of course there is no secret; there is only the doing of all those little things,
each one done correctly, time and again, until excellence in every detail becomes
a firmly ingrained habit, an ordinary part of one's everyday life.

In the pursuit of excellence, maintaining mundanity is the key psychological


challenge. In common parlance, winners dont choke. Faced with what seems to
be a tremendous challenge or a strikingly unusual event, such as the Olympic
Games, the better athletes take it as a normal, manageable situation ('It's just
another swim meet,' is a phrase sometimes used by top swimmers at a major
event such as the Games) and do what is necessary to deal with it.
Daniel F. Chambliss
Athletes move up to the top ranks through qualitative jumps: noticeable changes in
their techniques, discipline, and attitude, accomplished usually through a change in
settings (e.g., joining a new team with a new coach, new friends, etc.) who work at
a higher level. Without such qualitative jumps, no major improvements
(movements through levels) will take place...
Daniel F. Chambliss
Superlative performance is really a confluence of dozens of small skills or
activities, each one learned or stumbled upon, which have been carefully drilled
into habit and then are fitted together in a synthesized whole. There is nothing
extraordinary or superhuman in any one of those actions; only the fact that they
are done consistently and correctly, and all together, produce excellence.
Every generation has its characteristic folly, but the basic cause is the same:
People persist in believing that what has happened in the recent past will go on
happening into the indefinite future, even while the ground is shifting under their
feet.

1280

A great company could be a terrible investment if its price rise has already more
than discounted the bullish fundamentals. Conversely, a company that has been
experiencing problems and is the subject of negative news could be a great
investment if its price decline has more than discounted the bearish information.
When to get out of a position is as important as when to get in. Any market
strategy that ignores trade liquidation is by definition incomplete.
Risk control should not be confused with fear of risk. A willingness to accept risk is
probably an essential personality trait for a trader.
One of the greatest tragedies of life is the murder of a beautiful theory by a gang of
brutal facts.
Even great traders sometimes have completely wrongheaded ideas when they
start. They ultimately succeed, however, because they have the flexibility to
change their approach.
Define a target, a strategy consistent with the target, a set of disciplines to follow,
and risk management guidelines. Then trade, track, and evaluate your
performance.
The objective of setting a target is not necessarily to reach it, but rather to
establish a standard against which to measure your performance. If you are not
reaching your target, it forces you to focus on what you are doing wrong or what
you may not be doing that you should. The target holds you to a higher standard of
performance.

1279

Believing that an outcome is possible makes it achievable. The classic example is


Roger Bannister's penetration of the four-minute mile mark. Before he ran his sub
four-minute mile in 1954, this feat was considered an impossible barrier that was
beyond human physical capabilities. After he ran his so-called magic mile, many
other runners suddenly began breaking this once seemingly impossible barrier.

1286
1285
1284
1283

1282

1281

Daniel F. Chambliss

Daniel F. Chambliss

George J. Church

Jack Schwager
Jack Schwager
Jack Schwager
Benjamin Franklin

Jack Schwager

Ari Kiev

Ari Kiev

Ari Kiev

1278

1277

1276
1275
1274

1273
1272
1271

1270
1269
1268
1267

1266
1265

The mind must always be in the state of 'flowing,' for when it stops anywhere that
means the flow is interrupted and it is this interruption that is injurious to the wellbeing of the mind. In the case of the swordsman, it means death. When the
swordsman stands against his opponent, he is not to think of the opponent, nor of
himself, nor of his enemy's sword movements. He just stands there with his sword
which, forgetful of all technique, is ready only to follow the dictates of the
subconscious. The man has effaced himself as the wielder of the sword. When he
strikes, it is not the man but the sword in the hand of the man's subconscious that
strikes.
The mind could be said to be working at a very high speed, but with no intentions,
plans or direction. In analogy a clear mind is compared to a still pond, which is able
to clearly reflect the moon and trees. But just as waves in the pond will distort the
picture of reality, so will the thoughts we hold onto disrupt the true perception of
reality.
Mushin is achieved when a person's mind is free from thoughts of anger, fear, or
ego during combat or everyday life. There is an absence of discursive thought and
judgment, so the person is totally free to act and react towards an opponent
without hesitation and without disturbance from such thoughts. At this point, a
person relies not on what they think should be the next move, but what is their
trained natural reaction or what is felt intuitively.
Clouds are not spheres, mountains are not cones, coastlines are not circles, and
bark is not smooth nor does lightning travel in a straight line.
Think. Prepare. Plan in advance when there's no time pressure. Then, in real life,
do what you said.
Being a great trader is a process. It's a race with no finish line. The markets are
not static. No single style or approach can provide superior results over long
periods of time. To continue to outperform, the great traders continue to learn and
adapt.
You can't control what the market does, but you can control your reaction to the
market. I examine what I do all the time. That's what trading is all about.
You can't have everybody on one side of the fence. The world doesn't work that
way.
When I saw that screen light up that day in the Merrill Lynch offices, I lost any
residual doubt that Bloomberg could make it. We had picked just the right project.
It was big enough to be useful, small enough to be possible. Start with a small
piece, fulfill one goal at a time, on time. Do it with all things in life. Sit down and
learn to read one-syllable words. If you try to read Chaucer in elementary school,
you'll never accomplish anything. You can't jump to the end game right away, in
computers, politics, love, or any other aspect of life.
I have friends who get emotional about the market. They fight it. Why put yourself
in that position?
The thing is to start moving your feet. I find that too many traders just stand there
and let the truck roll over them.
If I am in a trade because of a catalyst, the first thing I check is whether the
catalyst still applies.
[Wharton] taught you that 40 percent of a stock's price movement was due to the
market, 30 percent to the sector, and only 30 percent to the stock itself, which is
something that I believe is true. I don't know if the percentages are exactly correct,
but conceptually the idea makes sense.
Whatever attitude you are in, do not be conscious of making the attitude; think only
of cutting.

Zen master Takuan

Wikipedia (Mushin)

Wikipedia (Mushin)
Benoit Mandelbrot
Mike Bloomberg

Jack Schwager
Steve Cohen
Steve Cohen

Mike Bloomberg
Steve Cohen
Steve Cohen
Steve Cohen

Steve Cohen
Miyamoto Musashi

1264
1263
1262
1261
1260

1259

1258

1257

1256

1255

1254

1253
1252

1251

1250

Hand reading works because most players play most hands in a relatively logical
way most of the time. By bringing logic to bear on their decisions, you can keep
eliminating hands that don't fit the observed data.
Dan Harrington
If you can get savage capitalists to rationally act like a team, then you have a
beautiful thing.
Cliff Asness
They can steal your idea, but they can't steal execution.
Silicon Valley proverb
David didn't beat Goliath with a whiteboard. Go get amongst it, and prepare to bob
and weave.
Tim Ferriss
It comes down to trying to expose yourself to the best things that humans have
done and then try to bring those things into what you're doing.
Steve Jobs
A market that is driven by inflows can have small corrections, but it has to then
immediately recover to new highs to keep generating new money inflows.
Otherwise, money inflows are likely to dry up, and the market will fall apart.
Therefore, this type of market is likely to either trend higher or break sharply.
Each stock has its own probability distribution that depends on a host of factors.
Who has what position? Where did the major buyers accumulate their positions?
Where are their stop-loss points? What price levels are likely to be technically
significant?
It's not a matter of coming up with a one-size-fits-all model that is better than the
standard Black-Scholes model. The key point is that the correct probability
distribution is different for every market and every time period. The probability
distribution has to be estimated on a case-by-case basis.
Regardless of whether technical analysis has any validity, enough people believe
in it to impact the market. For example, if people expect a stock to find support at
65, lo and behold, they're willing to buy it at 66. That is not a random walk
statement.
It might seem that if you have an edge, the way to maximize the edge is to trade as
big as you can. But that's not the case, because of risk. As a professional gambler
or as a trader, you are constantly walking the line between maximizing edge and
minimizing your risk of tapping out.
I don't think anyone is more disciplined than I am. When I put on a trade, I have a
contingency plan for every possible outcome. I can't think of any circumstance that
would be an exception. If there were, I would have a plan for that too.
Normal human tendencies are traits that cause you to do poorly. Therefore, to be
successful as a trader you need to condition abnormal responses. You hear many
traders say that you have to do the opposite of your gut response when you feel
good about a position you should sell, and when you feel terrible about it, you
should buy more. In the beginning that's true, but as you condition yourself for
abnormal responses, somewhere along the line you become skilled. Then your gut
becomes right.
I would rather get stopped out of a trade five times in a row, taking a small loss
each time, than take one large loss.
Most people just cannot weather the learning curve. As soon as it gets difficult, and
their approach isn't working up to their expectations, they begin to look for
something else. As a result, they become slightly efficient in many areas without
becoming very good in any single methodology. The reality is that it takes a very
long time to develop a superior approach, and along the way, you are going to go
through periods where you do poorly. Ironically, those are the periods that give you
the most valuable information.
First and foremost, understand that you will always make mistakes. The only way
to prevent mistakes from turning into disasters is to accept losses while they are
small and then move on.

John Bender

John Bender

John Bender

John Bender

John Bender

Mark Minervini

Mark Minervini
Mark Minervini

Mark Minervini

Mark Minervini

1249

1248

1247
1246
1245

1244

1243
1242

1241

1240

1239

1238

1237
1236
1235

1234
1233
1232

I constantly try to figure out how the market can trick or fool the majority of
investors. Then after the majority have been fooled I get in at what I call the 'point
of smooth sailing.' A so-called failed signal can actually be the beginning of a more
complex pattern that is far more reliable than the initial signal based on a
conventional pattern.
Let's say I buy a stock because of a signal and the market dips enough to stop me
out. The stock then witnesses a huge reversal and closes near the high of the day.
That price action may be an indication that there was a shakeout, which knocked
out most of the weak hands, and the stock is ready to go up. Putting the long back
on at that point may well be a higher probability trade than the original trade.
You can't get beat if you have a great defense. I would always prefer to bet on a
football team that has a great defense as opposed to one that has a great offense.
If a trade doesn't work out quickly, I take a small loss, and I may have to take a
small loss many times.
The key is to know when to do nothing. Most people, even if they have a winning
strategy, will not follow it because they lack discipline.
I think that anyone who wants to be a trader should learn how to play poker.
My results were transformed when I understood that what counts isn't how often
you're right, but how much you profit on your winning trades versus how much you
lose on your losing trades. On average, I'm only profitable about 50 percent of the
time, but I make much more when I'm right than I lose when I'm wrong.
If you are a beginner, trade with an amount of money that is small enough so that
you can afford to lose it, but large enough so that you will feel the pain if you do.
Otherwise, you're fooling yourself.
It is much better to learn the lesson that you can lose everything when you don't
have that much money than to learn the same lesson later on.
Containing your losses is 90 percent of the battle, regardless of the strategy. In
addition, if you put yourself in a position to buy stocks that have the potential to go
up a lot, your odds will be better.
You have all these people trying to come up with formulas to beat the market. The
market is not a science. The science may help increase the probabilities, but to
excel you need to master the art of trading.
My basic philosophy is: Expose your portfolio to the best stocks that the market
has to offer and cut your losses very quickly when you're wrong. That one
sentence essentially describes my strategy.
The motivation is always the same. Although I may hold the position much longer, I
am buying the stock because I think it will go up within hours or at most days.
When you buy an option, the premium steadily evaporates over time. It's like
holding an ice cube in your hand: the longer it's there, the more it diminishes until
finally it doesn't exist at all.
Bad traders don't make profits they only take out short-term loans from the
market.
When the levee breaks, momma you got to move...
When everything happens at once, wide and fast moving problems simply route
around any central authority. Therefore overall governance must arise from the
most humble interdependent acts done locally in parallel, and not from a central
command.
The work of managing a natural environment is inescapably a work of local
knowledge.
In turbulence is the preservation of the world.

Mark Minervini

Mark Minervini

Mark Minervini
Mark Minervini
Mark Minervini

Mark Minervini

Mark Minervini
Mark Minervini

Mark Minervini

Mark Minervini

Mark Minervini

Mark Minervini

Mark Cook
Wall Street proverb
Led Zeppelin

Kevin Kelly
Kevin Kelly
Kevin Kelly

1231
1230
1229

1228
1227

1226
1225

1224

1222
1221

1220
1219
1218

1217

1216

1215

1214

1213

The nature of life is to delight in all possible loopholes. Every creature is in some
way hacking a living by reinterpreting the rules.
'It works, why worry?' is life's deepest philosophy.
A network nurtures small failures in order that large failures don't happen as often.
There is nothing to be found in a beehive that is not submerged in a bee. And yet
you can search a bee forever with cyclotron and fluoroscope, and you will never
find a hive.
Complexity must be grown from simple systems that already work.
Hope should never be in your vocabulary. It is the worst four-letter word I know. As
soon as you say, 'Boy, I hope this position comes back,' you should reduce your
size.
I would attribute my own success to having both conviction about my gut feelings
and the ability to act on them quickly. That is so critical.
When I talk to potential new investors I focus on my mistakes. Because if you are
going to invest with someone, you want that person to have made mistakes on his
own tab and not to make them on yours. Someone who has never made a mistake
is dangerous, because mistakes will happen. If you've made mistakes, you realize
they can recur, and it makes you more careful.
Hazarding guesses (extremely rough ones, for that matter) about the behavior of a
population has some meaning. It is, however, almost impossible to foresee the
behavior of an individual, even on a day-to-day basis. In the same way, the
physicist can prognosticate with great exactitude the time a gram of radium will
need to halve its activity but is totally unable to say when a single atom of that
same radium will disintegrate.
Patience was still needed, in unforeseeable doses; yet more patience.
This company looks cheap, that company looks cheap, but the overall economy
could completely screw it up. The key is to wait. Sometimes the hardest thing to do
is to do nothing.

Kevin Kelly
Kevin Kelly
Kevin Kelly

Kevin Kelly
Kevin Kelly

Mark Cook
Stuart Walton

Stuart Walton

Primo Levi
Primo Levi

David Tepper

A foolish consistency is the hobgoblin of little minds.


Ralph Waldo Emerson
Give me a horse I can ride!
John Facenda
Sometimes the opportunities are so obvious that you almost can't lose when they
come around; the only problem is that they don't come around that often. The key
is not to lose money in the times in between.
Stuart Walton
My philosophy is to float like a jellyfish and let the market push me where it wants
to go. I don't draw a line in the sand and say this is my strategy and I'm going to
wait for the market to come to me. I try to figure out what strategies are working in
the market.
Stuart Walton
To me, the successful stock is not one that I bought at 10 and held to a 100, but
one where I picked up 7 points here, 5 points here, another 8 here, and caught a
major part of the move.
Stuart Walton
The theme I noticed back then that has persisted through bull and bear markets is:
Good companies, on balance, continue to go up. Grandmothers in Kansas City
know that.
Stuart Walton
I really admire people who do what they want to do and don't care about anything
else. I had a friend in college who was determined to be a rock and roll star. He
formed the band The Cowboy Junkies. When he started college, he couldn't even
play a guitar, and now he is sold out at every concert.
Stuart Walton

1212

1211

There is timing in the whole life of the warrior, in his thriving and declining, in his
harmony and discord. Similarly, there is timing in the Way of the merchant, in the
rise and fall of capital. All things entail rising and falling timing. You must be able to
discern this. In strategy there are various timing considerations. From the outset
you must know the applicable timing and the inapplicable timing, and from among
the large and small things and the fast and slow timings find the relevant timing,
first seeing the distance timing and the background timing. This is the main thing in
strategy. It is especially important to know the background timing, otherwise your
strategy will become uncertain.
Management of one's emotional state is critical. The truly exceptional traders can
stand up to anything. Instead of getting emotional when things don't go their way,
they remain calm and act in accordance with their approach.

1203

People need to have a perceptual filter that matches the way they think. The
appropriate perceptual filter for a trader has more to do with how well it fits a
trader's mental strategy, his mode of thinking and decision making, than how well it
accounts for market activity. When a person gets to know any perceptual filter
deeply, it helps develop his or her intuition. There's no substitute for experience.
Today's mistake is tomorrow's insight.
Capitalism, then, is by nature a form or method of economic change and not only
never is but never can be stationary...The opening up of new markets, foreign or
domestic, and the organizational development from the craft shop and factory to
such concerns as US Steel illustrate the same process of industrial mutation if I
may use that biological term that incessantly revolutionizes the economic
structure from within, incessantly destroying the old one, incessantly creating a
new one. This process of Creative Destruction is the essential fact about
capitalism.
Same as it ever was, same as it ever was. Same as it ever was, and look where
my hand was. Time isn't holding us, and time isn't after us. Same as it ever was,
same as it ever was...
What we've got here is... failure to communicate. Some men, you just can't reach.
So you get what we had here last week. Which is the way he wants it. Well, he
gets it. And I don't like it any more than you men.
In a nutshell, if you're too conservative, you won't do any trades, and if you're too
aggressive, you're going to get picked off a lot. The trick is to try to strike a balance
between the two.
Just by watching markets, I noticed that prices tend to come down much harder
and faster than they go up.

1202

...the poker world is so competitive that if you don't fully capitalize on every
advantage, you're not going to survive. I absolutely understood that concept by the
time I got down to the options floor. I learned more about options trading strategy
by playing poker than I did in all my college economics courses combined.

1210
1209

1208

1207

1206

1204

1201

1200

We actually use poker strategy in training our option traders, because we feel the
parallels are very strong. I believe that if I can teach our trainees the correct way to
think about poker, I can teach them the right way to trade options.
There are very few people who can develop the skills to get the edge, and far
fewer still who can withstand the losses emotionally and still stick with the system.
Probably only one in five hundred people has the necessary discipline to be
successful.

Miyamoto Musashi

Charles Faulkner

Charles Faulkner
Jack Sparrow

Joseph Schumpeter

Talking Heads

Cool Hand Luke

Jeff Yass
Jeff Yass

Jeff Yass

Jeff Yass

Blair Hull

1199

1198
1197
1196

1195

1194
1193
1192

1191

The people who want to be recognized as the greatest traders are probably not the
greatest traders. Egos get in the way of the process. In my opinion, you never want
to be the largest player in the pit.
In a sense, I owe everything that I have to the state of Nevada. It not only provided
me with my original trading stake, but the betting experience taught me a lot of
things that allowed me to become a successful trader.
If you get too careful about not risking your gains, you're not going to be able to
extract a large profit.
You need to have the courage to stand up against the crowd, decide your position,
and execute it.
Magnitude of losses and profits is purely a matter of position size. Controlling
position size is indispensable to success. Of all the traits necessary to trade
successfully, this factor is the most undervalued.
Understand that learning the markets can take years. Immerse yourself in the
world of trading and give up everything else. Get as close to other successful
traders as you can.
Fall down seven times, stand up eight.
Part of the trading process is testing the water. If your entry timing is good enough,
you won't lose much even when you're wrong.
I think investment psychology is by far the most important element, followed by risk
control, with the least important consideration being the question of where you buy
and sell.

Blair Hull

Blair Hull
Mark Ritchie
Mark Ritchie

Mark Ritchie
Linda Bradford
Raschke
Japanese Proverb
Linda Bradford
Raschke

Tom Basso

1184

I liken emotions in trading to a spring, with emotions being stretched up and down,
up and down. While it's going up and down, it's kind of thrilling, but eventually the
spring wears out. Burnout sets in, and you realize that maybe it isn't so much fun
to be on this emotional roller coaster. You find that if you can just keep your
emotions in balance in the middle, it's actually a whole lot more fun.
I'm fond of thinking of trading in terms of scores of years. If I live long enough, I'll
trade for fifty or sixty years. I figure that, over that time span, I'll see devastating
declines, spectacular advances that I virtually can't believe, and everything in
between.
After my years of experience in the markets, I now try to keep my models as
flexible as I possibly can. I try to imagine scenarios that would almost make good
movie plots.
I know this will sound like a cliche, but the single most important reason that
people lose money in financial markets is that they don't cut their losses short. It is
a curiosity of human nature that no matter how many books talk about this rule,
and no matter how many experts offer this advice, people still keep making the
same mistake.
We are still a multimedia organism. If we want to push the envelope of complexity
further, we have to use all of our devices for accessing information not all of
which are rational.
The ego falls away. Time flies. Every action, movement, and thought follows
inevitably from the previous one, like playing jazz. Your whole being is involved,
and you're using your skills to the utmost.
Choiceless awareness is a quality of mind that is free from making judgments,
decisions or generating commentary as it meets with sense experiences. It is a
mind that responds to each new moment without the burden of its past history or
making future projections.

Matthew Flickstein

1183

To watch the behavior of a man who acts not according to reason, but according to
his own deep impulses, is a spectacle of extreme interest, similar to that which the
naturalist enjoys when he studies the activities of an animal of complex instincts.

Primo Levi

1190

1189

1188

1187

1186

1185

Tom Basso

Tom Basso

Tom Basso

Victor Sperandeo
Mihaly
Csikszentmihalyi
Mihaly
Csikszentmihalyi

1182
1181

1180

1179

1178

1177

1176

1175

1174

1173
1172
1171
1170
1169
1168
1167

1166

1165

1164

The ultimate result of shielding men from the effects of folly is to fill the world with
fools.
In my opinion, the greatest misconception is the idea that if you buy and hold
stocks for long periods of time, you'll always make money.
In trading, you can't hide your failures. Your equity provides a daily reflection of
your performance. The trader who tries to blame his losses on external events will
never learn from his mistakes.
The key to trading success is emotional discipline. Making money has nothing to
do with intelligence. Think of all the bright people that choose careers on Wall
Street. If intelligence were the key, there would be a lot more people making
money trading.
Successful speculation implies taking risk when the odds are in your favor. Just
like in poker, where you have to know which hands to bet on, in trading you have
to know when the odds are in your favor.
The fact that we live at the bottom of a deep gravity well, on the surface of a gascovered planet going around a nuclear fireball 90 million miles away, and think this
to be normal, is obviously some indication of how skewed our perspective tends to
be.
A trading philosophy is something that cannot just be transferred from one person
to another, it's something that you have to acquire yourself through time and effort.
The essential element is having a core philosophy. Without a core philosophy
you're not going to be able to hold on to your positions or stick with your trading
plan during really difficult times. You must fully understand, strongly believe in, and
be totally committed to your trading philosophy.
Most people believe high turnover is risky, but I think just the opposite. High
turnover reduces risk when it's the result of taking a series of small losses in order
to avoid larger losses. I don't hold on to stocks with deteriorating fundamentals or
price patterns. For me, this kind of turnover makes sense. It reduces risk; it doesn't
increase it.
The wonderful thing about our business is that it's liquid, and you can wipe the
slate clean on any day. As long as I'm in control of the situation that is, as long
as I can cover my positions there's no reason to be nervous.
In secular bear markets, fighting general conditions is an expensive habit. Wall
Street is addicted to this habit by design.
Survive and advance.
The more extensive a man's knowledge of what has been done, the greater will be
his power of knowing what to do.
The secret of success is constancy of purpose.
Nurture your mind with great thoughts; to believe in the heroic makes heroes.
What we learn from history is that we do not learn from history.
Wall Street ices the inefficient cake with compulsive conformity. Everyone gets on
the bandwagon and stays until the evidence is too compelling, then they all fall off
with a jolt.
Soros has taught me that when you have tremendous conviction on a trade, you
have to go for the jugular. It takes courage to be a pig. It takes courage to ride a
profit with huge leverage. As far as Soros is concerned, when you're right on
something, you can't own enough.
I've learned many things from [George Soros], but perhaps the most significant is
that it's not whether you're right or wrong that's important, but how much money
you make when you're right and how much you lose when you're wrong. The few
times that Soros has ever criticized me was when I was really right on a market
and didn't maximize the opportunity.

Herbert Spencer
Victor Sperandeo

Victor Sperandeo

Victor Sperandeo

Victor Sperandeo

Douglas Adams

Richard Driehaus

Richard Driehaus

Richard Driehaus

Stan Druckenmiller
Jack Sparrow
Jim Valvano
Benjamin Disraeli
Benjamin Disraeli
Benjamin Disraeli
Benjamin Disraeli
The Art of Short
Selling

Stan Druckenmiller

Stan Druckenmiller

1159

The way to attain truly superior long-term returns is to grind it out until you're up 30
or 40 percent, and then if you have the convictions, go for a 100 percent year. If
you can put together a few near-100 percent years and avoid down years, then
you can achieve really outstanding long-term returns.
George Soros has a philosophy that I have also adopted: The way to build longterm returns is through preservation of capital and home runs. You can be far more
aggressive when you're making good profits.
I never use valuation to time the market. I use liquidity considerations and
technical analysis for timing. Valuation only tells me how far the market can go
once a catalyst enters the picture to change the market direction.
Frankly, even today, many analysts still don't know what makes their stocks go up
or down.
The essential element is that the markets are ultimately based on human
psychology, and by charting the markets you're merely converting human
psychology into graphic representations.

