Monday, 30 May 2011

Trading imbalances lead to Bi-polarism.....

ALL investors suffer from inherent predispositions which are usually negative in contradiction. It's undeniable and financially fatal. Overcoming these behavioral inconsistencies is obviously complex but necessary!

Illustrated simply and one of the more common examples of inherent predisposition is the fear of 'selling-at-a-loss'. 'Selling-at-a-profit' is inherently easy to execute. 'Selling-at-a-loss' however, is inherently difficult for some and worse still, impossible for others. It's often the 'buy low and sell high' gag [ a hoary chestnut..!] that prevents traders from admitting an obviously incorrect transaction and cutting an early loss. To make matters worse, winning trades are sold (inherently easy..) to fund losing trades!     'I'll average down......' (9/10 times a fatal eventuality.)

Overcoming these inherent flaws requires some introspection and for some it's too difficult. Nevertheless, recognising inherent behavioral flaws and with some independent professional assistance, your chances of success will be greatly improved.

Friday, 27 May 2011

The 'new normal' is marfi* by any other name.

There's no denying that our inherent abilities to sift right from wrong are easily influenced. We're numbed by 'reality'. 'Reality' is the 'get-out-of-jail-free card' we accept as counterintuitive to our instincts. Your perceptions are your own and mine are mine but when your perceptions are the same as mine and mine the same as yours, then that's 'reality'. Accepting influence changes our 'reality'. Advertising does it all the time. 'Wall Street' does it too....

'Reality' is in fact your most important financial variable. How, when, why and with who is influenced by 'reality'. 

Trust your instincts. 'Reality' is a myth.

*marfi - politely Swahili for animal droppings

Thursday, 26 May 2011

Odds are shifty, tricky little b*stards!!

The asylum that is the changeroom at my local gym shouldn't be your choice of venue for a portfolio evaluation. A free lunch is always deferred indigestion. A 'formal chat' between a PT [personal trainer] and his 'financial advisor' client [FAC] proves perhaps the old adage that you usually get what you pay for...

[FAC]: Lose half the tom in this small cap fund and reinvest in the TOP20. This 'mix' looks wrong to me, brother.
(a gut-wrenching 30 sec pause holds us in animated suspense mid-floss. The 'bells ringing' signs are off...)
[PT]: Why?
(Relegating risk / return analysis and the other mundane tools of our trade to the soiled-towel bin, the FAC replies..)
[FAC]: Small caps don't have the balance sheet to weather this downturn.
(Brilliant...The PT appears noticeably warmed & fuzzy; his everest conquered..)
[PT]: Okay
(Entrar a matar!!)
[FAC]: ZAR's weakening too.
(Isn't life great?)
[PT]: Okay.

'Odds-on' the PT will grow old in that gym....?

Ask the right questions, at the right time, in the right place and from the right people!! It's your money............chom.

Fear is a change of underwear!

Accepting the fact that markets are 'directionally-assisted' [DA] in the short-term will save you tears & money. Free to air mainstream financial media is cluttered with deceit and misinformation. It's a soup served cold.  Market commentators and anal ysts  ALW@Y$ opine a vested interest intentionally or unintentionally, either directly or indirectly. It's 'cards-up' poker. No point unless the deck's stacked and you're the dealer.... right?

'Sell in May and go away' is craps without the dice. Falling for that old gaffe is just as ludicrous as paying your advisor / broker / manager an annual 'management fee' for losing you money. Heads I win, tails you lose....

Demand more, ask more. Listen closely to the company CEOs. They're obliged by law to forecast accurately. Leave the rest to the player$.

Monday, 23 May 2011

High & well-heeled charlatans - Charmingly corporate!!

Woefully out-of-touch with the modern world, the investment industry, generally notorious for its extravagance, stubbornly clings to its silk-stocking past. For an industry laid bare, ridiculed and despised I can't help but mourn the corporate arrogance. Extravagance for the sake of extravagance wrapped, labeled and packaged as 'value-add' / good service is unfashionably vulgar.

Designer suits, shoes and bags considered costume de rigueur by HR departments for front-line investment staff, predispose an industry arrogance, thoroughly undeserved. Marbled floors and gilded ceilings exceeding appropriate levels of decorum, belie true service. Potential clients lured by 'other-worldly' decor perpetuate this visual myth. It's cheap trickery and the prelude to the conjuring spell that is Act 2 which casually introduces costumed actors draped in silk cloth posed across oak tables. They'll sprout 'house-view' or 'our analyst says' or 'informed research dictates..'  Caveat! 

I say again, don't be fooled! Resist the obvious and ask the right questions....

Tuesday, 17 May 2011

Don't be fooled!

Social media apps and Google and perhaps even the ailing traditional media networks force-feed us all sorts of 'pap / BS' each and every day. It's amusing to watch and listen to some of the 'experts' expounding / 'pounding' their knowledge on the market channels. Don't be fooled!! The 'I told you so' financial TV personality 'gurus' remind me of the 100-monkey theory I first learnt as an apprentice portfolio manager some two decades ago. In a nutshell the story goes as follows: 100 monkeys sitting in a trading room advise buy or sell. Those that are wrong are dismissed. The remainder again advise buy or sell. Those that are wrong fall out and so on until a solitary monkey remains. He / she's a genius, right? Wrong! He / she's really just a lucky monkey......

I say again. Don't be fooled and ask the right questions.  

It's your money, stupid.......  

Monday, 16 May 2011

Welcome to KSA Capital Management

Time and time again I'm approached for 'investment / trading' advice, which I give freely; in good faith. Certainly I'm not infallible, far from it, but the questions are usually restricted to specifics which are readily answered. Sadly though the crucial questions YOU, the private investor, should be asking of your broker / advisor / manager etc are never asked and this is why YOU fail.

It's your money, stupid.........