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orders readily is good practice that will make this unfamiliar activity seem more natural over time. Internet databases list expected EPS-report dates; phone the company to check.

      Tactic #2: Be nimble, or the crowd will surely trample you!

      Neither buying nor selling is a for-life decision; learn doing both as readily as ordering lunch when the situation requires. Instantaneous worldwide internet transmission of fact and opinion means the crowd takes virtually no time to move a stock’s price. To avoid consensual victimhood, you must move rapidly. Investors/traders are paid well to anticipate change, but badly for reacting with the crowd after new facts arise. Companies change, so your opinion and position must. Today’s price already reflects whatever you’ll find in print or databases; you are not the first to see it!

      Tactic #3: Gracefully and promptly accept unreasonable profits!

      Draw a line from your buy price and date to your target price and time. When fortuitous news, a major brokerage recommendation, favorable media coverage, or market euphoria shoots a stock notably above that line, sell! Not doing so means you’re now accepting a lower future return rate from today to your target

      Think opportunity cost of capital. You can always buy back. When the buying crowd swells well beyond normal that condition is unsustainable, so the stock must retreat. Understanding that, why hold on? Constantly ask if you’d buy today what you’re presently holding, at today’s price. (Holding is buying again!) What you’d not buy, you should sell.

      Tactic #4: Rid your decision process of ego’s misguiding influences!

      Overcome perfectionism: humans cannot always be right or routinely get the best price. Admitting mistakes early reduces money loss and ego pain. Resist temptations to ‘demand your money back’. Too many investors refuse to sell unless they get back every cent paid (for what has proved not a great choice). Meanwhile, many opportunities elude those ‘locked in’. Why demand getting back those last few percents in your proven laggard? Think opportunity cost, not blind loss aversion!

      Forget three irrelevant facts: what you paid for the stock (the worst mental anchor), what it sold for at its all-time high (now proven a market mistake by subsequent evidence), and its high since your purchase (a strong but often wrong goal). Stocks over-run both up and down. A high was a temporary price error, not a deserved value.

      Tactic #5: Watch the wider world for clues that a trend reversal is due.

      Not all relevant information about markets is found in the Financial Times, The Times or The Wall Street Journal. Watch humor and advertisements (whose success requires wide, understanding consensus) for signs of a bubbly, overconfident societal mindset. Cartoons, TV sitcoms, and print and electronic-media ads reflect well-established (late) trends. Do jokes feature easy riches (time to sell), or instead people leaping from bridges and windows (panic, a bottom)? When auto and holiday-trip ads refer to our market gains, time has come to hit the exits!

      Simon Cawkwell

      Simon Cawkwell (otherwise known as Evil Knievil) is Britain’s most feared bear-raider. A trained accountant, he made his name exposing the fiction that were Robert Maxwell’s accounts.

      Over the past ten years, during the greatest bull market in history, he has made money year in, year out from shorting stock - that is selling shares he does not own in order to buy them back more cheaply later.

      Books

      Profit of the Plunge, Rushmere Wynne, 1995

      Evil's Good: Book of Boasts and Other Investments, t1ps.com Ltd, 2002

      Bear Essentials: The Secrets of Forensic Accounting and Profitable Trading, t1ps.com Ltd, 2003

      Advice from a short seller

      1. Never buy shares with high valuations in relation to tangible net asset value.

      They can swan along and upwards for years but they have no cushion for the bad times.

      2. Never short-sell stocks when they are going up.

      Wait until they are going down and never hesitate to kick them down should they be so impertinent as to make an emotional appeal for help.

      3. Always treat any stockbroker who is remunerated with commission as a compulsive liar.

      4. Work on the assumption that all regulators are completely useless.

      Except, that is, at concealing their own incompetence such that the money you pay them for their ‘services’ cannot be reclaimed.

      5. Be very suspicious of all mining companies run by stockbrokers.

      But do not hesitate to buy such companies when they are new to the market. There is an infinite supply of fools to buy after you.

      6. Accept that all men always lie.

      But try to lie as little as possible.

      7. When a man says that his word is his bond . . .

      . . . take his bond.

      8. If you do not understand an investment, prepare to short it.

      There will always be a large number of gormless idiots who will have to sell after you so guaranteeing you a profit.

9. Borrow when others are not borrowing. Repay when others are not.

      Edward Chancellor

      Edward Chancellor is a financial journalist and author. After reading history at Cambridge and Oxford universities, he worked for Lazard Brothers in London. He has written freelance for a number of publications, including the Financial Times and The Economist, and is currently assistant editor at Breakingviews, the award-winning financial commentary service. He also writes for Fred Hickey's High Tech Strategist, Smithers & Co, and Grant's Interest-Rate Observer.

      Books

      Devil Take the Hindmost, MacMillan, 1999

      Crunch Time for Credit?: An Inquiry into the State of the Credit System in the United States and Great Britain, Harriman House Publishing, 2005

      Capital Account: Reports from a Contrarian Fund Manager, Texere Publishing,US, 2004

      Lessons from history

      1. ‘Put all your eggs in one basket and watch that basket!’

      This saying comes from Mark Twain, but has been applied to stock market investment more or less verbatim by both John Maynard Keynes and Warren Buffett. Modern portfolio theory suggests that one can reduce risk by diversification. However, it also suggests that the index represents the optimal portfolio, in which case one might as well purchase a tracker fund. However, most active investors would do better to concentrate their shareholdings in a limited number of companies which they feel they understand. This can actually reduce risk.

      2. ‘When the ducks quack, feed them.’

      This is an old Wall Street adage relating to initial public offerings. Investment bankers are not driven by philanthropy or even by an intellectual motivation to understand the world of finance. They are out to make money and will sell the public anything within the bounds of the law. In recent years we have seen a flood of second-rate IPOs, most of which are now trading at below their

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