1157

The most liquid period is the opening. Liquidity starts falling off pretty quickly after
the opening. The second most liquid time of day is the close. Trading volume
typically forms a U-shaped curve throughout the day. There's a lot of liquidity right
at the opening, it then falls off, reaching a nadir at midday, and then it starts to
climb back up, reaching a secondary peak on the close. Generally speaking, this
pattern holds in almost every market. It's actually pretty amazing.

Monroe Trout

1156

The desire to maximize the number of winning trades (or minimize the number of
losing trades) works against the trader. The success rate of trades is the least
important performance statistic and may even be inversely related to performance.

William Eckhardt

1163

1162

1161
1160

1155

1154

1153
1152
1151

1150
1149

1148

The market behaves much like an opponent who is trying to teach you to trade
poorly... The market likes to lull you into the false security of high success rate
techniques, which often lose disastrously in the long run. The general idea is that
what works most of the time is nearly the opposite of what works in the long run.
When you're on a big winning streak, there's a temptation to think that you're doing
something special, which will allow you to continue to propel yourself upward. You
start to think that you can afford to make shoddy decisions. You can imagine what
happens next. As a general rule, losses make you strong and profits make you
weak.
While amateurs go broke by taking large losses, professionals go broke by taking
small profits. The problem in a nutshell is that human nature does not operate to
maximize gain but rather to maximize the chance of a gain.
One common adage on this subject that is completely wrongheaded is: You can't
go broke taking profits. That's precisely how many traders do go broke.
Watch idly while profit-taking opportunities arise, but in adversity run like a
jackrabbit.
Anyone with average intelligence can learn to trade. This is not rocket science.
However, it's much easier to learn what you should do in trading than to do it.
Good systems tend to violate normal human tendencies. Of the people who can
learn the basics, only a small percentage will be successful traders.
To conquer fate, go ahead and meet it.
I haven't seen much correlation between good trading and intelligence. Some
outstanding traders are quite intelligent, but a few aren't. Many outstandingly
intelligent people are horrible traders. Average intelligence is enough. Beyond that,
emotional makeup is more important.

Stan Druckenmiller

Stan Druckenmiller

Stan Druckenmiller
Stan Druckenmiller

Al Weiss

William Eckhardt

William Eckhardt

William Eckhardt
William Eckhardt
William Eckhardt

William Eckhardt
Dickson G. Watts

William Eckhardt

1147

1146

1145

1144

1143

1142

Trading size is one aspect you don't want to optimize. The optimum comes just
before the precipice.
The desire to find patterns is the same human quirk that convinces people that
there is validity in superstitions, or astrology, or fortune tellers. The successes are
much more startling than the failures. You remember the times when the oracle
really hit the nail on the head, and you tend to forget the cases in which the
prediction was ambiguous or wrong.
The human mind was made to create patterns. It will see patterns in random data.
A turn-of-the-century statistics book put it this way: 'Too fine an eye for pattern will
find it everywhere.'
As a general rule, be very skeptical of your results. The better a system looks, the
more adamant you should be in trying to disprove it. This idea goes very much
against human nature, which wants to make the historical performance of a system
look as good as possible.
The lack of intrinsic meaning of angles on a bar chart has significance even for
chart-oriented traders who do not employ angles. How sharply a trend slopes on a
chart is often a psychological consideration in making a trade. If you fall prey to
this influence, you're letting the chart maker's practical and aesthetic
considerations impinge on your trading. Any trend can be made to look either
gentle or steep by adjusting the price scale.
In general, the delicate tests that statisticians use to squeeze significance out of
marginal data have no place in trading. We need blunt statistical instruments,
robust techniques.

1135

Sometimes the reason people lose is that they're not sufficiently selective. Upon
analysis, a trader may find that if he only concentrates on the trades that do well
and lets go of the other types of trades, he might actually be successful.
One very interesting thing I've found is that virtually every successful trader I know
ultimately ended up with a trading style suited to his personality.
When you're trading well, you have a better mental attitude. When you're trading
poorly, you start wishing and hoping. Instead of getting into trades you think will
work, you end up getting into trades you hope will work.
The most important advice is to never let a loser get out of hand... I'll keep on
reducing my trading size as long as I'm losing. I've gone from trading as many as
three thousand contracts per trade to as few as ten when I was cold, and then
back again.
One of the things I did that worked in those early years was analyzing every single
trade I made. Every day, I made copies of my cards and reviewed them at home.
Every trader is going to have tons of winners and losers. You need to determine
why the winners are winners and the losers are losers. Once you can figure that
out, you can become more selective in your trading and avoid those trades that are
more likely to be losers.
You don't want to have a position before a move has started. You want to wait until
the move is already under way before you get into the market.
The beginning of a price move is usually hard to trade because you're not sure
whether you're right about the direction of the trend. The end is hard because
people start taking profits and the market gets very choppy. The middle of the
move is what I call the easy part.

1134

So many people want the positive rewards of being a successful trader without
being willing to go through the commitment and pain. And there's a lot of pain.

1141
1140

1139

1138

1137
1136

William Eckhardt

William Eckhardt

William Eckhardt

William Eckhardt

William Eckhardt

William Eckhardt

Randy McKay
Randy McKay

Randy McKay

Randy McKay

Randy McKay
Randy McKay

Randy McKay

Bill Lipschutz

1133

1132

1131

1130

1129

1128

1127

1126

1125

1124
1123

1122

It's not enough to simply have the insight to see something apart from the rest of
the crowd, you also need to have the courage to act on it and to stay with it. It's
very difficult to be different from the rest of the crowd the majority of the time,
which by definition is what you're doing if you're a successful trader.
The really best traders don't think twice about how many hours they're working or
whether they come in on a weekend. There's no substitute for that level of
commitment.
[Superior] traders have tremendous commitment to the markets to their craft, so
to speak. They develop scenarios, reevaluate scenarios, collect information, and
reevaluate that information. They constantly ask themselves: What am I doing
right? What am I doing wrong? How can I do what I am doing better? How can I
get more information? It's obsessive.
...playing out scenarios is something that I do all the time. That is a process a
fundamental trader goes through constantly. What if this happens? What if this
doesn't happen? How will the market respond? What levels will the market move
to?
I don't have a problem letting my profits run, which many traders do. You have to
be able to let your profits run. I don't think you can consistently be a winning trader
if you're banking on being right more than 50 percent of the time.
You have to trade at a size such that if you're not exactly right in your timing, you
won't be blown out of your position. My approach is to build to a larger size as the
market is going my way.
Foreign exchange is a very psychological market... if you move the market 4
percent, for example, you're probably going to change the market psychology for
the next few days.
When you're in a losing streak, your ability to properly assimilate and analyze
information starts to become distorted because of the impairment of the confidence
factor, which is a by-product of a losing streak. You have to work very hard to
restore that confidence, and cutting back trading size helps achieve that goal.
There are a lot of elements to risk control: Always know exactly where you stand.
Don't concentrate too much of your money on one big trade or group of highly
correlated trades. Always understand the risk-reward of the trade as it now stands,
not as it existed when you put the position on.
Not everyone is going to interpret things in the same way, at the same time, as you
do, and it's important to understand that. You need to be plugged into the news
and to know what the market is looking at. For example, one day the foreign
exchange market may be focusing on interest rate differentials; the next day the
market may be looking at potential for capital appreciation, which is exactly the
opposite.
We cannot grow without challenge. Challenges routinely produce crises that
severely test us. However, crises also offer us the greatest opportunities.
...voyaging through wildernesses, be they full of woods or waves, is essential to
the growth and maturity of the human spirit. It is in the wilderness that you really
learn who you are. It is in facing the challenges of the wilderness that the thickness
of your wallet becomes irrelevant and your capabilities become the truer measure
of your value.

Bill Lipschutz

Bill Lipschutz

Bill Lipschutz

Bill Lipschutz

Bill Lipschutz

Bill Lipschutz

Bill Lipschutz

Bill Lipschutz

Bill Lipschutz

Bill Lipschutz
Steven Callahan

Steven Callahan

1109
1108
1107

The freedom of the sea lures men, yet freedom does not come free. Its cost is the
loss of the security of life on land. When a storm is brewing, the sailor cannot
simply park his ship and walk away from it. He cannot hide within stone walls until
the whole thing blows over. There is no freedom from nature, the power that binds
even the dead together. Sailors are exposed to nature's beauty and her ugliness
more intensely than most men ashore. I have chosen the sailor's life to escape
society's restrictions and I have sacrificed its protection. I have chosen freedom
Adrift: 76 Days Lost At
and I have paid the price.
Sea
The most appropriate description of man as differentiated from nonhuman beings
is: a being purposively struggling against the forces adverse to his life.
Ludwig Von Mises
There are many who find a good alibi far more attractive than an achievement. For
an achievement does not settle anything permanently. We still have to prove our
worth anew each day; we have to prove that we are as good today as we were
yesterday. But when we have a valid alibi for not achieving anything we are fixed,
so to speak, for life.
Eric Hoffer
General George S.
Most battles are won before they are ever fought.
Patton
Life shrinks or expands in proportion to one's courage.
Anais Nin
Reason's biological function is to preserve and promote life and to postpone its
extinction as long as possible. Thinking and acting are not contrary to nature; they
are, rather, the foremost features of man's nature.
Ludwig Von Mises
You've got to think about doing big things while you're doing small things, so all the
small things go in the right direction.
Alvin Toffler
When you really believe that trading is simply a probability game, concepts like
'right' and 'wrong' or 'win' and 'lose' no longer have the same significance. As a
result, your expectations will be in harmony with the possibilities.
Mark Douglas
How much heat can you stand? Money management is a thermostat a control
system for risk that keeps your trading within the comfort zone.
Gibbons Burke
Everyone has talent. What is rare is the courage to follow the talent to the dark
place where it leads.
Erica Jong
Take your life in your own hands and what happens? A terrible thing: no one to
blame.
Erica Jong
If you don't risk anything, you risk even more.
Erica Jong
The biggest cause of trouble in the world today is that the stupid people are so
sure about things and the intelligent folks are so full of doubts.
Bertrand Russell
You will run out of money before a guru runs out of indicators.
Neil Weintraub
I have no special talents. I am only passionately curious.
Albert Einstein

1106

Everyone's entitled to their own opinion, but they're not entitled to their own facts.

Donald Rumsfeld

1105

Do not believe in anything simply because you have heard it. Do not believe in
anything simply because it is spoken and rumored by many. Do not believe in
anything simply because it is found written in your religious books. Do not believe
in anything merely on the authority of your teachers and elders. Do not believe in
traditions because they have been handed down for many generations. But after
observation and analysis, when you find that anything agrees with reason, and is
conducive to the good and benefit of one and all, then accept it and live up to it.

Siddhartha Gautama

1104

500 fights, that's the number I figured when I was a kid. 500 street fights and you
could consider yourself a legitimate tough guy. You need 'em for experience. To
develop leather skin. So I got started. Of course, along the way you stop thinking
about being tough and all that. It stops being the point. You get past the silliness of
it all. But then, after, you realize that's what you are.

Knockaround Guys

1121
1120

1119
1118
1117

1116
1115

1114
1113
1112
1111
1110

1093

If you can preserve your financial and mental capital when others have depleted or
squandered theirs, the long-term rewards will be great.
Jack Sparrow
The illiterate of the 21st century will not be those who cannot read and write, but
those who cannot learn, unlearn, and relearn.
Alvin Toffler
Reason is the main resource of man in his struggle for survival.
Ludwig Von Mises
It may be readily conceived that if men passionately bent upon physical
gratifications desire greatly, they are also easily discouraged; as their ultimate
object is to enjoy, the means to reach that object must be prompt and easy or the
trouble of acquiring the gratification would be greater than the gratification itself.
Their prevailing frame of mind, then, is at once ardent and relaxed, violent and
enervated. Death is often less dreaded by them than perseverance in continuous
efforts to one goal.
Alexis de Tocqueville
Fat, drunk and stupid is no way to go through life, son.
Animal House
When I started writing I thought if I proved X was a stupid thing to do that people
would stop doing X. I was wrong.
Bill James
It seems LTCM could have survived one Nobel prize-winner, but with two, they
were doomed.
Frederic Townsend
The success of options valuation is the story of a simple, asymptotically correct
idea, taken more serious than it deserved, and then used extravagantly, with
hubris, as a crutch to human thinking.
Emanuel Derman
Success demands singleness of purpose.
Vince Lombardi
If all it took to beat the markets was a P.h.D in mathematics, there'd be a hell of a
lot of rich mathematicians out there.
Bil Dries
The class of those who have the ability to think their own thoughts is separated by
an unbridgeable gulf from the class of those who cannot.
Ludwig Von Mises

1092
1091

It is a capital mistake to theorize before one has data.


Losing an illusion makes you wiser than finding a truth.

1103
1102
1101

1100
1099
1098
1097

1096
1095
1094

1083

Portfolio structuring, risk management, execution strategies, capital management,


and leverage management may not be directly connected to the algorithm that
generates the buy and sell signals, but they are all hugely important.
The mathematics are very important, but it's only one piece of the puzzle. The
most important thing overall is the total investment process, of which the signal
generator is an important part.
Measure what is measurable, and make measurable what is not so.
The difference between a successful person and others is not a lack of strength,
not a lack of knowledge, but rather a lack of will.
Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on
the way up. Keep your eye open at the top.
Everything flows.
Life is a school of probability.
We have made our business managing risk. We are comfortable with risk and we
get our reward from risk.

1082
1081
1080
1079

Since investors are human and make mistakes, they're never 100% sure of their
vision and whether or not their view is correct. So price adjustments take time as
they fluctuate and a new consensus is formed in the face of changing market
conditions and new facts. For some changes this consensus is easy to reach, but
there are other events that take time to formulate a market view. It's those events
that take time that form the basis of our profits.
Man's expectations manifest in trends.
Money management is the true survival key.
The beginning is the most important part of the work.

1090

1089
1088
1087
1086
1085
1084

Sir Arthur Conan Doyle


Ludwig Borne

Bruce Cleland

Bruce Cleland
Galileo Galilei
Vince Lombardi
Ed Seykota
Heraclitus
Walter Bagehot
John W. Henry

John W. Henry
John W. Henry
Bill Dunn
Plato

1078

1077

1076
1075

1074
1073

1072
1071

1070

1069

1068

1067

1066

1065

1064

1063

1062

Free markets will always find their own means of price discovery.
Government regulation and intervention have been, are, and will continue to be
present for as long as society needs rules by which to live. Today's governmental
intervention or decree is tomorrow's opportunity.
The people that I know who are the most successful at trading are passionate
about it. They fulfill what I think is the first requirement: developing intuitions about
something they care about deeply, in this case, trading... They develop a deep
knowledge of whatever form of analysis they use. Out of that passion and
knowledge, their trading ideas, insights, and intuitions emerge.
My dear, one can make just as much money from the destruction of a civilization
as from the building of it.
There is nothing more difficult to take in hand, more perilous to conduct, or more
uncertain in its success, than to take the lead in the introduction of a new order of
things.
Speculation [is] dealing with the uncertain conditions of the unknown future. Every
human action is a speculation in that it is embedded in the flux of time.
To be aware how fruitful the playful mood can be is to be immune to the
propaganda of the alienated, which extols resentment as a fuel of achievement.
Fish see the bait, but not the hook; men see the profit, but not the peril.
Education rears disciples, imitators, and routinists, not pioneers of new ideas and
creative geniuses. The schools are not nurseries of progress and improvement,
but conservatories of tradition and unvarying modes of thought.
You have to stop trying to will things to happen in order to prove that you're right.
Listen only to what the market is telling you now. Forget what you thought it was
telling you five minutes ago. The sole objective of trading is not to prove you're
right, but to hear the cash register ring.
Trading is a psychological game. Most people think that they're playing against the
market, but the market doesn't care. You're really playing against yourself.
If the market gets negative news and the market shrugs it off and it continues to go
up, this is a bullish reaction because it means the market has already discounted
the news. On the other hand, a sign of a fully priced market is one that reacts
poorly to good news.
Technical indicators that show me low-risk entry points for high probability trades
are at the core of my methodology. But I am always intensely searching for
patterns, setups, recurring themes, no matter how small, to help further swing the
odds in my favor on a given trade.
When I was in the first grade, the teacher asked each of us what we wanted to be
when we grew up. I said, 'a detective.' This investigative nature has carried
through into adulthood. I love searching for clues, synthesizing tons of unrelated
data, and arriving at a logical conclusion. While these observations are not entirely
scientific, they are things I've seen repeatedly over the years.
Your trading methodology has to fit your personality. You have to understand your
strengths and your weaknesses. It took me nine years to figure myself out.
When you're in a losing position and you're brainlocked, do whatever's necessary
to help clear your head. Whether you're a pro or an amateur, you cannot lose your
objectivity.
Wall Street doesn't want to see the emperor naked. He may be old and fat and
flabby, but they don't want to know it. They want to see him regal and royal in all
his majesty. And as long as they see him that way, that's the way he is, because
they keep on buying. Big ball keep on rolling.

Keith Campbell

Keith Campbell

Charles Faulkner
Gone With the Wind

Niccolo Machiavelli
Ludwig Von Mises

Eric Hoffer
Chinese proverb

Ludwig Von Mises

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

1061

1060

1059
1058
1057
1056
1055

It behooves those who are genetically predisposed to a bearish position to


remember that markets have a logic of their own.
Don't get in a shootout if you've left your guns at home. The markets are no place
to be trying to impress people. The only way to impress anybody is to stay on your
toes, be consistent, and trade within your means.
When you're trading, it's important to have your guns on. You can't be wandering
around the Street unarmed, and if you don't know the terrain, you're going to get
killed.
A great trader is like a great athlete. You have to have natural skills, but you have
to train yourself how to use them.
You will never be more objective than before you execute a trade. Once you are in
a trade, emotions take over, so your plan must be in place beforehand.
Trading must be addressed as a profession, because if you do not treat it as such,
those who do will separate you from your money very quickly.
I went to a fight the other day and wound up trading futures in Chicago.

1052

The more you lose in a trade, the less objective you become. Exiting a losing trade
quickly clears your head and restores your objectivity. After a breather, you might
put the same trade back on if you can intellectually justify it, but you have to
constantly remind yourself that there's a myriad of opportunities in the
marketplace. By preserving your capital through the use of a stop, you make it
possible to wait patiently for a high-probability trade with a low-risk entry point.
A stop automatically takes your brain out of reverse and puts it into neutral. Your
money's not back to neutral, but your mind's back to the point where you can
regroup and try to think up a fresh idea without the pressure of a losing position
hanging over your head.
Whenever you have jealousy as an emotion, or greed, or envy, it distorts your
judgment. The market's like the bleached blonde in Vegas. It doesn't care about
you. That's why you have to put aside your ego and get out. If you have trouble
doing that, as most people do, be like Odysseus; tie yourself to the mast with an
automatic stop and take your emotions out of play.

1051

What most people fail to understand is that while you're losing your money, you're
also losing your objectivity. It's like being at the craps table in Vegas, and the fat
bleached blonde in the sequined dress is rolling the dice, and you're losing, and
you're determined that you're not going to let her beat you. What you've forgotten
is that she doesn't care about you, she's just rolling the dice.

1054

1053

1050
1049
1048

1047

Taking a loss is hard to do because it's an admission that you've been wrong. But
in the market, being wrong some of the time is part of the game. On each trade,
you have to establish your 'uncle point,' the point where you'll get out of a losing
position, and you have to have the mental discipline to pull the trigger at that point.
There's no cure for fools.
Confidence is every part of trading. If you're not convinced that you can win, you
should never climb into the ring.
For two hundred days a year, I'd end up with reasonably small losses netted out
with similar-sized gains. Lose $5,000 here, make $6,000 there, round after round,
twenty, thirty, forty times a day. But I'd win the other fifty trading days by clear-cut
unanimous decisions. Smack the bonds for $75,000, hit a stock for $100,000, nail
a couple of options for $125,000, pound the S&Ps for $150,000. Over time it made
me a big winner, to the tune of $5 million a year.

John Mauldin

Marty Schwartz

Marty Schwartz
Marty Schwartz
Marty Schwartz
Marty Schwartz
Wall Street proverb

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz
Yojimbo
Marty Schwartz

Marty Schwartz

1046

1045

1044

1043

1042

1041

1040

1039

1038
1037

1036

1034
1033
1032
1031
1030
1029

1028

The most important thing is to protect your trading capital until you can regain your
equilibrium and put all the shadows of the losing streak behind you. Losing streaks
are an unfortunate part of the game, but if you are a good disciplined trader who
can shift into neutral, the losing will end and black ink will start to flow again.
When I came back, I'd see a trade I liked and I'd do it small with a very tight stop,
so if I was wrong, I'd get right out. All the time I kept telling myself, make little
profits, make little profits, make little profits. Black ink, black ink, black ink. It's all
psychological.
You can never shift from reverse to first gear without going through neutral. You
must change the direction of bad trading by first shifting to neutral. You must stop.
The best way to stop a losing streak is to stop! Stop the losses, stop the bleeding.
Take time off and let your intellect take charge of your emotions; the market will be
there when you return.
The best way to end a losing streak is to cut your losses and divorce your ego from
the game... You have to manage your resources and not lose too much of your
stake. Many people when they're losing increase their bets; they double up hoping
to win it all back on one roll of the dice. That strategy can be devastating.
When you're a market timer, you have to be equally good at going short and going
long, and when the market changes sides, you can't hold your position and hope it
turns around. If you're not a natural like Mickey Mantle, you've got to be a student
of the game like Rod Carew. Practice, practice, practice.
Because we make and lose thousands of dollars every day, big-time traders often
give the appearance of treating money with an 'easy come, easy go' attitude.
That's not right. Just because we don't do the mashed potatoes over our wins or
whine about our losses doesn't mean that we take them casually.
When you're trading real time, and things start popping, you're challenged to make
immediate decisions. You can't stand still, there's no time to think. It's attack or
retreat, increase the position or get out.
That's the basic difference between an investor and a trader. A trader looks at the
market as one living, breathing organism instead of a collection of individual
stocks.
The only real security that a man will have in this world is a reserve of knowledge,
experience, and ability.
I've found that people who are great at something are not so much convinced of
their own greatness as mystified at why everyone else seems so incompetent.
Academic assertions that outperformance is impossible pose a useful sort of litmus
test. If one is cowed enough by the dogma to accept mediocrity as inevitable, then
one most likely lacks the drive, the talent or the intellect (or some combination of
the three) to achieve excellence in the first place.
Develop a built-in bullshit detector.
Never mistake motion for action.
There is great disorder under heaven... the situation is excellent.
For the great majority of mankind are satisfied with appearances, as though they
were realities.
The enemy advances, we retreat; the enemy camps, we harass; the enemy tires,
we attack; the enemy retreats, we pursue.
The realization that you are responsible for the results you get is the key to
successful investing. Winners know they are responsible for their results; losers
think they are not.

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz

Marty Schwartz
Henry Ford

Paul Graham

Jack Sparrow
Ernest Hemingway
Ernest Hemingway
Chairman Mao
Niccolo Machiavelli
Chairman Mao

Van Tharp

1027

1026

1025
1024

1023

1022

1021
1020

1019
1018

1017

1016

1015
1014
1013
1012

I'm not saying that controlling your mental state is the magic solution to trading
success. It's just part of the answer. But when you admit that the answer is within
yourself, you've come a long way.
Always respect the marketplace. Never take anything for granted. Do your
homework. Recap the day. Figure out what you did right and what you did wrong.
That is one part of the homework; the other part is projective. What do I want to
happen tomorrow? What happens if the opposite occurs? What happens if nothing
happens? Think through all the 'what-ifs.' Anticipate and plan, rather than react.
Discipline is number one: Take a theory and stick with it. But you also have to be
open-minded enough to switch tracks if you feel that your theory has been proven
wrong. You have to be able to say, 'My method worked for this type of market, but
we are not in that type of market anymore.'
How do you lose money? It's either a bad day trading or a losing position. If it's a
bad position that is the problem, then you should just get out of it.
...the best traders have no ego. To be a great trader, you have to have a big
enough ego only in the sense that you have confidence in yourself. You cannot let
ego get in the way of a trade that is a loser; you have to swallow your pride and get
out.
Trading is like any other job. You work hard, put in the time and effort, and make
your own luck. I was lucky that the first 100-lot I sold was a winner. But why was I
lucky? Because I stood there all day for over six months, developing and honing
market feeling. When the opportunity occurred, I didn't hesitate.
Most important, losers don't work hard enough. Most people walk in and think
there is a 50/50 chance on any trade. They don't think there is anything more to it
than that. They don't concentrate. They don't watch the factors that affect the
market. You can see it in their eyes; it is almost as if there is a wall in front of their
face.
I'm not afraid to lose. When you start being afraid to lose, you're finished.
Most traders who fail have large egos and can't admit that they are wrong. Even
those who are willing to admit that they are wrong early in their career can't admit it
later on. Also, some traders fail because they are too worried about losing.
I'm not picky about how I make my money. It doesn't matter if my opinion is right or
wrong. All that matters is whether I make money.
I know educated people who watch the news and wonder why the hell they lost
money when everyone else is taking profits. The media owes it to the public to
report that the market goes down not only on profit taking, but on a lot of loss
taking as well.
You have to learn how to lose; it is more important than learning how to win. If you
think you are always going to be a winner, when you lose, you will develop feelings
of hostility and end up blaming the market instead of trying to learn why you lost.
Your strategy has to be flexible enough to change when the environment changes.
The mistake most people make is they keep the same strategy all the time. They
say, 'Damn, the market didn't behave the way I thought it would.' Why should it?
Life and the markets just don't work that way.
Don't trade until an opportunity presents itself. Knowing when to stay out of the
markets is as important as knowing when to be in them.
Be your own person. Think against the herd, as they must lose in time.
Don't be arrogant. When you get arrogant, you forsake risk control. The best
traders are the most humble.

