Over the course of my career I have heard many market aphorisms and witnessed many self-destructive activities. I have even engaged in some occasionally myself. If you have ever wondered what types of things create a tilt moment for a trader all you need to do is listen to the reason they have the position.
These sayings are everywhere. They are designed to get you to do something based on your own greed, narcissism or desperation.
There are many expensive market memes out there, here are a few.
• Averaging down. If you are building a position this is a potentially lucrative approach. If you are compensating for a failed trade: this is dirt nap material.
• Following. This is where a guy on a hot streak provides you with his latest tip. Now, remember, he didn’t tell you the other moves he made with his hot hand, so odds are this one is going to be a loser.
• Promotion. Some promoter calls you during the day to tell you he is calling around and this thing is “gonna go”. You can be certain you aren’t the first call, and odds are he is shovelling his seed stock right into your account at a big premium. Don’t feel bad. He has lots more.
• Whispers. You buddy tells you that he heard through the grapevine that some guy is going to be a big buyer of some stock for some reason. Of course what he didn’t tell you is that the guy he heard it from lied, and the buyer actually has a monster sell order.
• Complaints. You are a market maker and the stock you are working with is thin and the character of trading changes. The IR guy complains to your firm that you aren’t doing a good job. Translation: I have an institution here with size and he needs someone to eat the position.
• Little company. If anyone starts their spiel with the words: this is an interesting little company…stop listening and banish the name from your mind. It is almost always a loser.
• My friend works at. I can’t tell you how many times I have known people in companies or closely associated with those companies that get the market call on them wrong….every time. Evaluate these messages as if they were from promoters.
• Table pounding buy. This one means? Ok I’ll tell you, it means my clients are loaded to the gills and I get an awesome bonus if you and your stupid trading hacks mark this sucker up.
• POS. This means that you didn’t do your homework and the sleazebag running the stock has filled your boots on your “support” bids. Enjoy.
• Because so and so is long. A hedge fund manager got on tv after another manager torpedoed a solar stock calling it a fraud. The thing after all got jammed for the end of years marks and it was ripe for a dressing down. The hedgies’ investment thesis was that a certain very well known fund manager was long. He made a few clams on this lame ass approach, but the stock has in fact been delisted. So if anyone says something as ridiculous as this, on tv no less…move along nothing to see here.
• It’s a ten bagger. Are you counting the “desired” outcome or the number of future punches to your overconfident scrotum?
• It’s the next… Enter the name here. Every bull cycle has this stupid comparison. Take the biggest most successful name and apply it to anything in the same sector. Or, apply it on the downside as well.
• The analyst says.. Well isn’t that great. The analyst says such and such. Like the one with a buy on Teck at the top, and goes sell at 3.50?
• A takeover target? Nice. How much are you long and where is your fucking sell order?
• The steep discount. If someone encourages you to buy a stock that is in the midst of a takeover offer and is trading at a massive discount: walk away. The discount means this thing is going lower and the deal probably won’t happen…no matter what that guy with 500 000 shares says.
• I’m going to get my money back. Oh really? Now that you have doubled down and maxed out your account? Good luck with that. If you do make it back you should be fired because the next time you will be confident and the damage will be even worse.
There are many ways for a trader to go on tilt, and the vast majority revolve around not paying attention to the motivation of others; or plain old lack of thought. Remember, every other SOB out there is reaching around to take your wallet, while you are trying to do it to them. Listen closely to the terms, the memes, the bullshit and save yourself some grief.
After all it’s not as much fun giving yourself the reach around.
What other things have you heard that have cost you dearly?
Great write up - I wish I understood half of what you said though.
Four most expensive words in the english language. "This time it's different"
What are the strategies that lead to success? i dont know much about trading ... are you just trying to make money off the spread (while simultaneously limiting exposure in either direction) or are you actually going out with a stated goal of holding certain positions?
If the second, how do you evaluate opportunities and determine what positions are attractive?
i thought it was "I want a divorce"
Cringe.
It's just a handful of things I heard and saw over the years. I take for granted some of the language/terminology i use is not always mainstream.
The most expensive words are actually something like: I'm buying at the bottom or selling at the top.
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