Van Tharp

Tony Saliba

Tony Saliba
Tony Saliba

Tom Baldwin

Tom Baldwin

Tom Baldwin
Brian Gelber

Brian Gelber
Brian Gelber

Mark Weinstein

Mark Weinstein

Mark Weinstein
Mark Weinstein
Mark Weinstein
Mark Weinstein

1011

1010
1009

Another item I would place under the category of misconceptions is the way the
media reports the reasons for the market being down. They are always saying the
market is down because of profit taking. I think it would be wonderful if everybody
was always taking profits. But, the truth is, most people lose money, and the
reason markets go down is because they take their losses.
I don't try to figure out where the market is going before the action; I let the market
tell me where it is going. Also, there is such a variety of technical input in the stock
market... that you will almost always get a signal before the market is about to do
something.
I am always looking for a market that is losing momentum, and then go the other
way.

Mark Weinstein

Mark Weinstein
Mark Weinstein

1003

When I trade at home, I often watch the sparrows in my garden. When I feed them
bread, they take just a little piece at a time and fly away. They keep on flying back
and forth, taking small bits of bread. They may have to make a hundred stabs at a
piece of bread to get what a pigeon gets at one time, but that is why a pigeon is a
pigeon. You will never be able to shoot a sparrow, it is just too fast.
Although the cheetah is the fastest animal in the world and can catch any animal
on the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in
the bush for a week, waiting for just the right moment. It will wait for a baby
antelope, and not just any baby antelope, but preferably one that is also sick or
lame. Only then, when there is no chance it can lose its prey, does it attack. That,
to me, is the epitome of professional trading.
Most people will not wait for the environment to tip itself off. They will walk into the
forest when it is still dark, while I wait until it gets light.
My fear of the markets has forced me to hone my timing with great precision.
When I am trading properly, it is like a pool player running racks. If my gut feel of
market conditions is not right, I don't trade.
I just wait until there is money lying in the corner, and all I have to do is go over
there and pick it up. I do nothing in the meantime. Even people who lose money in
the market say, 'I just lost my money, now I have to do something to make it back.'
No, you don't. You should sit there until you find something.
I always try to encourage people that are thinking of going into this business for
themselves. I tell them, 'Think that you might become more successful than you
ever dreamt, because that's what happened to me.'

Marty Schwartz

1002

I always take my losses quickly. That is probably the key to my success. You can
always put the trade back on, but if you go flat, you see things differently.

Marty Schwartz

1001

If you're ever very nervous about a position overnight, and especially over a
weekend, and you're able to get out at a much better price than you thought
possible when the market trades, you're usually better off staying with the position.

Marty Schwartz

1000

The most important thing is money management, money management, money


management. Anybody who is successful will tell you the same thing.

Marty Schwartz

999

The great thing about being a trader is that you can always do a much better job.
No matter how successful you are, you know how many times you screw up. Most
people, in most careers, are busy trying to cover up their mistakes. As a trader,
you are forced to confront your mistakes because the numbers don't lie.

Marty Schwartz

1008

1007
1006

1005

1004

Mark Weinstein

Mark Weinstein
Mark Weinstein

Mark Weinstein

Jim Rogers

998
997

996

995
994

993
992
991
990
989

988

987

986
985

984
983

982

After a devastating loss, I always play very small and try to get black ink, black ink.
It's not how much money I make, but just getting my rhythm and confidence back. I
shrink my size totally to a fifth or a tenth of the position that I trade normally.
And it works. I think I ended up losing only $57,000 in November 1982, after taking
a $600,000 hit on November 4.
By living the philosophy that my winners are always in front of me, it is not so
painful to take a loss. If I make a mistake, so what!
Before, admitting I was wrong was more upsetting than losing the money. I used to
try to will things to happen. I figured it out, therefore it can't be wrong. When I
became a winner, I said, 'I figured it out, but if I'm wrong, I'm getting the hell out,
because I want to save my money and go on to the next trade.
My attitude is that I always want to be better prepared than someone I'm
competing against. The way I prepare myself is by doing my work each night.
If you try to learn from every single trade that you make, you are only going to get
better and better as time goes on.
In physics you're playing against God, and he doesn't change his laws very often.
In finance you're playing against God's creatures, agents who value assets based
on their ephemeral opinions. They don't know when they've lost, so they keep
trying.
You need to be decisive, open-minded, flexible and competitive.
You miss 100% of the shots you don't take.
The highest compliment that you can pay me is to say that I work hard every day,
that I never dog it.
I skate to where the puck is going to be, not where it has been.
The stock market is neither efficient nor random. It is not efficient because there
are too many poorly conceived opinions; it is not random because strong investor
emotions can create trends.
High volume at a key point is an extraordinarily valuable tip-off that a stock is ready
to move. Volume can also be used in a reverse manner. When prices enter a
consolidation after an advance, volume should dry up very substantially. In other
words, there should be very little selling coming into the market. During a
consolidation, declining volume is generally constructive.
Just as a doctor would be foolish not to use X-rays and EKGs, investors would be
foolish not to use charts. Charts provide valuable information about what is going
on that cannot be obtained easily any other way. They allow you to follow a huge
number of different stocks in an organized manner.
Letting losses run is the most serious mistake made by most investors. The public
doesn't really understand the philosophy of cutting losses quickly.
The secret for winning in the stock market does not include being right all the time.
In fact, you should be able to win even if you are right only half the time. The key is
to lose the least amount of money possible when you are wrong.
My philosophy is that all stocks are bad. There are no good stocks unless they go
up in price. If they go down instead, you have to cut your losses fast.
There should be a respect for the person on the other side of the trade. Always ask
yourself: Why does he want to sell? What does he know that I don't? Finally, you
have to be intellectually honest with yourself and others. In my judgment, all great
traders are seekers of truth.

Marty Schwartz
Marty Schwartz

Marty Schwartz

Marty Schwartz
David Ryan

Emanuel Derman
Stan Druckenmiller
Wayne Gretzky
Wayne Gretzky
Wayne Gretzky

William O' Neill

William O' Neill

William O' Neill


William O' Neill

William O' Neill


William O' Neill

Michael Steinhardt

981
980

979

978

977

976

975
974

973

Good trading is a peculiar balance between the conviction to follow your ideas and
the flexibility to recognize when you have made a mistake. You need to believe in
something, but at the same time, you are going to be wrong a considerable
number of times. The balance between confidence and humility is best learned
through extensive experience and mistakes.
The term professionally managed implies a credit I am not sure I would give the
average professional in this business.
One of the allures of this business is that sometimes the greatest ignoramus can
do very well. That is unfortunate because it creates the impression that you don't
necessarily need any professionalism to do well, and that is a great trap.
One of the advantages of trading the way I do being a long-term investor, shortterm trader, individual stock selector, market timer, sector analyst is that I have
made so many decisions and mistakes that it has made me wise beyond my years
as an investor.
There is a very good investor I speak to frequently who said, 'All I bring to the party
is twenty-eight years of mistakes.' I really believe he is right. When you make a
mistake, there is some subconscious phenomenon that makes it less likely for you
to make that same mistake again.
We went short Polaroid when it was selling at sixty times earnings, which we
thought was absurd; it then went to seventy times earnings. The market seemed to
lose track of reality, and we found ourselves asking, 'What is the difference
between forty times earnings and eighty times earnings?' By putting a different
number on the secular growth rate estimate, you could justify almost any multiple.
That is how people were thinking in those days.
There is a very important difference between being a theoretical contrarian and
dealing with it in practical terms. In order to win as a contrarian, you need the right
timing and you have to put on a position in the appropriate size. If you do it too
small, it's not meaningful; if you do it too big, you can get wiped out if your timing is
slightly off. The process requires courage, commitment, and an understanding of
your own psychology.
As soon as a formula is right for any length of time, its own success carries the
weight of its inevitable failure.
Good traders know that opportunistic speculation is a process. Ignore any one
single outcome, focus on the methodology that can consistently avoid catastrophic
losses, manage risk, preserve capital. A good process can be replicated, a random
spin of the wheel cannot.

Michael Steinhardt
Michael Steinhardt

Michael Steinhardt

Michael Steinhardt

Michael Steinhardt

Michael Steinhardt

Michael Steinhardt
Michael Steinhardt

Barry Ritholtz

971

Evolution is not a conscious process. It is a winnowing out of the poorly designed


and emergence of the better designed on the basis of the process of natural
selection. In contrast, in finance the process is conscious and intelligent.
A better analogy than physics or biology is a military one. The point is that there is
a strategy of intelligent reaction to any action, an arms race to leapfrog one
another in information gathering and technology, to know what others are doing,
and to react in a way that they will not anticipate. This is the point where I could
pull out quotes from The Art of War about seeing into the mind of the enemy,
attacking when your opponent believes you will retreat, and the like. That is not
physics.

Richard Bookstaber

970

You can't build in a feedback or reactive model, because you don't know what to
model. And if you do know by the time you know the odds are the market has
changed. That is the whole point of what makes a trader successful he can see
things in ways most others do not, anticipate in ways others cannot, and then
change his behavior when he starts to see others catching on.

Richard Bookstaber

972

Richard Bookstaber

969
968

967

966
965

964
963

962
961

960

959

958
957
956
955

954
953
952

[Poker is] a very simple game; a five-year-old can learn it. But it's also highly
mathematical. If you never play someone on the next level, you dont even know
that level exists. It's almost another dimension.
I have two basic rules about winning in trading as well as in life: (1) If you don't bet,
you can't win. (2) If you lose all your chips, you can't bet.
When I was a kid and got my first motorcycle, I had an older friend who would
always get into fights. He told me, 'Larry, when you are on a motorcycle, never
argue with a car. You will lose.' The same lesson applies to trading: If you argue
with the market, you will lose.
There are really four kinds of trades or bets: good bets, bad bets, winning bets,
and losing bets. Most people think that a losing trade was a bad bet. That is
absolutely wrong. You can lose money even on a good bet. If the odds on a bet
are 50/50 and the payoff is $2 versus a $1 risk, that is a good bet even if you lose.
The important point is that if you do enough of those trades or bets, eventually you
have to come out ahead.
Risk is a no-fooling-around game; it does not allow for mistakes. If you do not
manage the risk, eventually they will carry you out.
I have a friend who has amassed a fortune in excess of $100 million. He taught me
two basic lessons. First, if you never bet your lifestyle, from a trading standpoint,
nothing bad will ever happen to you. Second, if you know what the worst possible
outcome is, it gives you tremendous freedom. The truth is that, while you can't
quantify reward, you can quantify risk.
There is a very important message here: People don't change. That is why this
whole game works.
I have a friend who is an economist. He would try to explain to me, as if talking to a
child, why what I was trying to do was futile, because 'the markets are efficient.' I
have noticed that everyone who has ever told me that the markets are efficient is
poor.
For some reason, the idea of trading on 5 percent margin made perfect sense to
me.
I know several people who claim to have market insights during dreams. I think
one of the functions of dreams is to reconcile information and feelings which the
conscious mind finds intractable.
It is a happy coincidence that when nature gives us true burning desires, she also
gives us the means to satisfy them. Those who want to win and lack skill can get
someone with skill to help them.
It's not how close you get to the ground, but how precise can you fly the airplane. If
you feel so careless with your life that you want to be the world's lowest flying
aviator, then you might do it for a while but then a great many former friends of
mine are no longer with us, simply because they cut their margins too close.
There are few activities so enlightening as to read old books with new eyes.
Trading is a curious mix of mostly going with the flow, yet knowing when to
selectively fade the flow.
Being contrarian at the wrong time is akin to arguing with a herd of cattle.
I think that if people look deeply enough into their trading patterns, they find that,
on balance, including all their goals, they are really getting what they want, even
though they may not understand it or want to admit it.
Win or lose, everybody gets what they want out of the market. Some people like to
lose, so they win by losing money.
Psychology motivates the quality of analysis and puts it to use. Psychology is the
driver and analysis is the road map.

Chip Reese
Larry Hite

Larry Hite

Larry Hite
Larry Hite

Larry Hite
Larry Hite

Larry Hite
Larry Hite

Ed Seykota

Ed Seykota

Bob Hoover
Jack Sparrow
Jack Sparrow
Jack Sparrow

Ed Seykota
Ed Seykota
Ed Seykota

951

950

949

948

947
946

945

A losing trader can do little to transform himself into a winning trader. A losing
trader is not going to want to transform himself. That's the kind of thing winning
traders do.
[Traders fail] for the same reason that most baby turtles fail to reach maturity:
Many are called and few are chosen. Society works by the attraction of the many.
As they are culled out, the good ones are left, and the others are released to go try
something else until they find their calling. The same is true for other fields of
pursuit.
One alternative [to expensive drama] is to keep bets small and then to
systematically keep reducing risk during equity drawdowns. That way you
approach your safe money asymptotically and have a gentle emotional and
financial touchdown.
The joy of winning and the pain of losing are right up there with the pain of winning
and the joy of losing. Also to consider are the joy and pain of not participating. The
relative strengths of these feelings tend to increase with the distance of the trader
from his commitment to being a trader.
'Luck' or 'smarts' or 'gift' are words indicating an attitudinal proclivity for mastery.
One tends to do well at one's calling. I think most good traders have a little extra
spark about trading.
Luck plays an enormous role in trading success. Some people were lucky enough
to be born smart, while others were even smarter and got born lucky.
Good traders have a special talent for trading just as good musicians and good
athletes have talents for their fields. Great traders are ones who are absorbed by
the talent. They don't have the talent the talent has them.

937
936

Gold tends to be dug up, refined, and then buried again. The geographical entropy
of all gold on the planet seems to decrease over time. A lot has been collected in
vaults. I project the trend as one toward a central world gold stash.
Inflation is part of the way societies sweep away the old order. All currencies
eventually get debased like it or not. Compute one penny invested at the time of
Christ, compounded at 3 percent per year. Then consider why nobody has
anywhere near that amount these days.
The stock market behaves differently from itself in that easily identifiable patterns
seldom exactly repeat.
A lot of people would rather understand the market than make money.
Common patterns transcend individual market behavior. For example, bond prices
have a lot in common with the way cockroaches crawl up and down a wall.
Unfortunately for cockroach followers, there is usually no one around to take the
other side of a trade.
Experienced traders can be very supportive just by being there for sharing joys
and sorrows.
The markets are the same now as they were five to ten years ago because they
keep changing just like they did then.
Charting is a little like surfing. You don't have to know a lot about the physics of the
tides, resonance, and fluid dynamics in order to catch a good wave. You just have
to be able to sense when it's happening and then have the drive to act at the right
time.
Be sensitive to the subtle differences between 'intuition' and 'into wishing.'

935

Gut feel is important. If ignored, it may come out in subtle ways by coloring your
logic. It can be dealt with through meditation and reflection to determine what's
behind it. If it persists, then it might be a valuable subconscious analysis of some
subtle information. Otherwise, it might be a dangerous sublimation of an inner
desire for excitement and not reflect market conditions.

944

943
942
941

940
939
938

Ed Seykota

Ed Seykota

Ed Seykota

Ed Seykota

Ed Seykota
Ed Seykota

Ed Seykota

Ed Seykota

Ed Seykota
Ed Seykota
Ed Seykota

Ed Seykota
Ed Seykota
Ed Seykota

Ed Seykota
Ed Seykota

Ed Seykota

934

933

932
931

930
929

928

927
926
925

924

923

922

921

920

I don't think traders can follow rules very long unless they reflect their own trading
style. Eventually, a breaking point is reached and the trader has to quit or change,
or find a new set of rules he can follow. This seems to be part of the process of
evolution and growth as a trader.
Mostly I follow the rules. As I keep studying the markets, I sometimes find a new
rule which breaks and then replaces a previous rule. Sometimes I get to a personal
breakpoint. When that happens, I get out of the markets altogether and take a
vacation until I feel that I am ready to follow the rules again. Perhaps some day, I
will have a more explicit rule for breaking rules.
I feel my success comes from my love of the markets. I am not a casual trader. It is
my life. I have a passion for trading. It is not merely a hobby or even a career
choice for me. There is no question that this is what I am supposed to do with my
life.
Losing a position is aggravating, whereas losing your nerve is devastating.
I set protective stops at the same time I enter a trade. I normally move these stops
in to lock in a profit as the trend continues. Sometimes, I take profits when a
market gets wild. This usually doesn't get me out any better than waiting for my
stops to close in, but it does cut down on the volatility of the portfolio, which helps
calm my nerves.
I am a self-taught trader who is continually studying both myself and other traders.
Psychologically, I tend to alter my activity depending on performance. I tend to be
more aggressive after I have been winning, and less so after losses. These
tendencies seem OK. In contrast, a costly tendency is to get emotional over a loss
and then try to get even with an overly large position.
The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3)
cutting losses. If you can follow these three rules, you may have a chance.
I prefer not to dwell on past situations. I tend to cut bad trades as soon as possible,
forget them, and then move on to new opportunities.
You mustn't hesitate to dream a little bigger darling.
Dramatic and emotional trading experiences tend to be negative. Pride is a great
banana peel, as are hope, fear, and greed. My biggest slip-ups occurred shortly
after I got emotionally involved with positions.
If I am bullish, I neither buy on a reaction, nor wait for strength; I am already in. I
turn bullish at the instant my buy stop is hit, and stay bullish until my sell stop is hit.
Being bullish and not being long is illogical.
Fundamentals that you read about typically are useless as the market has already
discounted the price, and I call them 'funny-mentals.' However, if you catch on
early, before others believe, then you might have valuable 'surprise-a-mentals.'
The profitability of trading systems seems to move in cycles. Periods during which
trend-following systems are highly successful will lead to their increased popularity.
As the number of system users increases, and the markets shift from trending to
directionless price action, these systems become unprofitable, and
undercapitalized and inexperienced traders will get shaken out. Longevity is the
key to success.
All trading is done on some sort of system, whether or not it is conscious. Many of
the good systems are based on following trends. Life itself is based on trends.
Birds start south for the winter and keep on going. Companies track trends and
alter their products accordingly. Tiny protozoa move in trends along chemical and
luminescence gradients.

Ed Seykota

Ed Seykota

Ed Seykota
Ed Seykota

Ed Seykota
Ed Seykota

Ed Seykota

Ed Seykota
Ed Seykota
Inception

Ed Seykota

Ed Seykota

Ed Seykota

Ed Seykota

Ed Seykota

919
918

917
916

915

914
913

912
911

910

909

908
907
906

905

904

903

Systems trading is ultimately discretionary. The manager still has to decide how
much risk to accept, which markets to play, and how aggressively to increase and
decrease the trading as a function of equity change. These decisions are quite
important often more important than trade timing.
Striking a workable ecology seems to promote trading longevity, which is one key
to success.
The key to long-term survival and prosperity has a lot to do with the money
management techniques incorporated into the technical system. There are old
traders and there are bold traders, but there are very few old, bold traders.
Systems don't need to be changed. The trick is for a trader to develop a system
with which he is compatible.
If I can help somebody, fine. That's the whole idea. I feel in my heart that nobody in
this game ever devoted more concentration to the batter's box than Theodore
Samuel Williams, a guy who practiced until the blisters bled, and loved doing it,
and got more delight out of examining by conversation and observation the art of
hitting the ball. If that does not qualify me, nothing will.
A sense of humor... is needed armor. Joy in one's heart and some laughter on
one's lips is a sign that the person down deep has a pretty good grasp of life.
I have always tried to keep the concept of patience in mind by waiting for the right
trade, just like you wait for the percentage hand in poker.
When more of the cards are on the table and you have a very strong hand in
other words, when you feel the percentages are skewed in your favor you raise
and play that hand to the hilt.
Most traders have a tendency to take risks that are too large at the beginning.
They tend not to be selective enough about when they take risks.
If a 260-pound fullback is running through the line and a 175-pound linebacker has
to stop him, he has to have the courage to go into him. You need that kind of
courage to be able to participate in the markets.
By having thought out your objective and having a strategy for getting out in case
the market trend changes, you greatly increase the potential for staying with your
winning positions.
The best way I know to learn discipline and patience is to think through a trade
thoroughly before putting it on. You need to develop a plan of your strategies for
various contingencies. That way, you won't get swayed by every news item that
hits the market and causes prices to move up or down.
The most important thing is to have a method for staying with your winners and
getting rid of your losers.
Whenever too many people are doing the same thing, the market will go through a
period of adjustment.
The best thing anyone can do when starting out is to learn how a trend system
works... If you can just learn discipline by using a trend-following system, even
temporarily, it will increase your odds of being a successful trader.
There is nothing worse than a really bad trading day. You feel so low that it is
difficult to hold your head up. But, if I knew that I could also have a similar
experience in the exhilaration of winning, I would take the combination of winning
and losing days any time because you feel that much more alive. Trading gives
you an incredibly intense feeling of what life is all about.
It's not that we had any unfair knowledge that other people didn't have, it is just
that we did our homework. People just don't want to believe that anyone can break
away from the crowd and rise above mediocrity.

Ed Seykota
Ed Seykota

Ed Seykota
Ed Seykota

Ted Williams

Hugh Sidey
Gary Bielfeldt

Gary Bielfeldt
Gary Bielfeldt

Gary Bielfeldt

Gary Bielfeldt

Gary Bielfeldt
Gary Bielfeldt
Gary Bielfeldt

Gary Bielfeldt

Paul Tudor Jones

Paul Tudor Jones

900

The trading experience is so intense that there is a natural tendency to want to


avoid thinking about it once the day is over. I am that way when things are
working. But, when they are not, it spurs me to want to think about what I'm doing
and how I might do better. When things go bad, traders shouldn't stick their heads
in the sand and just hope it gets better.
On any individual trade it is almost all luck. It is just a matter of statistics. If you
take something that has a 53 percent chance of working each time, over the long
run there is a 100 percent chance of it working.
I always say that you could publish trading rules in the newspaper and no one
would follow them. The key is consistency and discipline.

899
898

...so many people would make incredibly bad trades just to take a profit. They
would get out even though the market was locked limit-up and almost sure to go
up the next day. They couldn't stand the profits burning a hole in their pocket.
When you are getting beat to death, get your head out of the mixer.

902

901

897

896

895

894
893

892

891
890

889

888

887

There are a lot of people who get imprinted like ducks. You can teach them that a
warship is their mother if you get them young enough. For a lot of traders, it
doesn't matter so much whether their first big trade is successful or not, but
whether their first big profit is on the long or short side. Those people tend to be
perennial bulls or bears, and that is very bad. Both sides have to be equally OK.
What you can't afford to do is throw away your capital on suboptimal trades. If you
do, you will be too debilitated to trade when the right position comes along. Even if
you put the trade on, it will be relatively small because your capital will have been
depleted by the other trades.
After all is said and done, you have to minimize your losses and try to preserve
capital for those few instances when you can make a lot in a very short period of
time.
If there is one thing that is singularly responsible for the abysmal returns of the
S&P 500... it is the ludicrous set of valuation 'models' that Wall Street has
repeatedly foisted onto an uninformed public in order to sell them on the notion
that dangerously overvalued markets were actually 'cheap.' Knowledge is your
best defense. Valuation matters.
In the absence of historical evidence, people can say anything they want without
accountability.
It's not always obvious to the listener when an analyst's argument is full of holes,
but you should always be on red alert when a single year of earnings is taken, at
face value, as the basis for market valuation.
Life is a race. Death is the finish line. The objective is to go out with the highest
score possible not in terms of dollars earned or battles won, but a life most fully
lived.
...because of the complexity of defining interacting and changing market patterns,
a good trader will usually be able to outperform a good system.
When you get a range expansion, the market is sending you a very loud, clear
signal that the market is getting ready to move in the direction of that expansion.
Maybe there are macroeconomic forces at work that are part of a larger super
cycle that we don't have any control over. Perhaps we are simply responding to the
same type of cycles that most advanced civilizations fell prey to, whether it was the
Romans, sixteenth-century Spain, eighteenth-century France, or nineteenthcentury Britain.
I know from studying history that credit eventually kills all great societies. We have
essentially taken out our American Express card and said we are going to have a
great time.

Richard Dennis

Richard Dennis
Richard Dennis

Richard Dennis
Richard Dennis

Richard Dennis

Richard Dennis

Richard Dennis

John Hussman
John Hussman

John Hussman

Jack Sparrow
Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones

886
885

884

883

882

881

880

879
878

Everything gets destroyed a hundred times faster than it is built up. It takes one
day to tear down something that might have taken ten years to build.
I never apologize to anybody, because I don't get paid unless I win.
[No loyalty to positions] is important because it gives you a wide open intellectual
horizon to figure out what is really happening. It allows you to come in with a
completely clean slate in choosing the correct forecast for that particular market.
I try to avoid any emotional attachment to a market. I avoid letting my trading
opinions be influenced by comments I may have made on the record about a
market.
I think one of my strengths is that I view anything that has happened up to the
present point in time as history. I really don't care about the mistake I made three
seconds ago in the market. What I care about is what I am going to do from the
next moment on.
If I go into the market at just the right moment, by giving it a little gas on the upside,
I can create the illusion of a bull market. But, unless the market is really sound, the
second I stop buying, the price is going to come right down.
Everyone says you get killed trying to pick tops and bottoms and you make all the
money by catching the trends in the middle... I have often been missing the meat
in the middle, but I have caught a lot of bottoms and tops.
I consider myself a premier market opportunist. That means I develop an idea on
the market and pursue it from a very low-risk standpoint until I have repeatedly
been proven wrong, or until I change my viewpoint.
I have very strong views of the long-run direction of all markets. I also have a very
short-term horizon for pain.

870
869

I know that to be successful, I have to be frightened. My biggest hits have always


come after I have had a great period and I started to think that I knew something.
The idea that you can't beat the markets is a frightening prospect. That is why my
guiding trading philosophy is playing great defense. If you make a good trade,
don't think it is because you have some uncanny foresight. Always maintain your
sense of confidence, but keep it in check.
When I am trading poorly, I keep reducing my position size. That way, I will be
trading my smallest position size when my trading is worst.
Risk control is the most important thing in trading.
All the trades I have on are interrelated. I look at it in terms of what my equity is
each morning. My goal is to finish each day with more than I started.
I have a mental stop. If it hits that number, I am out no matter what.
Now I spend my day trying to make myself as happy and relaxed as I can be. If I
have positions going against me, I get right out; if they are going for me, I keep
them.
That was when I first decided I had to learn discipline and money management. It
was a cathartic experience for me, in the sense that I went to the edge, questioned
my very ability as a trader, and decided that I was not going to quit. I was
determined to come back and fight. I decided that I was going to become very
disciplined and businesslike about my trading.
First of all, never play macho man with the market. Second, never overtrade.

868

Tullis taught me about moving volume. When you are trading size, you have to get
out when the market lets you out, not when you want to get out. He taught me that
if you want to move a large position, you don't wait until the market is in new high
or low ground because very little volume may trade there if it is a turning point.

877

876
875
874
873
872

871

Paul Tudor Jones


Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones


Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones


Paul Tudor Jones
Paul Tudor Jones
Paul Tudor Jones
Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones


Paul Tudor Jones

Paul Tudor Jones

867
866

865
864

863

862
861

860

859
858

857
856
855
854

853
852

851

850

849

[Eli Tullis] was the toughest son of a bitch I ever knew. He taught me that trading is
very competitive and you have to be able to handle getting your butt kicked. No
matter how you cut it, there are enormous emotional ups and downs involved.
The one thing I learned from Eli [Tullis] is that, ultimately, the market is going to go
where it is going to go.
Learn from your mistakes. Don't be misled by the day-to-day fluctuations in your
equity. Focus on whether what you are doing is right, not on the random nature of
any single trade's outcome.
The [Keynesian] theory is fine, it just doesn't work in the real world. Therefore, we
shouldn't use it.
Trading to me is like betting on independent rolls of the dice that you think are
loaded a little bit in your favor, because you know some statistical things about the
market.
It is a little bit like playing golf: You can throw your clubs around after making a bad
shot, but while you are making the next shot you keep your head down and your
eye on the ball.
Being a trader is like being a boxer. Every now and then, the market gives you a
good wallop.
There is no way to play just one side of that street. If you feel too good when things
are going well, then inevitably you will feel too bad when they are going poorly. I
wouldn't claim that I realized that after three years of trading, but after you've done
it for about twenty years, it either drives you crazy, or you learn to put it into
perspective.
You have to maintain your perspective. There is more to life than trading. Also, to
me, being emotionally deflated would mean lacking confidence in what I am doing.
I avoid that because I have always felt that it is misleading to focus on short-term
results.
It is totally counter productive to get wrapped up in the results. Trading decisions
should be made as unemotionally as possible.
The correct approach is to say: This structure means up, and this structure means
up no more, but never that this structure means up this much and no more.
If there is any lesson I have learned... it is that the unexpected and the impossible
happen every now and then.
You should expect the unexpected in this business; expect the extreme. Don't
think in terms of boundaries that limit what the market might do.
The idea that one side of the market is more likely to work in the absence of
anything else is an illusion. The market just wouldn't be here if that was true.
My experience with novice traders is that they trade three to five times too big.
They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2
percent risks.
Whenever a trader says 'I wish,' or 'I hope,' he is engaging in a destructive way of
thinking because it takes attention away from the diagnostic process.
A common mistake is to think of the market as a personal nemesis. The market, of
course, is totally impersonal; it doesn't care whether you make money or not.
I would say that risk management is the most important thing to be well
understood. Undertrade, undertrade, undertrade is my second piece of advice.
Whatever you think your position ought to be, cut it at least in half.
As an alternative approach, one of the traders I know does very well in the stock
index markets by trying to figure out how the stock market can hurt the most
traders. It seems to work for him.

Paul Tudor Jones


Paul Tudor Jones

Richard Dennis
Richard Dennis

Richard Dennis

Richard Dennis
Richard Dennis

Richard Dennis

Richard Dennis
Richard Dennis

Richard Dennis
Richard Dennis
Richard Dennis
Richard Dennis

Bruce Kovner
Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner

839

The stock market has far more short-term countertrends. After the market has
gone up, it always wants to come down. The commodity markets are driven by
supply and demand for physical goods; if there is a true shortage, prices will tend
to keep trending higher.
Nowadays, everybody is a chartist, and there are a huge number of technical
trading systems. I think that change has made it much harder for the technical
trader.
The general rule is: The less observed, the better the trade.
Through bitter experience, I have learned that a mistake in position correlation is
the root of some of the most serious problems in trading. If you have eight highly
correlated positions, then you are really trading one position that is eight times as
large.
What I am really looking for is a consensus that the market is not confirming. I like
to know that there are a lot of people who are going to be wrong.
When you are really involved, the screen almost reaches out and grabs you. The
way the quotes are made changes: They get wider, they get wilder. I have contacts
all over the world in each of these markets and I know what is going on. It is a
tremendously exciting game.
One of the jobs of a good trader is to imagine alternative scenarios. I try to form
many different mental pictures of what the world should be like and wait for one of
them to be confirmed. You keep trying them on one at a time. Inevitably, most of
these pictures will turn out to be wrong that is, only a few elements of the
picture may prove correct. But then, all of a sudden, you will find in that one
picture, nine out of ten elements click. That scenario then becomes your image of
the world reality.
[The] principle characteristic of a bear market is very sharp down movements
followed by quick retracements... In a bear market, you have to use sharp
countertrend rallies to enter positions.
The only thing that disturbs me is poor money management. Every so often, I take
a loss that is significantly too large. But I never had a lot of difficulty with the
process of losing money, as long as losses were the outcome of sound trading
techniques.
The emotional burden of trading is substantial; on any given day, I could lose
millions of dollars. If you personalize these losses, you can't trade.

Bruce Kovner

838

...the point about a technical barrier and I've studied the technical aspects of the
market for a long time is that the market shouldn't go there if you are right.

Bruce Kovner

848

847
846

845
844

843

842

841

840

837

836

835
834

833

Whenever I enter a position, I have a predetermined stop. That is the only way I
can sleep. I know where I'm getting out before I get in. The position size on a trade
is determined by the stop, and the stop is determined on a technical basis.
The more a price pattern is observed by speculators, the more prone you are to
have false signals. The more a market is the product of nonspeculative activity, the
greater the significance of technical breakouts.
The Heisenberg principle in physics provides an analogy for the markets. If
something is closely observed, the odds are it is going to be altered in the process.
Tight congestions in which a breakout occurs for reasons that nobody understands
are usually good risk-reward trades.
...as a trader who has seen a great deal and been in a lot of markets, there is
nothing disconcerting to me about a price move out of a trading range that nobody
understands.

Bruce Kovner

Bruce Kovner
Bruce Kovner

Bruce Kovner
Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner
Bruce Kovner

Bruce Kovner

832

831

830

829
828
827

826

825

824

823

822

821

820
819
818

It is very important for me to study the details of price action to see if I can observe
something about how everybody is voting. Studying the charts is absolutely critical
and alerts me to existing disequilibria and potential changes.
Technical analysis reflects the vote of the entire marketplace and, therefore, does
pick up unusual behavior. By definition, anything that creates a new chart pattern
is something unusual.
For me, technical analysis is like a thermometer. Fundamentalists who say they
are not going to pay attention to the charts are like a doctor who says he's not
going to take a patient's temperature. But, of course, that would be sheer folly. If
you are a responsible participant in the market, you always want to know where
the market is whether it is hot and excitable, or cold and stagnant. You want to
know everything you can about the market to give you an edge.
There is a great deal of hype attached to technical analysis by some technicians
who claim that it predicts the future. Technical analysis tracks the past; it does not
predict the future. You have to use your own intelligence to draw conclusions
about what the past activity of some traders may say about the future activity of
other traders.
Technical analysis, I think, has a great deal that is right and a great deal that is
mumbo jumbo.
The market usually leads because there are people who know more than you do.
I almost always trade on a market view; I don't trade simply on technical
information. I use technical analysis a great deal and it is terrific, but I can't hold a
position unless I understand why the market should move.
[Successful traders] are strong, independent, and contrary in the extreme. They
are able to take positions others are unwilling to take. They are disciplined enough
to take the right size positions.
I'm not sure one can really define why some traders make it, while others do not.
For myself, I can think of two important elements. First, I have the ability to imagine
configurations of the world different from today and really believe it can happen...
Second, I stay rational and disciplined under pressure.
[Michael Marcus] also taught me one other thing that is absolutely critical: You
have to be willing to make mistakes regularly; there is nothing wrong with it. [He]
taught me about making your best judgment, being wrong, making your next best
judgment, being wrong, making your third best judgment, and then doubling your
money.
Michael [Marcus] taught me one thing that was incredibly important... He taught
me that you could make a million dollars. He showed me that if you applied
yourself, great things could happen. It is very easy to miss the point that you really
can do it. He showed me that if you take a position and use discipline, you can
actually make it.
The first rule of trading there are probably many first rules is don't get caught
in a situation in which you can lose a great deal of money for reasons you don't
understand.
To this day, when something happens to disturb my emotional equilibrium and my
sense of what the world is like, I close out all positions related to that event.
I look for confirmation from the chart, the fundamentals, and the market action. I
think you can trade anything in the world that way.
I am very open-minded. I am willing to take in information that is difficult to accept
emotionally, but which I still recognize to be true.

Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner
Bruce Kovner
Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner

Bruce Kovner
Michael Marcus
Michael Marcus

817

816

815

814

813
812

811

810

809
808

807

806

805

804

803

I think that, in the end, losing begets losing. When you start losing, it touches off
negative elements in your psychology; it leads to pessimism.
If trading is your life, it is a torturous kind of excitement. But if you are keeping your
life in balance, then it is fun. All the successful traders I've seen that lasted in the
business sooner or later got to that point. They have a balanced life; they have fun
outside of trading.
Gut feel is very important. I don't know of any great professional trader that doesn't
have it. Being a successful trader also takes courage: the courage to try, the
courage to fail, the courage to succeed, and the courage to keep on going when
the going gets tough.
You need to be aware that the world is very sophisticated and always ask yourself:
'How many people are left to act on this particular idea?' You have to consider
whether the market has already discounted your idea.
When I talk to other traders, I try to keep very conscious of the idea that I have to
listen to myself. I try to take their information without getting overly influenced by
their opinion.
In the final analysis, you need to have the courage to hold the position and take
the risk.
Every trader has strengths and weaknesses. Some are good holders of winners,
but may hold their losers a little too long. Others may cut their winners a little short,
but are quick to take their losses. As long as you stick to your own style, you get
the good and bad in your own approach.
Perhaps the most important rule is to hold on to your winners and cut your losers.
Both are equally important. If you don't stay with your winners, you are not going to
be able to pay for the losers.
If you become unsure about a position, and you don't know what to do, just get out.
You can always come back in. When in doubt, get out and get a good night's
sleep. I've done that lots of times and the next day everything was clear.
Another thing is that if a position doesn't feel right as soon as you put it on, don't
be embarrassed to change your mind and get right out.
I think to be in the upper echelon of successful traders requires an innate skill, a
gift. It's just like being a great violinist. But to be a competent trader and make
money is a skill you can learn.
...it hurt to realize what a fool I had been, but I have learned not to be as attached
to material things. I accepted it as a life lesson. I learned I don't have to own a
house in every beautiful place in the world; I can stay at a hotel and walk on the
beach or climb a trail there. Or, if I really feel like spoiling myself, I can charter a
plane; I don't have to own one.
The best trades are the ones in which you have all three things going for you:
fundamentals, technicals, and market tone. First, the fundamentals should suggest
that there is an imbalance of supply and demand, which could result in a major
move. Second, the chart must show that the market is moving in the direction that
the fundamentals suggest. Third, when news comes out, the market should act in
a way that reflects the right psychological tone.
My trading in those days was a little bit like being a surfer. I was trying to hit the
crest of the wave just at the right moment. But if it didn't work, I just got out. I was
getting a shot at making several hundred points and hardly risking anything. I later
used that surfing technique as a desk trader.
At key intraday chart points, I could take much larger positions than I could afford
to hold, and if it didn't work immediately, I would get out quickly. For example, at a
critical intraday point, I would take a twenty-contract position, instead of the three
to five contracts I could afford to hold, using an extremely close stop. The market
either took off and ran, or I was out.

Michael Marcus

Michael Marcus

Michael Marcus

Michael Marcus

Michael Marcus
Michael Marcus

Michael Marcus

Michael Marcus

Michael Marcus
Michael Marcus

Michael Marcus

Michael Marcus

Michael Marcus

Michael Marcus

Michael Marcus

802

801
799
798
797

796

795
794

I would sometimes think that maybe I ought to stop trading because it was very
painful to keep losing. In 'Fiddler on the Roof,' there is a scene where the lead
looks up and talks to God. I would look up and say, 'Am I really that stupid?' And I
seemed to hear a clear answer saying, 'No, you are not stupid. You just have to
keep at it.' So I did.
Trading provides one of the last great frontiers of opportunity in our economy. It is
one of the very few ways in which an individual can start with a relatively small
bankroll and actually become a multi-millionaire.
Nuts!
And remember wherever you go, there you are.
All truths are easy to understand once they are discovered the point is to
discover them.

790
789
788

787

He who asks fortune-tellers the future unwittingly forfeits an inner intimation of


coming events that is a thousand times more exact than anything they may say.

792

791

784

In their beginnings it is we who guide affairs and hold them in our power; but so
often once they are set in motion, it is they which guide us and sweep us along.
There are very few men and they are the exceptions who are able to think
and feel beyond the present moment.
What the best may have, above all, is a capacity to learn and change and to do
so faster than everyone else.

783

When your outgo exceeds your income, your upkeep becomes your downfall.

782

In the face of uncertainty, wisdom is to err on the side of pushing, to not give up.
But you have to be ready to recognize when pushing is only ego, only weakness.
You have to be ready to recognize when the pushing can turn to harm.

781

Thinking is no more and no less an organ of perception than the eye or ear. Just
as the eye perceives colors and the ear sounds, so thinking perceives ideas.

786
785

Jack Schwager
General Anthony
McAuliffe
Confucius
Galileo Galilei

The great questions of the time will not be resolved by speeches and majority
decisions that was the great mistake of 1848 and 1849 but by iron and blood. Otto von Bismarck
No two ideals were ever more incompatible than the security of conformity and the
freedom of individuality. After the choice is made, the rest is easy unless you
don't have the guts to stick by your choice.
Hunter S. Thompson
Beware of looking for goals: look for a way of life. Decide how you want to live and
then see what you can do to make a living WITHIN that way of life.
Hunter S. Thompson
To let another man define your own goals is to give up one of the most meaningful
aspects of life the definitive act of will which makes a man an individual.
Play your own game, be your own man, and don't ask anybody for a stamp of
approval.
Most people's lives are virtual monuments to cowardly indecision. Ah, that we lack
the courage of our romantic convictions; and thereby miss the wine of life, forgoing
the very thing that makes living worthwhile.
The reason that 'guru' is such a popular word is because 'charlatan' is so hard to
spell.
Winning is habit. Unfortunately, so is losing.
I am not a man, I am dynamite.

793

Michael Marcus

Hunter S. Thompson
Hunter S. Thompson

Hunter S. Thompson
William J. Bernstein
Vince Lombardi
Friedrich Nietzsche

Walter Benjamin

Michel de Montaigne
Carl von Clausewitz
Atul Gawande
unknown

Atul Gawande

Rudolph Steiner

780
779
778

We must eradicate from the soul all fear and terror of what comes toward us out of
the future. We must acquire serenity in all feelings and sensation about the future.
We must look forward with absolute equanimity to everything that may come.
Men willingly believe what they wish.
Things change... You know, that's it in a nutshell.

Rudolph Steiner
Julius Caesar
Mark Mobius

777

Economic history is a never-ending series of episodes based on falsehoods and


lies, not truths. It represents the path to big money. The object is to recognize the
trend whose premise is false, ride that trend, and step off before it is discredited.

George Soros

774
773
772

Discipline is hard harder than trustworthiness and skill... We are by nature


flawed and inconstant creatures. We can't even keep from snacking between
meals. We are not built for discipline. We are built for novelty and excitement, not
for careful attention to detail. Discipline is something we have to work at.
If you're going to bet the farm, you'd better have two farms.
We typically trade our beliefs about the market and once we've made up our minds
about those beliefs, we're not likely to change them. And when we play the
markets, we assume that we are considering all of the available information.
Instead, our beliefs, through selective perception, may have eliminated the most
useful information.
Nothing endures but change.
All is flux, nothing stays still.

771

Pete, it's a fool that looks for logic in the chambers of the human heart.

770

Forget about this idea of 'grinding out a day's pay.' If you want to make a day's pay
at the races, get a job watering horses, or pitching manure into trucks.

769

When national debts have once been accumulated to a certain degree, there is
scarce, I believe, a single instance of their having been fairly and completely paid.

776
775

768

767
766

765

764
763

762

Everyone ought to be rich.


Sophisticated institutions use complex, computer-driven models, but it remains far
from clear that their results are better than those achieved using a simplified
approach. Lack of discipline and a strong tendency of most people to feel more
comfortable running with the herd are the real enemies of good investment
performance, not the lack of complex models.
The greatest enemy of a good plan is the dream of a perfect plan.
The economy never has been a mechanical phenomenon, nor will it ever be. It is
not like a pendulum or the orbiting of bodies in the solar system. Changes in
technology, innovation, economic structure, regulations, financial institutions, and
social and political attitudes are ongoing and an essential part of the flow. The
economy is subject to all these and many more interconnected influences.
The mutuel take and the breakage add up to a percentage that continually grinds
and chisels the betting money... The grind privileges are spoken for and taken, so
the professional bettor must speculate.
You Must Speculate You CAN'T GRIND!
To beat the percentage of the mutuels, the player must ALWAYS have an overlay.
He must always have an extra percentage in his favor, to counteract the 'take'
percentage.

Atul Gawande
Wall Street proverb

Van Tharp
Heraclitus
Heraclitus
Ulysses Everett McGill

Robert L. Bacon

Adam Smith
John J. Raskob,
Ladies Home Journal,
1929

Tony Boekh
Carl von Clausewitz

Tony Boekh

Robert L. Bacon
Robert L. Bacon

Robert L. Bacon

761
760
759

758
757

Fortune favors the speculator over the grinder because of the plain old arithmetical
percentages. The speculator has a percentage chance to win. The grinder has no
chance.
The mutuel grinding only goes one way against the bettor. But any percentage
can be overcome by enough winners at fat enough prices!
The player at the races can't grind or chisel because [that girl] is taken. The
racetrack has all grind and chisel privileges!
But there is no use kidding: The professionals keep out of switches by waiting for
the sound overlay spots. They don't play the bad races at both ends of the daily
programs. They don\'t play bad races -- period! When they feel the least bit of
doubt, they walk away from the mutuel windows and step into the bar for a
leisurely drink that will last until a better spot comes along.
Any system is better than no system at all. But, of course, we are not studying here
to play any senseless systems or methods.

Robert L. Bacon
Robert L. Bacon
Robert L. Bacon

Robert L. Bacon
Robert L. Bacon

755

The amateurs who play so carelessly and who fall into all the wrong switches do
not stop to consider the percentages of their rightful losses. When an amateur
goes to the track and loses nine bets (eight races and a daily double) and loses all
his capital for the day, he has lost many times what the percentage calls for. He
has no right to lose so much. It's almost as if he did it on purpose!
If the average player the public play kept out of all these switches and traps,
then the powers-than-be would have to make the game far more complicated in
order to insure the fact that the majority of players continue to lose and thus
continue to furnish money to keep up the game.

Robert L. Bacon

754

[Horse] Racing is simple. Everything about the game is logical and common sense
and elementary. All the figures and the mathematics and the mechanics of racing
can be understood by a child in junior-high school. But the game is decked out in
an endless number of minor contradictions and open switches and deadfall traps,
in order to lure the average player into doing everything wrong.

Robert L. Bacon

753
752

Some amateur players carry inconsistency to such a degree that they demand
consistency from the horses, while at the same time being utterly inconsistent in
their methods of play. It's not the races that beat these players it's the switches!
The public can never catch up to the form or the game ceases.

Robert L. Bacon
Robert L. Bacon

756

751

750

749

748
747
746

The principle of ever-changing trends works to force quick and drastic changes of
results sequences when the public happens to get wise to a winning idea.
There is no danger of the public ever finding any key to the secret of winning. The
crazy gambling urge and speculative hysteria that overcomes most players at the
track makes that fact a certainty. But, if the public play ever did get wise to the
facts of life, the principle of ever-changing cycles of results would move the form
away from the public immediately.
The beginner plunges ahead on a favorite that loses, then bets lightly on a fairpriced horse that wins. He keeps switching amounts and positions, so that he
never has a worthwhile bet on a winner at a worthwhile price. He is always one
race behind the form of a horse and several races behind the rhythm of the results
sequences.
Few players take into consideration the principle of ever-changing cycles of
results. The would-be professional player must always understand that the form
moves away from the public's knowledge.
If money be not thy servant, it will be thy master.
Money is a terrible master but an excellent servant.

Robert L. Bacon

Robert L. Bacon

Robert L. Bacon

Robert L. Bacon

Robert L. Bacon
Francis Bacon
P.T. Barnum

745
744
743

742

741
740

739
738
737

736

735

734
733

732
730

729
728

727
725
724

When the government produces one quantity of the public good, money, the public
will proceed to make more, just as lawyers find new loopholes in tax laws as fast
as legislation closes up old ones.
John Bull can stand many things, but he cannot stand 2 percent.
Manias and bubbles are an integral part of the Age of Inflation because they are
caused by too much money and credit.
There have probably been more financial manias in the past 50 years than in any
other period in history. More recent experience shows that they seem to be getting
more extreme, as are the nasty consequences.
One thing is certain, that at particular times a great deal of stupid people have a
great deal of stupid money... At intervals, the money of these people the blind
capital, as we call it, of a country, is particularly large and craving; it seeks for
someone to devour it, and there is a 'plethora'; it finds someone, and there is
speculation; it is devoured, and there is 'panic'.
But perhaps what separated us more than all else was that they were of the land,
while I belonged to the sea.
How could men whose every instinct held them to the warmth and motion of the
herd, understand that just as instinctively I preferred solitude solitude peopled
with the ever-changing moods of the elements?
For eighteen years I followed the sea, took what it offered. It has brought me
shipwreck and success, sorrow, danger, and unutterable happiness.
...the way most fortunes are lost is not through excessive expenditure, but through
bad investments.
We delighted in forcing bigger, slower competitors to follow us over difficult ground.
Like guerillas, startups prefer the difficult terrain of the mountains, where the troops
of the central government can't follow.
The larger a group, the closer its average member will be to the average for the
population as a whole. So all other things being equal, a very able person in a big
company is probably getting a bad deal, because his performance is dragged
down by the overall lower performance of the others.
A big company is like a giant galley driven by a thousand rowers. Two things keep
the speed of the galley down. One is that individual rowers don't see any result
from working harder. The other is that, in a group of a thousand people, the
average rower is likely to be pretty average.
If you're in a job that feels safe, you are not going to get rich, because if there is no
danger there is almost certainly no leverage.
To get rich you need to get yourself in a situation with two things, measurement
and leverage. You need to be in a position where your performance can be
measured, or there is no way to get paid more by doing more. And you have to
have leverage, in the sense that the decisions you make have a big effect.
The movie will begin in five moments, the mindless voice announced. All those
unseated will await the next show.
If you can dream and not make dreams your master; If you can think and not
make thoughts your aim; If you can meet with Triumph and Disaster; And treat
those two impostors just the same...
Financial commentators who don't actually invest are like sex therapists who don't
have sex.
As a military force has no constant formation, water has no constant shape: the
ability to gain victory by changing and adapting according to the opponent is called
genius.
Therefore victory in war is not repetitious, but adapts its form endlessly.
Everyone knows the form by which I am victorious, but no one knows the form by
which I ensure victory.

Charles P.
Kindleberger
Walter Bagehot
Tony Boekh

Tony Boekh

Walter Bagehot
Henry de Monfreid

Henry de Monfreid
Henry de Monfreid
Paul Graham

Paul Graham

Paul Graham

Paul Graham
Paul Graham

Paul Graham
Jim Morrison

Rudyard Kipling
Jack Sparrow

Sun Tzu
Sun Tzu
Sun Tzu

723
722
721
720
719

718
717

When you are concentrated into one while the opponent is divided into ten, you are
attacking at a concentration of ten to one, so you outnumber the opponent.
To advance irresistibly, push through their gaps. To retreat elusively, outspeed
them.
Be extremely subtle, even to the point of formlessness.
To unfailingly take what you attack, attack where there is no defense. For
unfailingly secure defense, defend where there is no attack.
Appear where they cannot go, head for where they least expect you.
So when opponents are at ease, it is possible to tire them. When they are well fed,
it is possible to starve them. When they are at rest, it is possible to move them.
What causes opponents to come of their own accord is the prospect of gain. What
discourages opponents from coming is the prospect of harm.

Sun Tzu
Sun Tzu
Sun Tzu
Sun Tzu
Sun Tzu

Sun Tzu
Sun Tzu

708

Therefore good warriors cause others to come to them, and do not go to others.
Those who are first on the battlefield and await the opponents are at ease; those
who are last on the battlefield and head into battle get worn out.
The thing to do is watch the market, read the tape to determine the limits of the getnowhere prices, and make up your mind that you will not take an interest until the
price breaks through the limit in either direction.
The future's uncertain and the end is always near...
The average American is from Missouri everywhere and at all times except when
he goes to the brokers' offices and looks at the tape... He will risk half his fortune in
the stock market with less reflection than he devotes to the selection of a mediumpriced automobile.
For purposes of easy explanation we will say that prices, like everything else,
move along the line of least resistance. They will do whatever comes easiest,
therefore they will go up if there is less resistance to an advance than to a decline;
and vice versa.
The trend is evident to a man who has an open mind and reasonably clear sight,
for it is never wise for a speculator to fit his facts to his theories. Such a man will,
or ought to, know whether it is a bull or a bear market, and if he knows that he
knows whether to buy or to sell.
A man ought not to be led into trading by tokens. He should wait until the tape tells
him that the time is ripe.
And right here I will say that, though I do not give it as a mathematical certainty or
as an axiom of speculation, my experience has been that accidents that is, the
unexpected or unforeseen have always helped me in my market position
whenever the latter has been based upon my determination of the line of least
resistance.

707

...any important piece of news given out between the closing of one market and
the opening of another is usually in harmony with the line of least resistance. The
trend has been established before the news is published, and in bull markets bear
items are ignored and bull news exaggerated, and vice versa.

Reminiscences of a
Stock Operator

706

It sounds very easy to say that all you have to do is to watch the tape, establish
your resistance points and be ready to trade along the line of least resistance as
soon as you have determined it. But in actual practice a man has to guard against
many things, and most of all against himself that is, against human nature.

Reminiscences of a
Stock Operator

716
715

714
713

712

711

710
709

Sun Tzu
Sun Tzu
Reminiscences of a
Stock Operator
Jim Morrison

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

705

704

When a man makes his play in a commodity market he must not permit himself set
opinions. He must have an open mind and flexibility. It is not wise to disregard the
message of the tape, no matter what your opinion of crop conditions or of the
probable demand may be.
In a narrow market, when prices are not getting anywhere to speak of but move
within a narrow range, there is no sense in trying to anticipate what the next big
movement is going to be up or down.

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

702

It would not be so difficult to make money if a trader always stuck to his


speculative guns that is, waited for the line of least resistance to define itself
and began buying only when the tape said up or selling only when it said down.
After the real movement started, how long would it take to make up the fifty
thousand dollars I had dropped in order to make sure that I began to load up at
exactly the right time? No time at all! It always pays a man to be right at the right
time.

Reminiscences of a
Stock Operator

701

The weaknesses that all men are prone to are fatal to success in speculation
usually those very weaknesses that make him likable to his fellows or that he
himself particularly guards against in those other ventures of his where they are
not nearly so dangerous as when he is trading in stocks or commodities.

Reminiscences of a
Stock Operator

700

I sometimes think that speculation must be an unnatural sort of business, because


I find that the average speculator has arrayed against him his own nature.

703

699

698

697

696

695

694

693

692

It is absolutely wrong to gamble in stocks the way the average man does.
The speculator's chief enemies are always boring from within. It is inseparable
from human nature to hope and to fear... The successful trader has to fight these
two deep-seated instincts. He has to reverse what you might call his natural
impulses. Instead of hoping he must fear; instead of fearing he must hope. He
must fear that his loss may develop into a much bigger loss, and hope that his
profit may become a big profit.
A trader gets to play the game as the professional billiard player does that is, he
looks far ahead instead of considering the particular shot before him. It gets to be
an instinct to play for position.
The professional concerns himself with doing the right thing rather than with
making money, knowing that the profit takes care of itself if the other things are
attended to.
A man can't spend years at one thing and not acquire a habitual attitude towards it
quite unlike that of the average beginner. The difference distinguishes the
professional from the amateur. It is the way a man looks at things that makes or
loses money for him in the speculative markets.
But Fate does not always let you fix the tuition fee. She delivers the educational
wallop and presents her own bill, knowing you have to pay it, no matter what
amount it may be.
Of all speculative blunders there are few worse than trying to average a losing
game. My cotton deal proved it to the hilt a little later. Always sell what shows you
a loss and keep what shows you a profit. That was so obviously the wise thing to
do and was so well known to me that even now I marvel at myself for doing the
reverse.
The loss of the money didn't bother me. Whenever I have lost money in the stock
market I have always considered that I have learned something; that if I have lost
money I have gained experience, so that the money really went for a tuition fee. A
man has to have experience and he has to pay for it.

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

691

690

689
688

687

686

685

I knew that unless I had sufficient trading capital I would not be able to use good
judgment. Without adequate margins it would be impossible to take the coldblooded, dispassionate attitude toward the game that comes from the ability to
afford a few minor losses such as I often incurred in testing the market before
putting down the big bet.
I have come to feel that it is as necessary to know how to read myself as to know
how to read the tape. I have studied and reckoned on my own reactions to given
impulses or to the inevitable temptations of an active market, quite in the same
mood and spirit as I have considered crop conditions or analyzed reports of
earnings.
When you read contemporary accounts of booms or panics the one thing that
strikes you most forcibly is how little either stock speculation or stock speculators
today differ from yesterday. The game does not change and neither does human
nature.
A man does not swear eternal allegiance to either the bull or the bear side. His
concern lies with being right.
I was not, and I never have felt that I was, wedded indissolubly to one or the other
side of the market. That a bull market has added to my bank account or a bear
market has been particularly generous I do not consider sufficient reason for
sticking to the bull or the bear side after I receive the get-out warning.
And there is another thing to remember, and that is that a market does not
culminate in one grand blaze of glory. Neither does it end with a sudden reversal of
form. A market can and does often cease to be a bull market long before prices
generally begin to break.
I cleared about three million dollars in 1916 by being bullish as long as the bull
market lasted and then by being bearish when the bear market started. As I said
before, a man does not have to marry one side of the market till death do them
part.

683

On the news the market broke badly and I naturally covered. It was the only play
possible. When something happens on which you did not count when you made
your plans it behooves you to utilize the opportunity that a kindly fate offers you.
I have in mind certain hazards of speculation that from time to time remind a man
that no profit should be counted safe until it is deposited in your bank to your
credit.

682

The belief in miracles that all men cherish is born of immoderate indulgence in
hope. There are people who go on hope sprees periodically and we all know the
chronic hope drunkard that is held up before us as an exemplary optimist.

684

681

680

679

At first, when I listened to the accounts of old-time deals and devices I used to
think that people were more gullible in the 1860's and 70's than in the 1900's. But I
was sure to read in the newspapers that very day or the next something about the
latest Ponzi or the bust-up of some bucketing broker and about the millions of
sucker money gone to join the silent majority of vanished savings.
In booms, which is when the public is in the market in the greatest numbers, there
is never any need of subtlety, so there is no sense of wasting time discussing
either manipulation or speculation during such times; it would be like trying to find
the difference in raindrops that are falling synchronously on the same roof across
the street.
It is enough for the experienced trader to perceive that something is wrong. He
must not expect the tape to become a lecturer. His job is to listen for it to say 'Get
out!' and not wait for it to submit a legal brief for approval.

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

677

When I lose money by reason of some development which nobody could foresee I
think no more vindictively of it than I do of an inconveniently timed storm. Life itself
from the cradle to the grave is a gamble and what happens to me because I do not
possess the gift of second sight I can bear undisturbed.
Among the hazards of speculation the happening of the unexpectedI might even
say of the unexpectableranks high. There are certain chances that the most
prudent man is justified in takingchances that he must take if he wishes to be
more than a mercantile mollusk.

676

The theory that most of the sudden declines or particular sharp breaks are the
results of some plunger's operations probably was invented as an easy way of
supplying reasons to those speculators who, being nothing but blind gamblers, will
believe anything that is told them rather than do a little thinking.

678

674

673

672

671

670

669

668

667

666
665

I admit that I do get irresistible impulses at times to do certain things in the market.
It doesn't matter whether I am long or short of stocks. I must get out. I am
uncomfortable until I do. I myself think that what happens is that I see a lot of
warning-signals. Perhaps not a single one may be sufficiently clear or powerful to
afford me a positive, definite reason for doing what I suddenly feel like doing.
The training of a stock trader is like a medical education. The physician has to
spend long years learning anatomy, physiology, materia medica and collateral
subjects by the dozen. He learns the theory and then proceeds to devote his life to
the practice.
You can transmit knowledgethat is, your particular collection of card-indexed
factsbut not your experience. A man may know what to do and lose moneyif
he doesn't do it quickly enough.
Years of practice at the game, of constant study, of always remembering, enable
the trader to act on the instant when the unexpected happens as well as when the
expected comes to pass.
Observation, experience, memory and mathematicsthese are what the
successful trader must depend on. He must not only observe accurately but
remember at all times what he has observed.
A man can have great mathematical ability and an unusual power of accurate
observation and yet fail in speculation unless he also possesses the experience
and the memory. And then, like the physician who keeps up with the advances of
science, the wise trader never ceases to study general conditions, to keep track of
developments everywhere that are likely to affect or influence the course of the
various markets.
Of course, it often happens that an experienced trader acts so quickly that he
hasn't time to give all his reasons in advancebut nevertheless they are good and
sufficient reasons, because they are based on facts collected by him in his years of
working and thinking and seeing things from the angle of the professional, to whom
everything that comes to his mill is grist.
Experience has taught me that the way a market behaves is an excellent guide for
an operator to follow. It is like taking a patient's temperature and pulse or noting
the colour of the eyeballs and the coating of the tongue.
I study because my business is to trade. The moment the tape told me that I was
on the right track my business duty was to increase my line. I did. That is all there
is to it.
I have found that experience is apt to be a steady dividend payer in this game and
that observation gives you the best tips of all.

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

664
663

662
661

660

659
658
657
656
655
654
653
652
651
650

An old broker once said to me: 'If I am walking along a railroad track and I see a
train coming toward me at sixty miles an hour, do I keep on walking on the ties?
Friend, I sidestep. And I do not even pat myself on the back for being so wise and
Reminiscences of a
prudent.'
Stock Operator
I cannot expect to play certainties only. I must reckon on probabilities and
Reminiscences of a
anticipate them.
Stock Operator
I have sometimes bought a stock during an undoubted bull market and found out
that other stocks in the same group were not acting bullishly and I have sold out
my stock. Why? Experience tells me that it is not wise to buck against what I may
Reminiscences of a
call the manifest group-tendency.
Stock Operator
I never buy a stock even in a bull market, if it doesn't act as it ought to act in that
Reminiscences of a
kind of market.
Stock Operator
Speculation in stocks will never disappear. It isn't desirable that it should. It cannot
be checked by warnings as to its dangers. You cannot prevent people from
Reminiscences of a
guessing wrong no matter how able or how experienced they may be.
Stock Operator
The Budget should be balanced, the Treasury should be refilled, public debt
should be reduced, the arrogance of officialdom should be tempered and
controlled, and the assistance of foreign lands should be curtailed lest the Republic
become bankrupt. People must again learn to work, instead of living on public
Marcus Tullius Cicero,
assistance.
55 BC
Come on you raver, you seer of visions Come on you painter, you piper, you
prisoner, and shine!
Pink Floyd
The Dude abides. I don't know about you but I take comfort in that. It's good
knowin' he's out there. The Dude. Takin' 'er easy for all us sinners...
The Big Lebowski
I'll tell you what I'm blathering about... I've got information, man! New shit has
come to light!
The Big Lebowski
Obviously you're not a golfer.
The Big Lebowski
I'm in the high-fidelity, first-class traveling section, I think I need a lear jet...
Pink Floyd
...that's just, like, your opinion, man.
The Big Lebowski
This aggression will not stand, man!
The Big Lebowski
Losers average losers.
Paul Tudor Jones
Always look for a trending market.
Paul Tudor Jones

643

If you sit by the river long enough, you will see the bodies of your enemies float by.
Sun Tzu
To play ball, you need three things. Heart. Mind. Balls. If you have two, you can
play, but you will never be great. To be great, all three.
Frank Curiel
I looked up and saw the Valkyries coming and heard the grim reaper's scythe
knocking on my door. I did my best to run to the light.
Cliff Asness
...the storm in the equity market was surely a warning. The most sophisticated
hedge funds had lost control of their models. The rocket scientists had blown up
their rockets.
More Money Than God
That which does not kill me, makes me stronger.
Friedrich Nietzsche
I have lived a rich, restless, magnificent life.
Henry de Monfreid
To all great human traders, knowing when to go for the jugular and when to be
patient is a large part of the skill; spotting the best opportunities and betting big
could make a greater contribution to the bottom line than increasing the share of
bets that you were right on.
More Money Than God

642

Typically bubbles have an asymmetric shape. The boom is long and slow to start.
It accelerates gradually until it flattens out again during the twilight period. The bust
is short and steep because it involves the forced liquidation of unsound positions.
Disillusionment turns into panic, reaching its climax in a financial crisis.

649
648
647

646
645
644

George Soros

641
640

Every bubble has two components: an underlying trend that prevails in reality and
a misconception relating to that trend. When a positive feedback develops
between the trend and the misconception, a boom-bust process is set in motion.
The process is liable to be tested by negative feedback along the way, and if it is
strong enough to survive these tests, both the trend and the misconception will be
reinforced.
Bubbles are not the only manifestations of reflexivity, but they are the most
spectacular.

633

...a positive feedback is self-reinforcing. It cannot go on forever because


eventually, market prices would become so far removed from reality that market
participants would have to recognize them as unrealistic. When that tipping point is
reached, the process becomes self-reinforcing in the opposite direction.
Reflexivity sets up a feedback loop between market valuations and the so-called
fundamentals which are being valued. The feedback can be either positive or
negative.
Financial markets, far from accurately reflecting all the available knowledge,
always provide a distorted view of reality. This is the principle of fallibility. The
degree of distortion may vary from time to time. Sometimes it's quite insignificant,
at other times it is quite pronounced.
All great deeds and all great thoughts have a ridiculous beginning. Great works are
often born on a street corner or in a restaurant's revolving door.
One of the lessons of history is that nothing is often a good thing to do and always
a clever thing to say.
Hope is independent of the apparatus of logic.
Wall Street is populated by conventional thinkers, serving compromised ends, in
the confines of a broken system.

632

Events as disparate as Japanese trade negotiations and Mexican assassinations


had been linked in terrifying ways by the tentacles of leverage.

639

638

637
636
635
634

George Soros
George Soros

George Soros

George Soros

George Soros
Albert Camus
Will Durant
Norman Cousins
Jack Sparrow

More Money Than God

625
624

I stood back and looked at myself with awe: I saw a perfectly honed machine.
George Soros
Too many men don't want to do something after they make money. They just go on
and make a lot more money.
Alfred Winslow Jones
Great investors tend to have a 'screw loose,' pursuing the game not for profit, but
for sport.
David Swensen
It's time to be vicious. It's time to kill, and enjoy the killing, so something better can
live. Not enough is said about the importance of abandoning crap.
Ira Glass
The beating heart of creativity is a passionate commitment to exploring, testing
and discarding new ideas.
Jack Sparrow
What everybody 'knows' is frequently wrong.
Peter Drucker
Hold on loosely, but don't let go... if you cling too tightly, you're gonna lose
control...
38 Special
Rommel, you magnificent bastard. I read your book!
Patton

623
622

I thought random walk was bullshit... The whole idea that an individual can't make
serious money with a competitive edge over the rest of the market is wacko.
Not a bear in sight. The bear patrol is working like a charm.

Helmut Weymar
Homer J. Simpson

621
620

The stock market is an inexact phenomenon. Laypersons' opinions often seem as


worthy as professionals', and shoeshine men and brokers compete for genius.
Fear is an impediment to clarity. So is greed.

Michael Steinhardt
Jack Sparrow

631
630
629
628
627
626

614

The best poker players the very best, world-class players when they are in
action are machines. They are cool headed, intuitive, impassive, imperturbable,
and relentless.
A man who has attained mastery of an art reveals it in his every action.
When the reality of power has been surrendered, it's playing a dangerous game to
seek to retain the appearance of it.
The world is ruled by letting things take their course. It cannot be ruled by
interfering.
The way of the wise man is to act and not compete.
You and your opponent are one. There is a coexisting relationship between you.
You coexist with your opponent and become his complement, absorbing his attack
and using his force to overcome him.

613

Become more acutely aware of what's happening right now, this very moment.

619
618
617
616
615

612
611
610

609
608
607
606
605
604
603
602
601
600

599
598
597
596

595
594

No matter what the activity be it music, art, sports, a profession or trade there
is a state of achievement wherein it becomes so perfected through practice and a
certain mental attitude, that it seems to function independently of the performer.
He who is skilled in attack flashes forth from the topmost heights of heaven,
making it impossible for the enemy to guard against him.
Withdraw like a mountain in movement, advance like a rainstorm. Strike and crush
with shattering force; go into battle like a tiger.
Aggression exists in nature. What may look like a harmless bumble bee is a highly
aggressive force on its own level, engaged in a life-and-death struggle. What
appears to be a delicate flower is in fact an organism violently struggling and
forcing itself into life. These and other delicacies (at least as they appear to the
human eye) could easily be mistaken for some form of passivity, when in fact there
is a very different paradigm present.
The good fighters of old first put themselves beyond the possibility of defeat, and
then waited for an opportunity of defeating the enemy.
Make sure you're right, then go ahead.
In battle, momentum means riding on the force of the tide of events. If enemies are
on the way to destruction, then you follow up and press them.
In war one sees one's own difficulties, and does not take into account those of the
enemy; one must have confidence in one's self.
Induce others to construct a formation while you yourself are formless.
Fixity is death; fluidity is life.
Whoever has form can be defined, and whoever can be defined can be overcome.
Whenever you pursue people on the run, chasing beaten soldiers, you must make
sure whether they are really fleeing or just feigning.
The rule is: When the enemy is far away but tries to promote hostilities, he wants
you to move forward.
To overcome the intelligent by folly is contrary to the natural order of things; to
overcome the foolish by intelligence is in accord with the natural order. To
overcome the intelligent by intelligence, however, is a matter of opportunity.
He who fears being conquered is sure of defeat.
Perhaps we must always advance a little by zig-zags.
Victory shifts from man to man.
In war, when adversaries are orderly in their movements and are at their sharpest,
it is not yet time to fight with them; it is best to fortify your position and wait. Watch
for their energy to wane after being on alert for a long time; then rise and strike
them.
Good warriors prevail when it is easy to prevail.

Zen and the Art of


Poker
Samurai maxim
Alexis de Tocqueville
Lao Tzu
Zen proverb

Bruce Lee
Phil Jackson

Arthur Sokoloff
Sun Tzu
Zhuge Liang

Zen and the Art of


Poker
Sun Tzu
Davy Crockett
Liu Ji
Napoleon
Sun Tzu
Winston L. King
Sun Tzu
Liu Ji
Sun Tzu

Zhuge Liang
Napoleon
Theodore Roosevelt
Homer's Iliad

Liu Ji
Sun Tzu

593

592
591

590

589
588

587
586
585
584

583

582

581
580
579
578

577
576
575

574

When two tigers fight, one will be killed and the other will be seriously wounded.
If a player is not in a normal rhythm or in balance with the game, that is a signal
that something is wrong. Good players spot this rhythm shift as quickly as a
musician hears a note out of tune.
When you see the enemy to be empty, proceed; where you see the enemy to be
full, stop.
Years of experience eventually teach you that your main battle, always, is with
yourself your propensity for errors, for rationalizing marginal hands into good
hands, lack of concentration, misreading other players, emotional eruptions,
impatience, and so on. Your opponents are merely dim outlines that come and go.
Few of them ever reach the exalted heights of damage that you can inflict on
yourself.
It is important to come to the table with the goal of mastering yourself, not just the
game. In many ways, this is more important than mastering the game. The reason
is simple: For the most part, you already know the game. This mastering of
yourself, however, is the work of a lifetime.
Even if our efforts of attention seem for years to be producing no result, one day a
light that is in exact proportion to them will flood the room.
Like an Olympic runner who learns to run 'within himself,' you will eventually
become comfortable inside your knowledge of the game. You will cease striving;
the clouds will disperse, the sun comes out.
It's just like learning archery; eventually you reach a point where ideas are ended
and feelings forgotten, and then you suddenly hit the target.
When the way comes to an end, then change. Having changed, you pass through.
From the moment we cease trying to swim upstream and begin to flow with the
current, something changes within us.
When we are focused exclusively on our own emotions (as we often are), the
emotions of others tend to be obscured. When we make ourselves neutral,
however, we find that the canvas suddenly becomes blank and the emotions of
others begin to appear.
You should not grieve over bad shots; learn now not to rejoice over the good ones.
You must free yourself from the buffetings of pleasure and pain, and learn to rise
above them in easy equanimity. This too, you must practice unceasingly you
cannot conceive how important it is.
You must not be astonished at anything that comes up... Accept it all calmly, as if
you were a mere spectator, uninterested, and were observing a process for which
you need not feel responsible... The result, in the end, is perfect stillness.
Teach us to care and not to care... teach us to sit still.
Attachment is the great fabricator of illusions; reality can be attained only by
someone who is detached.
Before enlightenment: Chop wood, carry water. After enlightenment: Chop wood,
carry water.
Players sometimes think that great things are called for sophisticated plays,
plays that go beyond the ordinary, into the extraordinary, where some other realm
of effort is required. In fact, once skill is achieved, ordinary levels of calm are
sufficient.
Sitting quiet, doing nothing, spring comes, and grass grows by itself.
Everything is true just as it is: Why dislike it? Why hate it?
This is the point you want to get to: a detachment so complete that it almost
borders on disinterest. (Cautionary note: it is important to have a large enough
bankroll to allow you to play like this.)

Zen proverb

Steve Fox
Zhuge Liang

Zen and the Art of


Poker

Zen and the Art of


Poker
Simone Weil
Zen and the Art of
Poker
Zen master Ying-An
I Ching
Arthur Sokoloff

Zen and the Art of


Poker

Eugen Herrigel

Eugen Herrigel
T.S. Eliot
Simone Weil
Zen proverb

Zen and the Art of


Poker
Zen proverb
Zen proverb
Zen and the Art of
Poker

570
569

Everything that happens, and above all what happens to me, should be observed
impartially, as though on the deepest level it did not concern me.
Please don't think that I'm bragging about the fact that I didn't lose in saying that I
know the secret of not losing, but winning. I really do know the secret. It's very
stupid and simple and amounts to ceaseless self-control at all stages of the game
and not getting excited. That's all there is to it. That way you can't lose and are
bound to win. But that's not the point. The point is whether, once you know the
secret, you are capable of exploiting it.
Remain dispassionate. Make it your goal to achieve a cool and calm demeanor.
This is necessary in order to 'keep the airwaves clear' in order to read incoming
signals correctly.
Many gray areas exist, many borderline decisions. Superheated emotions can tip
all these borderline decisions the wrong way, like dominoes, until they add up to
disaster. Skill at detachment (and rebounding from losses) is important: the ability
to dismiss the previous hand from mind is crucial.
When the pools of perception are cleansed, everything appears as it is.

568
567
566

As regards the quietude of the sage, he is not quiet because quietness is said to
be good. He is quiet because the multitude of things cannot disturb his quietude.
There is an uphill road and there is a downhill road.
The way goes onward and contains its own correction.

565

Imagine a boxer coming into the ring, expecting to meet his opponent face to face.
Instead, he finds himself in a ring filled only with fog. He swings wildly, but makes
no contact with anything. His force is dissipating, and there is little he can do.

573

572

571

564
563
562
561
560
559
558
557
556

555
554
553
552
551
550

Eugen Herrigel

Fyodor Dostoevsky
Zen and the Art of
Poker

Zen and the Art of


Poker
Zen proverb

Chuang-tzu
Japanese proverb
Eugen Herrigel

Arthur Sokoloff

It is not enough to rely on luck or hope to carry us past the weak parts of our
game. These parts must be attended to. The system must be whole and complete.
The spider dances her web without knowing that there are flies who will get caught
in it.
Get the facts, or the facts will get you.

Zen and the Art of


Poker

Among other evils which being unarmed brings you, it causes you to be despised.
Thousands of repetitions, and out of one's true self perfection emerges.
Should you desire the great tranquility, prepare to sweat white beads.
The technically learnable part of it must be practiced to the point of repletion.
You must act as if the goal were infinitely far off.
Let others take their own way, and I take my own.
War, battles, and conflicts of all kinds (including poker) set in motion forces that
quickly become unpredictable. Small defects or problems that are present at the
beginning can quickly spiral out of control. And if small problems can do this, think
what starting out with large problems means.
There is nothing so subject to the inconstancy of fortune as war.
Only by avoiding the beginning of things can we escape their ending.
One inch ahead all is darkness.
Wait for a good pitch to hit.
We must be able to back away from the game, but not by putting great
commitment and the muscle of our emotions into doing so.

Niccolo Machiavelli
Neville Shulman
Zen master Hakuin
Eugen Herrigel
Eugen Herrigel
Japanese proverb

Eugen Herrigel
Thomas Fuller

Zen and the Art of


Poker
Miguel de Cervantes
Cyril Connolly
Japanese proverb
Ted Williams
Zen and the Art of
Poker

548

Adopt the pace of nature; her secret is patience.


Develop a readiness to participate that is, to explode into action which is
separate from the relaxed state you are in at the times in between.

Ralph Waldo Emerson


Zen and the Art of
Poker

547

There is interaction if there is a call for it, no interaction if there is no call for it.

Zen master Yangshan

549

546
545
544
543
542
541
540
538
537

536

535
534

533
532
531
530

529
528
527
526

Do you have the patience to wait... til your mud settles and the water is clear? Can
you remain unmoving... til the right action arises by itself?
...over the long run the hands you fold make the hands you do play stand out more
sharply and give them more power.
You must learn to wait properly.
Be the ball.
Who knows this morning what will happen tonight?
Buy when there's blood in the streets, even if the blood is your own.
Dealing with failure is easy: Work hard to improve. Success is also easy to handle:
You've solved the wrong problem. Work hard to improve.
Change breaks the brittle.
People don't change their minds. They die, and are replaced by people with
different opinions.
As all these results were obtained, not by any heroic method, but by patient and
detailed reasoning, I began to think it probable that philosophy had erred in
adopting heroic remedies for intellectual difficulties, and that solutions were to be
found merely by greater care and accuracy.
Keep away from people who try to belittle your ambitions. Small people always do
that, but the really great make you feel that you, too, can become great.
Politics is not the art of the possible. It consists in choosing between the disastrous
and the unpalatable.

Lao Tzu
Zen and the Art of
Poker
Eugen Herrigel
Caddyshack
Chinese proverb
Baron Rothschild
Alan Perlis
Jan Houtema
Arturo Albergati

Bertrand Russell

Mark Twain
J.K. Galbraith

We act as though comfort and luxury were the chief requirements of life, when all
that we need to make us happy is something to be enthusiastic about.
Albert Einstein
The greatest dangers to liberty lurk in insidious encroachment by men of zeal, wellmeaning but without understanding.
Louis David Brandeis
The imagination of nature is far, far greater than the imagination of man.
Richard Feynman
There's practice, and then there is deep practice. All too often, the first is a waste
of time.
Jack Sparrow
The major difference between a thing that might go wrong and a thing that cannot
possibly go wrong is that, when a thing that cannot possibly go wrong goes wrong,
it usually turns out to be impossible to get at or repair.
Douglas Adams
I do what I do best, I take scores. You do what you do best, try to stop guys like
me.
Heat
He knew the risks, he didn't have to be there. It rains... you get wet.
Heat
Do you see me doin' thrill seeker liquor store robberies with a 'Born To Lose' tattoo
on my chest?
Heat

520

Do not have any attachments, do not have anything in your life you are not willing
to walk out on in 30 seconds flat if you spot the heat around the corner.
I will either find a way, or make one.
A fundamental characteristic of our economy is that the financial system swings
between robustness and fragility, and these swings are an integral part of the
process that generates business cycles.
A man must constantly exceed his level.
I don't have much formal education in these things, but you learn. You build
enough stuff; after a while, you see it. And if you reverse-engineer enough things,
you see what other people have done.
This is a war universe. War all the time. There may be other universes, but ours
seems to be based on war and games.

William S. Burroughs

519

There are no limits. There are plateaus, but you must not stay there, you must go
beyond them. If it kills you, it kills you. A man must constantly exceed his level.

Bruce Lee

525
524

523
522

521

Heat
Hannibal

Hyman Minsky
Bruce Lee

Steve Perlman

518
517

516

515
514
513

511

510
509

508
507
506
505

504

503
502
501

500

499

498

497

...if you always put limits on what you can do, physical or anything else, it'll spread
over into the rest of your life. It'll spread into your work, into your morality, into your
entire being.
they are taking risks all the time, but they don't want to acknowledge that they
are taking risks. They want to pretend everything is risk-free.
I kind of like uncertainty to some extent, because it's a little bit of suspense and
excitement and adventure... And you can learn a lot even if things don't work out.
But not everyone likes adventure. A lot of people seem to be against uncertainty,
actually. In all areas of life.
People have a narrow concept of what's possible, and we're limited more by our
own ideas of what's possible than what really is possible. So they just get
uncomfortable, and they kind of tend to attack it for whatever reason.
I think, in general, people are uncomfortable with things that are different.
Paradoxically, the more that governments try to protect us against financial
disasters, the more likely they are to occur.
Long wave forces are very powerful and operate slowly over time, making them
hard to recognize by most people. The long wave is like the tide in the ocean,
powerful and operating below the surface.
Conventional thinking, particularly around important turning points, is usually not
very helpful because it tends to focus on the extrapolation of past trends into the
future.
To learn consistently, most people need not only to understand their own biases,
but also to improve the quality of the feedback they receive.
'Know your own strength' can be taken as a pessimistic warning or a lofty
aspiration. It all depends on how you look at it. But then that's pretty much true of
everything.
Great traders can afford to be humble. In the face of ever present uncertainty, their
huge profits give them comfort.
To a large extent the world seems to conspire against learning.
Experience is a good teacher, but she sends in terrific bills.
We synthesize and integrate new information into old knowledge. Like a glass of
red wine poured into a bowl of clear water, the new blends with the old. Thus, it
becomes impossible to reverse the process.
Our minds are not filing cabinets that store information the way it came in. Instead,
we edit the information heavily, cut it up into pieces, and file the edited extracts in
multiple parts of our minds, depending on what they are associated with.
We all know the false clarity of hindsight. Events may seem inevitable in hindsight,
even though they might have been very hard to predict beforehand.
Victory has a thousand fathers; defeat is an orphan.
Because we like to believe that we caused successful outcomes and we like to
rationalize that we weren't responsible when things turned out badly, most people
suffer from an attribution bias that can destroy useful feedback.
The illusion of control and accompanying false claims of credit for good outcomes
are firmly rooted biases to allay our deepest fears about an uncontrollable world.
...only by recognizing the role of chance in successes can you realistically learn
which of your actions you should carefully repeat and which could be improved.
Falsely claiming credit is an important barrier to learning.
Why don't people learn from their experience? For one, the data we receive can
usually be interpreted in more than one way. And even when the evidence is clear
enough that we should be able to learn from it, we are naturally biased to interpret
it in a way that preserves our positive self-image.

Bruce Lee
Paul Buchheit

Paul Buchheit

Paul Buchheit
Paul Buchheit
Tony Boekh

Tony Boekh

Tony Boekh
Decision Traps

Jack Sparrow
Jack Sparrow
Decision Traps
Minna Antrim

Decision Traps

Decision Traps
Decision Traps
the Duke of Wellington

Decision Traps

Decision Traps

Decision Traps

Decision Traps

496
495
494
493
492

491

490

489
488
487
486
485
484
483
482
481
480
479

478
477

476
475
474
473
472

There is no veiled incantation, magnetic lodestone, patented formula, or arcane


process any one individual can use to move general market prices, because a
market is millions of people interacting for their own personal reasons.
As a general rule of thumb, simplicity beats complexity because simplicity travels
light.
There is always free cheese in a mousetrap.
I've come to the conclusion that using a financial professional to help you invest is
like getting open-heart surgery from a starving lion...
If I've learned one thing in this business, it's that the only thing that always goes
higher is the compensation of the investment pros.
Wall Street research reports are more sales documents than disinterested
analyses... the tendency is for analysts to play up the good and sugar-coat the
bad.
Even the most brilliant mathematical geniuses will never be able to tell us what the
future holds. In the end, what matters is the quality of our decisions in the face of
uncertainty.
Forecasters, by definition, are biased and untrustworthy recorders of current
economic events. In other words, they tend to uncover evidence that supports their
forecasts, and they ignore or analytically dismiss anything that challenges it.
We are long term investors. We are in this thing for three or four weeks.
The gutters of Wall Street are strewn with the bodies of people who looked good
for five years.
When all this is behind you, a whole other world will open up for you.
I ain't got time to bleed.
The sooner you match what's in your head with what's in the real world, the better
you'll feel.
Open your eyes, son. Can't you see?
He's a high roller, dog.
This is chess, not checkers!
I walk a higher path, son.
People do not learn as easily from experience as you might expect even
intelligent, highly motivated people.
If you understand your biases, know how to create good feedback, and can
interpret feedback realistically, you can consistently turn your experiences into
reliable knowledge perhaps for the first time.
People sometimes stumble over the truth, but usually they pick themselves up and
hurry about their business.
History shows that whenever authorities limit the commitment to a particular value,
it encourages investors to quantify their worst case scenario (which during times of
financial sector strains can be horrific), leading to a panic and meltdown.
Wall Street dumps so much BS on the public, you need a shovel to clear yourself a
path.
If you ask five experts where to invest, there will be six answers; the five expert
opinions, plus the right one.
There is no magic wand that anyone can wave to make you successful,
independently wealthy, and completely happy.
Investors often develop a cultlike devotion to one investment guru or another. And
when they do so, objectivity goes out the window.

Harvey Houtkin
Jack Sparrow
Mark Skousen
Scott Adams
Jim Sweeney

Jeffrey Laderman

Peter L. Bernstein

John Liscio
King of Queens
Marty Whitman
Training Day
Predator
Training Day
Training Day
Training Day
Training Day
Training Day
Decision Traps

Decision Traps
Winston Churchill

BCA Research
Doug Fabian
Jonathon Clements
Harvey Houtkin
Mark Hulbert

471
470

469

468

467
465
464
463
462

461

460

459
458

457

456
455
454
453

452

What do head-and-shoulders formations, bases and pornography have in


common? They are all very difficult to define, even though some stock-market
technical analysts (and judges) are sure they know them when they see them.
After-hours trading is like sex in high school: There's a lot of interest in it, but
probably not that many people actually doing it.
Relying solely on your quantitative skills to invest successfully is like trying to fly an
airplane based only on an exquisite knowledge of aeronautical engineering,
ignoring the need of real-world flying experience and lacking a good sense of the
fickleness of both aircraft systems and the weather.
Leveraging gargantuan sums without a proper appreciation of the capriciousness
of the capital markets is the financial equivalent of skydiving while drunk. And if
your models are largely based on the last few years of data, you've just left your
parachute on the plane...
There was no shortage of terror and despair in the financial markets . . . It was all a
bit reminiscent of the fable about the little boy who cried wolf. By the time one
finally appeared, most people had lost their capacity to believe and be alarmed.
People who buy stocks when they get bonuses and sell them when the roof starts
to leak are entrusting their investment decisions to their roofs.
The lure of online trading seems to be that here is something you can do with no
skill, no knowledge, and yet you can make tons of money.
An old-fashioned bear doesn't stab you with a sword, as in the crash of 1987 and
the mini-crash of 1989. It nicks you with a thousand cuts.
A funny thing happened on the way to the mortuary. The bull got well.
It's heartening to know that some traditions survive on Wall Street. For example,
the idea that bad news for the economy is good news for financial markets.
There is no shortage of media accounts that try to answer our questions about the
market today, but there is a shortage within these accounts of relevant facts or
considered interpretations of them. Many news stories in fact seem to have been
written under a deadline to produce something anything to go along with the
numbers from the market.
Wall Street is a tough teacher but also a good teacher. If you have any weakness
arrogance, laziness, stinginess, cowardice, procrastination the market will
zero in on that weakness and make you pay dearly.
In this business, you never stop learning. Let me put it another way. If you stop
learning, you're on your way to going out of business.
The situation reminds one of a Ouija board, in which players are encouraged to
interpret the meaning of movements in their trembling hands and to distill forecasts
from them. Or the stock market is seen as an oracle, issuing mysterious and
meaningless pronouncements, which we then ask our leaders to interpret,
mistakenly investing their interpretations with authority.
Conventional wisdom interprets the stock market as reacting to new era theories.
In fact, it appears that the stock market often creates new era theories, as
reporters scramble to justify stock market price moves.
Sometimes, when you can't figure out a good defense, the best thing to do is to go
on offense.
Yeah, but it's the only game in town!
Investors generally overestimate their ability to see the future, and the worst of
them act as if they know exactly what lies ahead.
The fact that we don't know where trouble will come from shouldn't allow us to feel
comfortable in times when prices are full. The higher prices are relative to intrinsic
value, the more we should allow for the unknown.

John Dorfman
Peter Di Teresa

William J. Bernstein

William J. Bernstein

Louis Rukeyser
Andrew Tobias
Meir Statman
John Dorfman
Louis Rukeyser

Tom Petruno

Robert J. Shiller

Richard Russell
Richard Russell

Robert J. Shiller

Robert J. Shiller
Seth Klarman
Canada Bill Jones
Howard Marks

Howard Marks

445

Risk means more things can happen than will happen.


Most people view the future as likely to repeat past patterns, which it may or may
not do. They tend to think of the future in terms of a single scenario, whereas it
really consists of a wide range of possibilities.
Investing defensively requires that when everything seems to be going well and
investors are feeling positive, we must sense the implicit danger and prepare for
negative developments.
When governments are big issuers of debt, it can be hard for non-government
issuers to raise money. But when governments are big buyers of securities
instead, the capital they inject into the markets can make it easy for others to issue
securities.
In the same way that expanded risk tolerance accompanies appreciated past
prices and contributes to the risk of loss, so does risk aversion tend to rise in times
of depressed prices, increasing the risk of missed opportunity.
Risk aversion is absolutely essential for the markets to function properly.
There are two main risks in the investment world: the risk of losing money and the
risk of missing opportunity. You can completely avoid one or the other, or you can
compromise between the two, but you can't eliminate both.

444

[Strong opinions weakly held] is equally useful for evaluating an already-final


forecast in the face of new information. It sensitizes one to the weak signals of
changes coming over the horizon and keeps the hapless forecaster from becoming
so attached to their model that reality intrudes too late to make a difference.

451

450

449

448

447
446

443

442
441

440

439
438
437
436
435
434
433
432
431
430
429

Eventually your intuition will kick in and a new hypothesis will emerge out of the
rubble, ready to be ruthlessly torn apart once again. You will be surprised by how
quickly the sequence of faulty forecasts will deliver you to a useful result.
Since the mid-1980s, my mantra for this process is 'strong opinions, weakly held.'
Allow your intuition to guide you to a conclusion, no matter how imperfect this is
the 'strong opinion' part. Then and this is the 'weakly held' part prove yourself
wrong. Engage in creative doubt.
Iterate the process a few times, and it is surprising how quickly one can get to a
useful forecast.
Instead of withholding judgment until an exhaustive search for data is complete, I
will force myself to make a tentative forecast based on the information available,
and then systematically tear it apart, using the insights gained to guide my search
for further indicators and information.
Try as one might, when one looks into the future, there is no such thing as
'complete' information, much less a 'complete' forecast. As a consequence, I have
found that the fastest way to an effective forecast is often through a sequence of
lousy forecasts.
The point of forecasting is not to attempt illusory certainty, but to identify the full
range of possible outcomes.
Hold on tightly, let go lightly.
If you realize that all things change, there is nothing you will try to hold on to. If you
are not afraid of dying, there is nothing you cannot achieve.
If you do not change direction, you may end up where you are heading.
He who knows others is wise. He who knows himself is enlightened.
He who controls others may be powerful, but he who has mastered himself is more
powerful still.
He who conquers others is strong; He who conquers himself is mighty.
Man must accept motion.
Want a cookie?
He beet me... Straight up. Pay heem... pay that man his money.

Elroy Dimson

Howard Marks

Howard Marks

Howard Marks

Howard Marks
Howard Marks

Howard Marks

Paul Saffo

Paul Saffo

Paul Saffo
Paul Saffo

Paul Saffo

Paul Saffo
Paul Saffo
Croupier
Lao Tzu
Lao Tzu
Lao Tzu
Lao Tzu
Lao Tzu
Lao Tzu
Teddy KGB
Teddy KGB

428
427

426
425
424
423
422

421
420
419

418

416

415
414

413
412

411
410

409

They're trying to goad me, trying to own me. But this isn't a gunfight. It's not about
pride or ego. It's only about money.
Listen, here's the thing. If you can't spot the sucker in the first half hour at the
table, then you ARE the sucker.

Mike McDermott
Mike McDermott

You were lookin' for that third three, but you forgot that Professor Green folded on
Fourth Street and now you're representing that you have it. The DA made his two
pair, but he knows they're no good. Judge Kaplan was trying to squeeze out a
diamond flush but he came up short and Mr. Eisen is futilely hoping that his
queens are going to stand up. So like I said, the Dean's bet is $20.
Mike McDermott
We can't run from who we are. Our destiny chooses us.
Mike McDermott
For a man to achieve all that is demanded of him, he must regard himself as
Johann Wolfgang von
greater than he is.
Goethe
To know that we know what we know, and that we do not know what we do not
know, that is true knowledge.
Confucius
Don't ever let them get into your pocket that means there's no reason to
leverage substantially.
Paul Tudor Jones
These days, there are many more deep intellectuals in the business, and that,
coupled with the explosion of information on the internet, creates the illusion that
there is an explanation for everything and that the primary task is simply to find
that explanation.
Paul Tudor Jones
Do not choose to be wrong for the sake of being different.
Lord Samuel
A smooth sea never made a skilled mariner.
unknown
...at the end of the day, your job is to buy what goes up and to sell what goes down
so really who gives a damn about PE's? If it's going up you're supposed to be long
it. But there's no question that it's just easier for me to leverage with some degree
of conviction the short side of some markets.
Paul Tudor Jones
I think there's a natural progression that everyone goes through. The older you get,
the more you'll realize that a quality life is one that has an extraordinary balance in
it.
Paul Tudor Jones
When I was younger, I had much greater drawdowns, much greater drawdown
frequency, much greater leverage... I'm probably the exact same trader as I was
15 years ago, it's just less risk, less return.
Paul Tudor Jones
Everything is a function of leverage, how much of a drawdown are you willing to
tolerate, how much leverage do you want to put on.
Paul Tudor Jones
...every time I've seen volatility like that, I don't care what the market was, whether
it was soybeans in '76 or '83 or whether it was silver at the top in 1980 or whether
it was some of the biotech stocks at the top earlier in the '90s, when you get that
kind of volatility you know that generally that's associated with a top.
You look at every bear market and they've always basically occurred because of
an up-tick in inflation and an up-tick in interest rates.
The crash was something that was imminently forecastable to somebody that
understood the measure of derivatives and how large they had grown in such a
relatively short period of time and the impact that it would have on a relatively
unknowing and nave market.
...at the end of the day, the most important thing is how good are you at risk
control. Ninety-percent of any great trader is going to be the risk control.
It doesn't make any difference whether it's pork bellies or Yahoo. At the end of the
day, it's all the same. You need to understand what factors you need to have at
your disposal to develop a core competency to make a legitimate investment
decision in that particular asset class.

Paul Tudor Jones


Paul Tudor Jones

Paul Tudor Jones


Paul Tudor Jones

Paul Tudor Jones

408

407

406

405
404

403
402

401

400

399

398

397

396

395

You pick an instrument and there's a whole variety of benchmarks, things that you
look at when trading a particular instrument whether it's a stock or a commodity or
a bond. There's a fundamental information set that you acquire with regard to each
particular asset class and then you overlay a whole host of technical indicators and
that's how you make a decision.
The secret to being successful from a trading perspective is to have an
indefatigable and an undying and unquenchable thirst for information and
knowledge. Because I think there are certain situations where you can absolutely
understand what motivates every buyer and seller and have a pretty good picture
of what's going to happen. And it just requires an enormous amount of grunt work
and dedication to finding all possible bits of information.
You've got to look at good traders historically. If a trader can on average annually
deliver two to three times their worst drawdown, then that's a very good track
record, and I'd say that that's what I try to do.
There's no reason to take substantial amounts of financial risk ever, because you
should always be able to find something where you can skew the reward risk
relationship so greatly in your favor that you can take a variety of small
investments with great reward risk opportunities that should give you minimum
drawdown pain and maximum upside opportunities.
I'd say that my investment philosophy is that I don't take a lot of risk, I look for
opportunities with tremendously skewed reward-risk opportunities.
My grandfather told me at a very early age that you are only worth what you can
write a check for tomorrow... that's one reason that I've always liked the futures
market so much, because you can generally get liquid and be in cash in literally
the space of a few minutes.
I think I am the single most conservative investor on earth in the sense that I
absolutely hate losing money.
We run a laissez-faire, entrepreneurial shop. I started my career in futures, and the
rallying cry was always free markets for free men, so I've tried to create an open
architecture here for traders to test their ideas and thrive.
We kind of had the moniker 'global macro' thrust upon us. We didn't sign up for it.
But I look at it as kind of the 007 license to do whatever we want, and we're in a
period now where globally there is no lack of opportunity...
[Paul Tudor Jones] taught me to think in points, not dollars, and he always used to
say, 'It's just points, it is not money.' He gave me an ongoing tutorial in
disassociating oneself from the result of the trade, yet still having passion about it.
I'll never forget the day the New Orleans Junior League board came to visit [Eli
Tullis] during lunch. He was getting absolutely massacred in the cotton market that
day, but he charmed those little old ladies like he was a movie star. It put
everything in perspective for me.
I lost my stakes a couple of times, which taught me risk control and risk
management. Losing those stakes in my early 20s gave me a healthy dose of fear
and respect for Mr. Market and hardwired me for some great money management
tools.
...the inefficiencies that existed in the '70s and '80s and even the '90s are not as
readily seen. But in this business there will also always be that upper tier that
top 10 or 20 percent of managers who will outperform everyone else.
The only way to learn how to trade during that last, exquisite third of a move is to
do it, or, more precisely, live it a sort of baptism by fire. One has to experience
both the elation and fear as markets move five and six standard deviations from
conventional definitions of value.

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones


Paul Tudor Jones

Paul Tudor Jones


Paul Tudor Jones

Louis Moore Bacon

Louis Moore Bacon

Louis Moore Bacon

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones

394

393

392
391

390

389
388

387
386
385
384

383

382

381

379

While I'm a staunch advocate of higher education, there is no training


classroom or otherwise that can prepare for trading the last third of a move,
whether it's the end of a bull market or the end of a bear market. There's typically
no logic to it; irrationality reigns supreme, and no class can teach what to do during
that brief, volatile reign.
...technical analysis is at the bottom of the study list for many of the younger
generation, particularly since the skill often requires them to close their eyes and
trust the price action.
I see the younger generation hampered by the need to understand and rationalize
why something should go up or down. Usually, by the time that becomes selfevident, the move is already over. When I got into the business, there was so little
information on fundamentals, and what little information one could get was largely
imperfect. We learned just to go with the chart.
It's very hard to find a pure fundamentalist who's also a very successful macro
trader...
While I spend a significant amount of my time on analytics and collecting
fundamental information, at the end of the day, I am a slave to the tape and proud
of it.
The inability to read a tape and spot trends is also why so many in the relative
value space who rely solely on fundamentals have been annihilated in the past
decade. Markets have consistently experienced '100-year events' every five years.
When it comes to trading macro, you cannot rely solely on fundamentals; you have
to be a tape reader, which is something of a lost art form.
When trading macro, you never have a complete information set or information
edge the way analysts can have when trading individual securities. It's a hell of a
lot easier to get an information edge on one stock than it is on the S&P 500.
I love trading macro. If trading is like chess, then macro is like three-dimensional
chess. It is just hard to find a great macro trader.
Tacit assumptions have sunk many boats in the world of science and engineering.
The test of a first-rate intelligence is the ability to hold two opposite ideas in mind
at the same time and still retain the ability to function.
Losing money is the least of my troubles. A loss never bothers me after I take it. I
forget it overnight. But being wrong not taking the loss that is what does
damage to the pocketbook and to the soul.
As far as my trading went, having a million merely meant more reserves. Money
does not give a trader more comfort, because, rich or poor, he can make mistakes
and it is never comfortable to be wrong. And when a millionaire is right his money
is merely one of his several servants.
Of course, if a man is wise and lucky, he will not make the same mistake twice. But
he will make any one of the ten thousand brothers or cousins of the original. The
Mistake family is so large that there is always one of them around when you want
to see what you can do in the fool-play line.
The recognition of our own mistakes should not benefit us any more than the study
of our successes. But there is a natural tendency in all men to avoid punishment.
When you associate certain mistakes with a licking, you do not hanker for a
second dose, and, of course, all stock market mistakes wound you in two tender
spots your pocketbook and your vanity.

Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones


Paul Tudor Jones

Paul Tudor Jones

Paul Tudor Jones


Paul Tudor Jones

Paul Tudor Jones


Paul Tudor Jones
Jon Kabat-Zinn
F. Scott Fitzgerald
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

378
377

376

375

374

373

372

371

370
369

368

Well, I was worth over one million after the close of business that day. But my
biggest winnings were not in dollars but in the intangibles: I had been right, I had
looked ahead and followed a clear-cut plan. I had learned what a man must do in
order to make big money; I was permanently out of the gambler class; I had at last
learned to trade intelligently in a big way. It was a day of days for me.
That was the day I remember most vividly of all the days of my life as a stock
operator. It was the day when my winnings exceeded one million dollars.
I also had found out that nobody was immune from the danger of making sucker
plays. And for a sucker play a man gets sucker pay; for the paymaster is on the job
and never loses the pay envelope that is coming to you.
In short, I had learned that I had to work for my money. I was no longer betting
blindly or concerned with mastering the technique of the game, but with earning
my successes by hard study and clear thinking.
I still had much to learn but I knew what to do. No more floundering, no more halfright methods. Tape reading was an important part of the game; so was beginning
at the right time; so was sticking to your position. But my greatest discovery was
that a man must study general conditions, to size them so as to be able to
anticipate probabilities.
The big men of the Street are as prone to be wishful thinkers as the politicians or
the plain suckers. I myself can't work that way. In a speculator such an attitude is
fatal. Perhaps a manufacturer of securities or a promoter of new enterprises can
afford to indulge in hope-jags.
The way to make money is to make it. The way to make big money is to be right at
exactly the right time. In this business a man has to think of both theory and
practice. A speculator must not be merely a student, he must be both a student
and a speculator.
What happened shows you that I am right in never trading at limits. Suppose I had
limited my selling price to 300? I'd never have got it off. No, sir! When you want to
get out, get out.
You ought to have seen that cornered stock, that it was sure suicide to go short of,
take a headlong dive when those competitive orders struck it. I let 'em have a few
thousand more. The price was 111 when I started selling it. Within a few minutes I
took in my entire short line at 92.
I was not pitting my tape-reading knack or my hunches against chance. The
inexorable logic of events was making money for me.
But I can tell you after the market began to go my way I felt for the first time in my
life that I had allies the strongest and truest in the world: underlying conditions.
They were helping me with all their might. Perhaps they were a trifle slow at times
in bringing up the reserves, but they were dependable, provided I did not get too
impatient.

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

366

It was very curious how, after suffering tremendous losses from a break of fifteen
or twenty points, people who were still hanging on, welcomed a three point rally
and were certain the bottom had been reached and complete recovery begun.
If a man didn't make mistakes he'd own the world in a month. But if he didn't profit
by his mistakes he wouldn't own a blessed thing.

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

365

That is what happened. I didn't wait to determine whether or not the time was right
for plunging on the bear side. On the one occasion when I should have invoked the
aid of my tape-reading I didn't do it. That is how I came to learn that even when
one is properly bearish at the very beginning of a bear market it is well not to begin
selling in bulk until there is no danger of the engine back-firing.

Reminiscences of a
Stock Operator

367

364
363

362

I was too eager to prove to myself that I had seen real dollars and not a mirage. I
saw, and knew that I saw. Thinking about the reward for my excellent sight kept
me from considering the distance to the dollar-heap. I should have walked and not
sprinted.
If you begin right you will not see your profitable position seriously menaced; and
then you will find no trouble in sitting tight.
Thus I eventually discovered that it was all very well not to lose your bear position
in a bear market, but that at all times the tape should be read to determine the
propitiousness of the time for operating.

359

I have always found it profitable to study my mistakes.


I had made a mistake. But where? I was bearish in a bear market. That was wise. I
had sold stocks short. That was proper. I had sold them too soon. That was costly.
My position was right but my play was wrong.
It was a perfectly natural oversight. I had to pay the usual tuition a good whack
per each step forward.

358

For years I had been the victim of an unfortunate combination of inexperience,


youth and insufficient capital. But now I felt the elation of a discoverer.

361

360

355

Obviously the thing to do was to be bullish in a bull market and bearish in a bear
market. Sounds silly, doesn't it? But I had to grasp that general principle firmly
before I saw that to put it into practice really meant to anticipate probabilities. It
took me a long time to learn to trade on those lines.
To be angry at the market because it unexpectedly or even illogically goes against
you is like getting mad at your lungs because you have pneumonia.
I do not allow my possessions or my prepossessions either to do my thinking
for me. That is why I repeat that I never argue with the tape.

354

My one steadfast prejudice is against being wrong.

353

I never want to buy stocks too cheap or too easily.


the point is not so much to buy as cheap as possible or go short at the top
prices, but to buy or sell at the right time.
From then on I began to think of basic conditions instead of individual stocks. I
promoted myself to a higher grade in the hard school of speculation. It was a long
and difficult step to take.
I found when I got my reports that Ed Harding's kindly intentional interference cost
me forty thousand dollars. A low price for a man to pay for not having the courage
of his own convictions! It was a cheap lesson.
I have noticed that there is quite a difference between talking and trading. Some of
these chaps remind you of the bold clerk who talks to his cantankerous employer
as to a yellow dog when he tells you about it.

357
356

352

351

350

349

348

347

The next day we got news of the San Francisco earthquake. It was an awful
disaster. But the market opened down only a couple of points. The bull forces were
at work, and the public is never independently responsive to news.
I have told some of these stories to friends, and some of them tell me it isn't a
hunch but the subconscious mind, which is the creative mind, at work. That is the
mind which makes artists do things without their knowing how they came to do
them. Perhaps with me it was the cumulative effect of a lot of little things
individually insignificant but collectively powerful.

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

346
345

344

343
342

341
340

339

338

337

336

335

334
333

I have been short one hundred thousand shares and seen a big rally coming. I
have figured and figured correctly that such a rally as I felt was inevitable,
and even wholesome, would make a difference of one million dollars in paper
profits. And I nevertheless have stood pat and seen half my paper profit wiped out,
without once considering the advisability of covering my shorts to put them out
again on the rally. I knew that if I did I might lose my position and with it the
certainty of a big killing. It is the big swing that makes the big money for you.
I can wait without a twinge of impatience. I can see a setback without being
shaken, knowing that it is only temporary.
Without faith in his own judgment no man can go very far in this game. That is
about all I have learned to study general conditions, to take a position and stick
with it.
One of the most helpful things that anybody can learn is to give up trying to catch
the last eighth or the first. These two are the most expensive eighths in the
world. They have cost stock traders, in the aggregate, enough millions of dollars to
build a concrete highway across the continent.
You have to use your brains and your vision to do this; otherwise my advice would
be as idiotic as to tell you to buy cheap and sell dear.
Disregarding the big swing and trying to jump in and out was fatal to me. Nobody
can catch all the fluctuations. In a bull market your game is to buy and hold until
you believe that the bull market is near its end. To do this you must study general
conditions and not tips or special factors affecting individual stocks.
It is literally true that millions come easier to a trader after he knows how to trade
than hundreds did in the days of his ignorance.
Men who can both be right and sit tight are uncommon. I found it one of the
hardest things to learn. But it is only after a stock operator has firmly grasped this
that he can make big money.
And right here let me say one thing: After spending many years in Wall Street and
after making and losing millions of dollars I want to tell you this: It never was my
thinking that made the big money for me. It was always my sitting. Got that? My
sitting tight!
I think it was a long step forward in my trading education when I realized at last
that when old Mr. Partridge kept on telling the other customers, 'Well, you know
this is a bull market!' he really meant to tell them that the big money was not in the
individual fluctuations but in the main movements that is, not in reading the tape
but in sizing up the entire market and its trend.
Time and again I heard him say, 'Well, this is a bull market, you know!' as though
he were giving you a priceless talisman wrapped up in a million-dollar accident
insurance policy. And of course I did not get his meaning.
It is naturally the semisucker who is always quoting the famous trading aphorisms
and the various rules of the game. He knows all the don'ts that ever fell from the
oracular lips of the old sages excepting the principal one, which is: Don't be a
sucker!
The tyro knows nothing, and everybody, including himself, knows it. But the next,
or second, grade thinks he knows a great deal and makes others feel that way too.
He is the experienced sucker, who has studied not the market itself but a few
remarks about the market made by a still higher grade of suckers.
They say you never grow poor taking profits. No, you don't. But neither do you
grow rich taking a four point profit in a bull market.

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

332

331

330

329

328

327

325

324

323

322

321

320
319

318
317

There was as much to learn from partial victory as there was from defeat.
It was the change in my own attitude toward the game that was of supreme
importance to me. It taught me, little by little, the essential difference between
betting on fluctuations and anticipating inevitable advances and declines, between
gambling and speculating.
I had to start much earlier if I wanted to catch the move in Fullerton's office. In
other words, I had to study what was going to happen; to anticipate stock
movements. That sounds asininely commonplace, but you know what I mean.
I was doing better than breaking even and that is why I didn't think there was any
need to deprive myself of the good things in life. The market was always there to
supply them. I was acquiring the confidence that comes to a man from a
professionally dispassionate attitude toward his own method of providing bread
and butter for himself.
I know now what I did not know then, and I think of the mistakes of my ignorance
because those are the very mistakes that the average stock speculator makes
year in and year out.
But not even a world war can keep the stock market from being a bull market when
conditions are bullish, or a bear market when conditions are bearish. And all a man
needs to know to make money is to appraise conditions.
There is what I call the behavior of a stock, actions that enable you to judge
whether or not it is going to proceed in accordance with the precedents that your
observation has noted. If a stock doesn't act right don't touch it; because, being
unable to tell precisely what is wrong, you cannot tell which way it is going. No
diagnosis, no prognosis. No prognosis, no profit.
After all, the game of speculation isn't all mathematics or set rules, however rigid
the main laws may be. Even in my tape reading something enters that is more than
mere arithmetic.
The average ticker hound or, as they used to call him, tape-worm goes
wrong, I suspect, as much from overspecialization as from anything else. It means
a highly expensive inelasticity.
There is nothing like losing all you have in the world for teaching you what not to
do. And when you know what not to do in order not to lose money, you begin to
learn what to do in order to win. Did you get that? You begin to learn!
The manager was a chap who looked as if he had been an actor or a stump
speaker. He was very impressive. He'd say good morning as though he had
discovered the morning's goodness after ten years of searching for it with a
microscope and was making you a present of the discovery as well as of the sky,
the sun and the firm's bank roll.
He figured that I was a permanent sucker, the ticker-hound kind that always plays
and always loses; a steady-income provider for brokers, whether they were the
kind that bucket your orders or modestly content themselves with the
commissions.
My old shotgun and BB shot could not do the work of a high power repeating rifle
against big game.
The ticker beat me by lagging so far behind the market it seems so obvious now
that tape reading is not enough, irrespective of the brokers' execution, that I
wonder why I didn't then see both my trouble and the remedy for it.
It's the guessing that develops a man's brain power. Just consider what you have
to do to guess right.

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

316
315
314
313

If the unusual never happened there would be no difference in people and then
there wouldn't be any fun in life. The game would become merely a matter of
addition and subtraction. It would make of us a race of bookkeepers with plodding
minds.
Speculation is a hard and trying business, and a speculator must be on the job all
the time or he'll soon have no job to be on.
It took me five years to learn to play the game intelligently enough to make big
money when I was right.
My losses have taught me that I must not begin to advance until I am sure I shall
not have to retreat. But if I cannot advance I do not move at all.

311

I have heard of people who amuse themselves conducting imaginary operations in


the stock market to prove with imaginary dollars how right they are. Sometimes
these ghost gamblers make millions. It is very easy to be a plunger that way.
They say there are two sides to everything. But there is only one side to the stock
market; and it is not the bull side or the bear side, but the right side.

310

It takes a man a long time to learn all the lessons of his mistakes.

309

A stock operator has to fight a lot of expensive enemies within himself.


No man can always have adequate reasons for buying or selling stocks daily or
sufficient knowledge to make his play an intelligent play.

312

308

307
306

There is a time for all things, but I didn't know it. And that is precisely what beats
so many men in Wall Street who are very far from being in the main sucker class.
There is the plain fool, who does the wrong thing at all times everywhere, but there
is the Wall Street fool, who thinks he must trade all the time.
If all I have is ten dollars and I risk it, I am much braver than when I risk a million, if
I have another million salted away.

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator
Reminiscences of a
Stock Operator

301
300
299

That's all the fun there is being right by using your own head.
It struck me at once that if my dope didn't work in practice there was nothing in the
theory of it to interest anybody.
Your business with the tape is now not tomorrow. The reason can wait. But you
must act instantly or be left.
Another lesson I learned early is that there is nothing new in Wall Street. There
can't be because speculation is as old as the hills. Whatever happens in the stock
market today has happened before and will happen again.
My tremendous intuitive sense of the female creature informs me that you are
troubled.
Now... bring me that horizon.
Time to nut up or shut up.

298

Vision is the greatest of talents, because it looks so much like magic. We see it in
sports, when a basketball player surprises an entire arena by delivering a lastsecond pass to a waiting teammate. Or in business when a smart investor spots a
tiny, vital pattern and leverages it to a massive advantage. Vision dwarfs other
talents like accuracy, persistence, and strength because it operates on a higher
plane. It changes the game by creating new opportunities where none existed.

297

Myths and legends die hard in America. We love them for the extra dimension they
provide, the illusion of near-infinite possibility to erase the narrow confines of most
men's reality. Weird heroes and mould-breaking champions exist as living proof to
those who need it that the tyranny of 'the rat race' is not yet final.
Hunter S. Thompson

305
304
303

302

Reminiscences of a
Stock Operator
Jack Sparrow
Jack Sparrow
Zombieland

Daniel Coyle

296
295
294
293

292
291
290
289

288

287
286

285
284

283
282

281
280
279

278
277
276

The TV business is uglier than most things. It is normally perceived as some kind
of cruel and shallow money trench through the heart of the journalism industry, a
long plastic hallway where thieves and pimps run free and good men die like dogs,
for no good reason.
The Edge... there is no honest way to explain it because the only people who really
know where it is are the ones who have gone over.
Buy the ticket, take the ride.
When the going gets weird, the weird turn pro.
The history of every industrious and commercial community, under a stable
government, will present successive alternate periods of credit and distrust,
following each other with a good deal of regularity.
I write to keep from going mad from the contradictions I find among mankind
and to work some of those contradictions out for myself.
I'm beginning to think these are not perfect storms. I'm beginning to think these are
regular storms and we have a shitty boat.
I make many changes, and reject and try again, until I am satisfied.
An excellent decision maker and a bad decision maker will both make mistakes.
The difference is what causes them to make mistakes and the frequency of their
mistakes.
Intelligent people who are open to recognizing and learning from their mistakes
substantially outperform people with the same abilities who aren't open in the
same way. Yet it is far more common for people to let their egos stand in the way
of learning.
If you don't mind being wrong on the way to being right, you will learn a lot.
Recognize that you will certainly make mistakes; so will those around you and
those who work for you. And what matters is how you deal with them. If you treat
mistakes as learning opportunities that can yield rapid improvement if handled
well, you will be excited by them.
There is no worse course in leadership than to hold out false hopes soon to be
swept away.
Your ability to see the changing landscape and adapt is more a function of your
perceptive and reasoning abilities than your ability to learn and process quickly.
It's not the strongest species that survive, nor the most intelligent, but those most
able to adapt.
Of all the mysteries of the stock exchange there is none so impenetrable as why
there should be a buyer for everyone who seeks to sell. October 24, 1929 showed
that what is mysterious is not inevitable. Often there were no buyers, and only after
wide vertical declines could anyone be induced to bid ... Repeatedly and in many
issues there was a plethora of selling orders and no buyers at all.
Volatility is greatest at turning points, and diminishes as a [new] trend is
established.
Trust, but verify.
One of these days in your travels, a guy is going to come up to you and show you
a nice brand-new deck of cards on which the seal is not yet broken, and this guy is
going to offer to bet you that he can make the Jack of Spades jump out of the deck
and squirt cider in your ear. But, son, do not bet this man, for as sure as you are
standing there, you are going to end up with an earful of cider.
The race is not always to the swift, nor the battle to the strong... but that's the way
to bet.
Brick by brick, my citizens, brick by brick.

Hunter S. Thompson
Hunter S. Thompson
Hunter S. Thompson
Hunter S. Thompson
Encyclopedia
Americana, 1838
Edition
Michel de Montaigne
Jon Stewart
Ludwig Van Beethoven

Ray Dalio

Ray Dalio
Ray Dalio

Ray Dalio
Winston Churchill

Ray Dalio
Charles Darwin

John Kenneth
Galbraith
George Soros
Damon Runyon

Damon Runyon
Damon Runyon
Hadrian

274

Robust demand is the only thing that holds prices from falling vertically in the face
of eager selling. Overvalued, overbought, overbullish markets are often already
spent of that demand.
Perhaps the single most important factor was that I had a great passion for the
game. I think almost anyone can be net profitable in the stock market given
enough time and effort, but to be a great trader, you have to have a passion for it.
You have to love trading.

273

Everyone, from the greatest genius to the most ordinary clerk, has to adopt mental
frameworks that simplify and structure the information encountered in the world.

275

270

Seek simplicity, then distrust it.


Patience is required most when one desires to apply it least.
The truly skilled poker player and all the more so the truly skilled trader is not
just a fighter. He is also an artist, a statistician, and a student of human nature, all
rolled into one.

269

You must learn to allow patience and stillness to take over from anxiety and frantic
activity... The good player is patient. He is observant, controlling his patience, and
organizing his composure. When he sees an opportunity, he explodes.

272
271

John Hussman

Mark Minervini

Decision Traps
Alfred North
Whitehead
Jack Sparrow

Jack Sparrow

Jim Lau

266

There is no means of avoiding the final collapse of a boom expansion brought


about by credit expansion. The alternative is only whether the crisis should come
sooner as the result of a voluntary abandonment of further credit expansion, or
later as a final and total catastrophe of the currency system involved.
Where are the customers' yachts?
Statistics are like bikinis. What they reveal is suggestive, but what they conceal is
vital.

265

Nobody on Wall Street has a monopoly on truth. Market strategists don't. Money
managers and investment-newsletter writers don't. Brokers, financial planners and
insurance agents don't. Newpaper columnists don't. So treat all financial advice
with caution. Look at every investment and every investment strategy with
profound skepticism. Think long and hard about every financial myth.

264

Professional investment may be likened to those newspaper competitions in which


the competitors have to pick out the six prettiest faces from a hundred
photographs, the prize being awarded to the competitor whose choice most nearly
corresponds to the average preferences of the competitors as a whole; so that
each competitor has to pick, not those faces which he himself finds prettiest, but
those which he thinks likeliest to catch the fancy of the other competitors, all of
whom are looking at the problem from the same point of view.
John Maynard Keynes

268
267

263

262
261
260

Investing on raw momentum buying stocks that are going up, just because they
are going up used to be considered as unsophisticated as picking your nose in
public. Now, many people consider it a legitimate school of investing.
It's almost as if we've seen the emergence of a new life form, the Robo-Trader, a
mutant strain of investor who grazes on information from CNBC and regurgitates it
in the form of online trades.
The tribe has spoken, and in accordance with the island's long-standing tradition,
the bears have again been banished.
Progress does not march forward like an army on parade; it crawls on its belly like
a guerrilla.

Ludwig Von Mises


Fred Schwed
Aaron Levenstein

Jonathon Clements

John Dorfman

Walter Updegrave
Louis Rukeyser
Michael Lewis

238
237
236

It was a Fred Flintstone kind of quarter. At times, it seemed like many stocks and
funds were just spinning their feet and wheels like Fred does whenever he peels
out in his Stone-Age sedan.
For professional investors like myself, a sense of humor is essential . . . We are
very aware that we are competing not only against the market averages but also
against one another. It's an intense rivalry.
Don't be a hero. Don't have an ego.
The market has no respect for your station in life or for how smart an investor you
have been until now. In fact, the market in this incarnation most prefers to
humiliate those who remain smug or who appear to be telling it what to do and
when to do it.
In bull markets, people have faith; in bear markets, doubt. The other way around
might be more profitable.
This sucker could go down.
Pigs get fat but hogs get slaughtered.
A rolling loan gathers no loss.
They promise the blessings of the Garden of Eden, but they plan to transform the
world into a gigantic post office. Every man but a subordinate clerk in a bureau.
What an alluring utopia! What a noble cause to fight!
Against all this frenzy of agitation there is but one weapon available: reason. Just
common sense is needed to prevent man from falling prey to illusory fantasies and
empty catchwords.
If I say it's safe to surf this beach, Captain, then it's safe to surf this beach!
I love the smell of napalm in the morning.
...for a certain group of cynics with a penchant for quality, the sound of a stock
crashing nicely will evoke a knowing and whimsical smile.
To enjoy the advantages of a free market, one must have both buyers and sellers,
both bulls and bears. A market without bears would be like a nation without a free
press. There would be no one to criticize and restrain the false optimism that
always leads to disaster.
Bulls always have been more popular than bears in this country because optimism
is so strong a part of our heritage. Still, over-optimism is capable of doing more
damage than pessimism since caution tends to be thrown aside.
Bears can only make money if the bulls push up stocks to where they are
overpriced and unsound.
Life's a bitch... and she's back in heat.
Never mistake a clear view for a short distance.
Outside the limit of our sight, feeding off us, perched on top of us, from birth to
death, are our owners! Our owners! They have us. They control us! They are our
masters! Wake up! They're all about you! All around you!
The world needs a wake up call, gentlemen... We're gonna phone it in.
You... You look like your face fell in the cheese dip back in 1957.

235

I've come here to chew bubblegum and kick ass... and I'm all out of bubblegum.

They Live

234

unknown
M.C. Escher

231

If they're going to get my money, it'll be like getting nibbled to death by ducks.
So let us then try to climb the mountain, not by stepping on what is below us, but to
pull us up at what is above us, for my part at the stars; amen.
I believe that producing pictures, as I do, is almost solely a question of wanting so
very much to do it well.

229
228

There has to be a certain enigma in it, which does not immediately catch the eye.
We adore chaos because we love to produce order.

M.C. Escher
M.C. Escher

259

258
257

256
254
253
251
250

248

247
246
245
244

243

242
241
240
239

233

Dan Culloton

Ralph Wanger
Paul Tudor Jones

Tom Petruno
James Grant
George W. Bush
Wall Street proverb
Wall Street proverb

Ludwig Von Mises

Ludwig Von Mises


Colonel Kilgore
Colonel Kilgore
The Art of Short
Selling

Bernard Baruch

Bernard Baruch
Bernard Baruch
They Live
Paul Saffo

They Live
They Live
They Live

M.C. Escher

226
224
223
221
220
217
214
213
212
211
210

209

208
207
206

205

204
203
202
201

I try in my prints to testify that we live in a beautiful and orderly world, not in a
chaos without norms, even though that is how it sometimes appears.
What I give form to in daylight is only one per cent of what I have seen in
darkness.
I don't grow up. In me is the small child of my early days.
He who wonders discovers that this, in itself, is wonder.
My work is a game, a very serious game.
This is not my vessel. My vessel is magnificent, and fierce and huge-ish and gone.
Why is it gone?
When you marooned me on that god forsaken spit of land, you forgot one very
important thing mate: Im Captain Jack Sparrow.
Worry about your own fortunes gentlemen. The deepest circle of hell is reserved
for betrayers and mutineers.
I think we've all arrived at a very special place. Spiritually, ecumenically,
grammatically.
The only rules that really matter are these: What a man can do and what a man
can't do.
It is of the highest importance, therefore, not to have useless facts elbowing out
the useful ones.
Given the uncertain nature of the future, and thus the difficulty of being confident
your position is the right oneespecially as price moves against youit's
challenging to be a lonely contrarian.

M.C. Escher
M.C. Escher
M.C. Escher
M.C. Escher
Jack Sparrow
Jack Sparrow
Jack Sparrow
Jack Sparrow
Jack Sparrow
Sherlock Holmes

Howard Marks

Skepticism is the chastity of the intellect, and it is shameful to surrender it too soon
or to the first comer: there is nobility in preserving it coolly and proudly.
George Santayana
You become a champion by fighting one more round. When things are tough, you
fight one more round.
Gentleman Jim Corbett
It is the mark of an educated mind to be able to entertain a thought without
accepting it.
Aristotle
There he goes. One of God's own prototypes. Some kind of high powered mutant
never even considered for mass production. Too weird to live, and too rare to die.
A good fight should be like a small play, but played seriously. A good martial artist
does not become tense, but ready; not thinking, yet not dreamingready for
whatever may come. When the opponent expands I contract and when he
contracts I expand, and when there is a moment to strike, I do not hitit hits all by
itself.
The great danger for most of us lies in not setting our aim too high and falling
short; but in setting our aim too low, and achieving our mark.
You can't stop the waves, but you can learn to surf.
First, you decide what you want specifically; and second, you decide if you're
willing to pay the price to make it happen, and then pay that price.

199

Winning is hard to do, and there's a price that you pay for it. And that's how I saw
Michael as a player as someone that wanted to prove he's a winner every day.
The three most harmful addictions are heroin, carbohydrates, and a monthly
salary.

197
196

When one door closes, another opens; but we often look so long and so regretfully
upon the closed door that we do not see the one which has opened for us.
Everything comes to him who hustles while he waits.

194
193

The best thinking has been done in solitude. The worst has been done in turmoil.
A problem well stated is a problem half-solved.

200

M.C. Escher

Hunter S. Thompson

Bruce Lee
Michelangelo
Jon Kabat-Zinn
Nelson Bunker Hunt

Scottie Pippen
Nassim Taleb
Alexander Graham
Bell
Thomas Edison
Thomas Edison
Charles Kettering

192
191
190
189
188
187
186
185
184
183
182

181

180

Concentrate all your thoughts upon the work at hand. The sun's rays do not burn
until brought to a focus.
Opportunity is missed by most people because it usually goes around wearing
overalls looking like hard work.
Wisdom consists of seeing many things and concentrating on one thing.
Seeing things in their right relation to each other is the highest vision.
Many men have the 'courage of their opinions,' few the courage to abandon
opinions.
Man begins in simplicity, advances to complexity, returns to simplicity. The last is
complexity reduced to the fewer terms.
Learn principles. Facts will then fall into their relations and connections.
Genius consists of seeing instantly the vital point.
Fools try to prove that they are right. Wise men try to find when they are wrong.
Don't storm the fortress of fortunelay siege to it.
If only we could be like water. When water moves, it follows the path of least
resistance. Water would be good at poker.
If you have an inflexible image in your mind of an opponent, then whenever he
changes, your evaluation of him will be wrong. If you have an inflexible image in
your mind of yourself, then whenever you change, your evaluation of yourself will
be wrong. For up-to-date evaluation, there is no time but the present.
If we carry in our mind a false image of ourselves, and that image gives us
confidence, and the confidence itself increases the probability that we will
procreate, then it doesn't matter that the image is false. Delusion will be naturally
selected.

169

A good anticipator foresees all pertinent paths without attaching to any of them.
Because your own strength is unequal to the task, do not assume that it is beyond
the powers of man; but if anything is within the powers and province of man,
believe that it is within your own compass also.
They who can give up essential liberty to obtain a little temporary safety, deserve
neither liberty nor safety.
Politics is the art of looking for trouble, finding it everywhere, diagnosing it
incorrectly, and applying the wrong remedies.
I've missed more than 9,000 shots in my career. I've lost almost 300 games. 26
times, I've been trusted to take the game winning shot and missed. I've failed over
and over and over again in my life. And that is why I succeed.
I loved the night. I think secretly all scientists exult in working alone, surrounded by
the urgent private quiet of the dark. To be doing something no one had ever
done... to be alone and out on the edge like that, there was no feeling like it in the
world.
Nothing in the world can take the place of Persistence. Talent will not; nothing is
more common than unsuccessful men with talent. Genius will not; unrewarded
genius is almost a proverb. Education will not; the world is full of educated
derelicts. Persistence and determination alone are omnipotent.
A common mistake that people make when trying to design something completely
foolproof is to underestimate the ingenuity of complete fools.
The higher we soar, the smaller we appear to those who cannot fly.
If we did all the things we were capable of doing, we would literally astound
ourselves.

168

Talent hits a target no one else can hit; Genius hits a target no one else can see.

179

178
176
175

174

173

172
171
170

Alexander Graham
Bell
Thomas Edison
Dickson G. Watts
Dickson G. Watts
Dickson G. Watts
Dickson G. Watts
Dickson G. Watts
Dickson G. Watts
Dickson G. Watts
Dickson G. Watts
Tommy Angelo

Tommy Angelo

Tommy Angelo
Tommy Angelo

Marcus Aurelius
Benjamin Franklin
Groucho Marx

Michael Jordan

Steven Rosenberg

Calvin Coolidge
Douglas Adams
Friedrich Nietzsche
Thomas Edison
Arthur Schopenhauer

167

Maybe, just once, someone will call me 'Sir' without adding, 'You're making a
scene.'

163

Twenty years from now you will be more disappointed by the things that you didn't
do than by the ones you did do. So throw off the bowlines. Sail away from the safe
harbor. Catch the trade winds in your sails. Explore. Dream. Discover.
The market is a mathematical hypothesis. The best solutions to it are the elegant
and the simple.
I knew that if I ever went broke at poker, it wouldn't be because my best wasn't
good enough to keep me afloat. It'd be because my worst was bad enough to sink
me.
The best way to get better at poker is to get better at everything and let poker rise
with the tide.

162

I learned to approach racing like a game of billiards. If you bash the ball too hard,
you get nowhere. As you handle the cue properly, you drive with more finesse.

166
165

164

161
160
159

158

157

156
155
154
153
152
151
150
149
148
147
146
145
144
143
142
141

Nothing is more difficult, and therefore more precious, than to be able to decide.
Well-bred instinct meets reason halfway.
One machine can do the work of 50 ordinary men. No machine can do the work of
one extraordinary man.
Excellence is an art won by training and habituation. We do not act rightly because
we have virtue or excellence, but we rather have those because we have acted
rightly. Excellence, then, is not an act, but a habit.
Intuition and concepts constitute... the elements of all our knowledge, so that
neither concepts without an intuition in some way corresponding to them, nor
intuition without concepts, can yield knowledge.
There is no logical way to the discovery of these elemental laws. There is only the
way of intuition, which is helped by a feeling for the order lying behind the
appearance.

Homer J. Simpson

Mark Twain
George Soros

Tommy Angelo
Tommy Angelo

Juan Manuel Fangio


Napoleon
George Santayana
Elbert Hubbard

Aristotle

Immanuel Kant

Albert Einstein

Nothing is more intolerable than to have to admit to yourself your own errors.
Ludwig Van Beethoven
Intuition will tell the thinking mind where to look next.
Jonas Salk
The intuitive mind is a sacred gift and the rational mind is a faithful servant. We
have created a society that honors the servant and has forgotten the gift.
Albert Einstein
Genius is infinite patience.
Michelangelo
Rare is the blessing that bears no resemblance to curse.
Jack Sparrow
Whoever undertakes to set himself up as a judge of Truth and Knowledge is
shipwrecked by the laughter of the gods.
Albert Einstein
A lie gets halfway around the world before the truth has a chance to get its pants
on.
Winston Churchill
So long as I am acting from duty and conviction, I am indifferent to taunts and
jeers. I think they will probably do me more good than harm.
Winston Churchill
Continuous effortnot strength or intelligenceis the key to unlocking our
potential.
Winston Churchill
There are three classes of people: those who see, those who see when they are
shown, those who do not see.
Leonardo da Vinci
The truth of things is the chief nutriment of superior intellects.
Leonardo da Vinci
The noblest pleasure is the joy of understanding.
Leonardo da Vinci
The greatest deception men suffer is from their own opinions.
Leonardo da Vinci
I have been impressed with the urgency of doing. Knowing is not enough; we must
apply. Being willing is not enough; we must do.
Leonardo da Vinci
He who loves practice without theory is like the sailor who boards ship without
rudder and compass, and never knows where he may cast.
Leonardo da Vinci

140
139
137
136
135
134
133

Anyone who conducts an argument by appealing to authority is not using his


intelligence; he is just using his memory.
Existence is a strange bargain. Life owes us little; we owe it everything. The only
true happiness comes from squandering ourselves for a purpose.
The empires of the future are the empires of the mind.
It is a mistake to look too far ahead. Only one link in the chain of destiny can be
handled at a time.
Out of intense complexities, intense simplicities emerge.
The whole history of civilization is strewn with creeds and institutions which were
invaluable at first and deadly afterwards.
Every time history repeats itself, the price goes up.

123
122

By doubting, we come to examine, and by examining, so we perceive the truth.


He who desires but acts not, breeds pestilence.
I must create a system or be enslaved by another man's.
Mediocre people are always at their best; they climb molehills without breaking a
sweat.
A true craftsman never stands for wrinkles in the duct tape.
A man is not idle because he is absorbed in thought. There is a visible labor and
there is an invisible labor.
Believe that life is worth living and your belief will help create the fact.

121

All life is an experiment.

120

In times of drastic change, it is the learners who inherit the future. The learned
usually find themselves equipped to live in a world that no longer exists.

132
129
128
127
126

119
118
117
116
115
114
113
112
111
110

109

108

Leonardo da Vinci
William Cowper
Winston Churchill
Winston Churchill
Winston Churchill
Walter Bagehot
unknown
Peter Abelard
William Blake
William Blake
unknown
unknown
Victor Hugo
William James
Oliver Wendell Holmes

Oliver Wendell Holmes


Johann Wolfgang von
Goethe
Things which matter most must never be at the mercy of things which matter least.
Your pain is the breaking of the shell that encloses your understanding.
Khalil Gibran
One doesn't discover new lands without consenting to lose sight of the shore for a
very long time.
Andre Gide
The winds and waves are always on the side of the ablest navigators.
Edward Gibbon
I love it when a plan comes together.
The A-Team
You shall judge a man by his foes as well as his friends.
Joseph Conrad
I had ambition not only to go farther than any man had ever been before, but as far
as it was possible for a man to go.
Joseph Conrad
To have his path made clear for him is the aspiration of every human being in our
beclouded and tempestuous existence.
Joseph Conrad
It is the mark of an inexperienced man not to believe in luck.
Joseph Conrad
I don't like work. But I like what is in workthe chance to find yourself. Your own
realityfor yourself, not for otherswhich no other man can ever know.
Joseph Conrad
All men dream: but not equally. Those who dream by night in the dusty recesses of
their minds wake in the day to find that it was vanity; but the dreamers of the day
are dangerous men, for they may act their dreams with open eyes, to make it
possible.
T.E. Lawrence
The credit belongs to the man who is actually in the arena; whose face is marred
by dust and sweat and blood; who strives valiantly who knows the great
enthusiasms, the great devotions, and spends himself in a worthy cause; who, at
best, knows the triumph of high achievement; and who, at the worst, if he fails, at
least fails while daring greatly, so that his place shall never be with those cold and
timid souls who know neither victory nor defeat.
Teddy Roosevelt

107

106

Mountains should be climbed with as little effort as possible and without desire.
The reality of your own nature should determine the speed. If you become restless,
speed up. If you become winded, slow down. You climb the mountain in an
equilibrium between restlessness and exhaustion. Then, when you're no longer
thinking ahead, each footstep isn't just a means to an end but a unique event in
itself.
To live only for some future goal is shallow. It's the sides of the mountain which
sustain life, not the top. Here's where things grow. But of course, without the top
you can't have any sides. It's the top that defines the sides.

101
100

There is only one thing for it thento learn. Learn why the world wags and what
wags it. That is the only thing which the mind can never exhaust, never alienate,
never be tortured by, never fear or distrust, and never dream of regretting.
Within their areas of competence, experts have many more categories of
awareness than novices. The perception of subtleties is what Michael Jordan,
Warren Buffett, and Yo-Yo Ma have in common.
Specialization is for insects.
The height of cultivation is really nothing special. It is merely simplicity; the ability
to express the utmost with the minimum. It is the halfway cultivation that leads to
ornamentation.
Democracy is the theory that the common people know what they want and
deserve to get it good and hard.
Every decent man is ashamed of the government he lives under.

98

When once you have tasted flight, you will forever walk the earth with your eyes
turned skyward, for there you have been and there you will always long to return.

105

104
103

102

97
96
95
94
91
89
87
86
85
84
83
82

A bureaucrat is the most despicable of men, though he is needed as vultures are


needed, but one hardly admires vultures whom bureaucrats so strangely resemble.
I have yet to meet a bureaucrat who was not petty, dull, almost witless, crafty or
stupid, an oppressor or a thief, a holder of little authority in which he delights, as a
boy delights in possessing a vicious dog. Who can trust such creatures?
The bravest are surely those who have the clearest vision of what is before them,
glory and danger alike, and yet notwithstanding, go out to meet it.
The society that separates its scholars from its warriors will have its thinking done
by cowards and its fighting by fools.
Those who make wise decisions are more formidable to their enemies than those
who rush madly into strong action.
I don't know half of you half as well as I should like; and I like less than half of you
half as well as you deserve.
Dark forces dragged me away from the keyboard, swirling forces of irresistible
intensity and power.
For a sucessful technology, honesty must take precedence over public
relationsfor nature cannot be fooled.
There's no sense being exact about something if you don't even know what you're
talking about.
Good judgment comes from experience, and experience comes from bad
judgment.
I have always found that plans are useless, but planning is indispensable.
The ability to simplify means to eliminate the unnecessary so that the necessary
may speak.
Simplicity is the ultimate sophistication.

Robert Pirsig

Robert Pirsig

The Once and Future


King

Lee Humphries
Robert A. Heinlein

Bruce Lee
H.L. Mencken
H.L. Mencken

Leonardo da Vinci

Cicero
Thucydides
Thucydides
Thucydides
Bilbo Baggins
Boris Johnson
Richard Feynman
John von Neumann
Fred Brooks
Dwight D. Eisenhower
Hans Hoffman
Leonardo da Vinci

81
80
79
78
77

76
75
74
73
72

71

70

69
68

67

66
65
64
63
62
61
60

Increasingly, people seem to misinterpret complexity as sophistication, which is


baffling the incomprehensible should cause suspicion rather than admiration.
Possibly this trend results from a mistaken belief that using a somewhat
mysterious device confers an aura of power on the user.
Never ascribe to malice that which is adequately explained by incompetence.
My friends, as I have discovered myself, there are no disasters, only opportunities.
And, indeed, opportunities for fresh disasters.
Suppose you were an idiot. And suppose you were a member of Congress. But I
repeat myself.
The most costly of all follies is to believe passionately in the palpably not true. It is
the chief occupation of mankind.
It is not materialism that is the chief curse of the world, as pastors teach, but
idealism. Men get into trouble by taking their visions and hallucinations too
seriously.
The secret of joy in work is contained in one word excellence. To know how to
do something well is to enjoy it.
A newspaper is a device for making the ignorant more ignorant and the crazy
crazier.
For every complex problem, there is a solution that is neat, simple, and wrong.
It is the dull man who is always sure, and the sure man who is always dull.
A child-like man is not a man whose development has been arrested; on the
contrary, he is a man who has given himself a chance of continuing to develop
long after most adults have muffled themselves in the cocoon of middle-aged habit
and convention.
Be formless shapeless, like water. If you put water into a cup, it becomes the
cup. You put water into a bottle; it becomes the bottle. You put it into a teapot; it
becomes the teapot. Water can flow, and it can crash. Be like water my friend.
He who joyfully marches to music in rank and file has already earned my
contempt. He has been given a large brain by mistake, since for him the spinal
cord would fully suffice.
The most exciting phrase to hear in science, the one that heralds new discoveries,
is not 'Eureka!' but 'That's funny'
After a certain high level of technical skill is achieved, science and art tend to
coalesce in aesthetics, plasticity, and form. The greatest scientists are artists as
well.
It is nothing short of a miracle that the modern methods of education have not yet
entirely strangled the holy curiosity of inquiry It is a very grave mistake to think
that the enjoyment of seeing and searching can be promoted by means of coercion
and a sense of duty.
Great spirits have always encountered violent opposition from mediocre minds.
The pursuit of truth and beauty is a sphere of activity in which we are permitted to
remain children all our lives.
Only two things are infinite, the universe and human stupidity, and I'm not sure
about the former.
All that is valuable in human society depends upon the opportunity for
development accorded the individual.
The important thing is to never stop questioning.
I would not give a fig for the simplicity this side of complexity, but I would give my
life for the simplicity on the other side of complexity.

Niklaus Wirth
Napoleon
Boris Johnson
Mark Twain
H.L. Mencken

H.L. Mencken
Pearl S. Buck
H.L. Mencken
H.L. Mencken
H.L. Mencken

Aldous Huxley

Bruce Lee

Albert Einstein
Isaac Asimov

Albert Einstein

Albert Einstein
Albert Einstein
Albert Einstein
Albert Einstein
Albert Einstein
Albert Einstein
Oliver Wendell Holmes

59
58

56
55
54
53
52
51
50
49
48
47

46
45
44
43

42
41
40
39
38

37

36

34

33

We are drowning in information, while starving for wisdom. The world henceforth
will be run by synthesizers, people able to put together the right information at the
right time, think critically about it, and make important choices wisely.
Sometimes a concept is baffling not because it is profound, but because it is
wrong.

E.O. Wilson
E.O. Wilson

In a purely technical sense, each species of higher organism is richer in


information than a Caravaggio painting, Bach fugue, or any other great work of art.
E.O. Wilson
The wolf careth not, how many the sheep be.
Virgil
A society of sheep must in time beget a government of wolves.
Bertrand de Jouvenel
Simplify, simplify, simplify.
Henry David Thoreau
Things should be made as simple as possible, but not simpler.
Albert Einstein
A mind all logic is like a knife all blade.
Chinese proverb
So I got that goin' for me, which is nice.
Caddyshack
Tiger got to hunt, bird got to fly; Man got to sit and wonder, 'Why, why, why?' Tiger
got to sleep, bird got to land; Man got to tell himself he understand.
Cat's Cradle
Following the dictates of experience may possibly fool you, now and then. But not
Reminiscences of a
following them invariably makes an ass out of you.
Stock Operator
There are men whose gait is far quicker than the mob's. They are bound to
Reminiscences of a
leadno matter how much the mob changes.
Stock Operator
So in the case of those who are skilled in attack, their opponents do not know
where to defend. In the case of those skilled in defense, their opponents do not
know where to attack.
Sun Tzu
The reverse side also has a reverse side.
Japanese proverb
My approach works not by making valid predictions, but by allowing me to correct
false ones.
George Soros
It's not whether you're right or wrong that's important, but how much money you
make when you're right, and how much you lose when you're wrong.
George Soros
The biggest secret about success is that there isn't any big secret about it, or if
there is, then it's a secret from me, too. The idea of searching for some secret for
trading success misses the point.
Ed Seykota
It requires a great deal of boldness, and a great deal of caution, to make a great
fortune.
Nathan Rothschild
Markets are no different than empires. They expand, rise in value, become overextended, and eventually collapse.
Marc Faber
Every path chosen precludes an infinite number of alternative paths.
Jack Sparrow
Drink up me hearties, yo ho...
Jack Sparrow
When the speed of rushing water reaches the point where it can move boulders,
this is the force of momentum. When the speed of a hawk is such that it can strike
and kill, this is precision. So it is with skillful warriors their force is swift, their
precision is close.
Sun Tzu
The way to make money is to make it. The way to make big money is to be right at
exactly the right time. In this business a man has to think of both theory and
practice. A speculator must not be merely a student, he must be both a student
Reminiscences of a
and a speculator.
Stock Operator
Human subtlety will never devise an invention more beautiful, more simple, or
more direct than does nature in her inventions nothing is lacking, and nothing is
superfluous.
Leonardo da Vinci
Although nature commences with reason and ends in experience, it is necessary
for us to do the oppositethat is, to commence with experience, and from this
proceed to investigate the reason.
Leonardo da Vinci

32

31
30
29

28
27
26

24
23
22

I love those who can smile in trouble, who can gather strength from distress, and
grow brave by reflection. 'Tis the business of little minds to shrink, but they whose
heart is firm, and whose conscience approves their conduct, will pursue their
principles unto death.
It had long since come to my attention that people of accomplishment rarely sat
back and let things happen to them. They went out and happened to things.
Iron rusts from disuse; water loses its purity from stagnation... even so does
inaction sap the vigor of the mind.
In rivers, the water that you touch is the last of what has passed and the first of
that which comes; so with present time.
Life is pretty simple: You do some stuff. Most fails. Some works. You do more of
what works. If it works big, others quickly copy it. Then you do something else. The
trick is the doing something else.
If you can't explain it to a six year old, you don't really understand it.
I can live with doubt and uncertainty and not knowing. I think it is much more
interesting to live not knowing than to have answers that might be wrong.
Learn from science that you must doubt the experts. As a matter of fact, I can also
define science another way: Science is the belief in the ignorance of experts.
The first principle is that you must not fool yourself, and you are the easiest person
to fool.
We have found it of paramount importance that, in order to progress, we must
recognize our ignorance and leave room for doubt.

You can know the name of a bird in all the languages of the world, but when you're
finished, you'll know absolutely nothing whatever about the bird So let's look at
the bird and see what it's doingthat's what counts. I learned very early the
difference between knowing the name of something and knowing something.
Not only have experts gathered many 'elemental' facts about their field; they have
linked them to one another to produce a vast array of 'relational' facts... It is these
latent relationships that the mind processes in its search for insight. The
processing is autonomous and subliminal, but you can encourage it. Reflection
compounds knowledge.
Funny old world innit?
Take what you can... give nothin' back.
History doesn't repeat, but sometimes it rhymes.
Those who forget history are condemned to repeat it.
The world is perpetual caricature of itself; at every moment it is the mockery of
what it is pretending to be.
Ninety percent of any great trader is going to be the risk control.
Nobody ever went bowlegged carrying away the money they won from me.
A Smith and Wesson beats four aces.
And that, my liege, is how we know the earth to be banana-shaped.
Every now and then go away, have a little relaxation, for when you come back to
your work your judgment will be surer. Go some distance away, because then the
work appears smaller... more of it can be taken in at a glance, and a lack of
harmony and proportion is more readily seen.

I am turned into a sort of machine for observing facts and grinding out conclusions.

5
3
1

If all the economists were laid end to end, they would never reach a conclusion.
The four most dangerous words in investing are This time its different.
An investment in knowledge always pays the best interest.

21

20
19
18
17
13
12
11
10
9
8

Leonardo da Vinci

Leonardo da Vinci
Leonardo da Vinci
Leonardo da Vinci

Tom Peters
Richard Feynman
Richard Feynman

Richard Feynman
Richard Feynman
Richard Feynman

Richard Feynman

Lee Humphries
Jack Sparrow
Jack Sparrow
Mark Twain
George Santayana
George Santayana
Paul Tudor Jones
Canada Bill Jones
Canada Bill Jones
Monty Python

Leonardo da Vinci
Charles Darwin
George Bernard Shaw
John Templeton
Benjamin Franklin