I recently was asked what this blog is about. Call it a gateway to successful investing in the stock market. Here you should gain greater certainty about opportunity and risk ... and whether you should be in the market or out ... or, if you prefer, long or short.
One of the key discoveries made by legendary early-20th century trader, Jesse Livermore, led to his understanding the importance of the market's trend. Having this power of discernment, he found, took his gift for reading the ticker tape to a level where profits were both richer and more certain.
Being long when the market was slated to rise, and short when the market was slated to fall, he found greater frequency when he could confidently let profits ride.
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Let's face it. Some things never change. Long ago, even King Solomon realized, "there is nothing new under the sun."
Jesse Livermore put it this way...
"I learned early ... 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 to-day has happened before and will happen again. I've never forgotten that." —Reminiscences of a Stock Operator
Greed and fear ... the sway of social circumstances ... simply are timeless elements affecting every generation's stock market investments. This fact is as plain as the sun's rising and setting.
Money subtly causes people to act in common. So, just how investor mass behavior appears inclined at any given moment can be priceless knowledge, indeed.
What's to know?
Maybe you believe stock market investing is just an exercise in random chaos. No doubt, I will be the first to admit the impossibility of knowing all things.
However, the big picture is by no means illusive. There are ways to reasonably assess probabilities in the stock market at large. On this count I find the Elliott Wave Principle provides a most useful analytical foundation.
Supplementing this, I look at a select cadre of underlying technical measures. These help me gauge probabilities within the framework of my Elliott Wave analysis.
All this guides my commentary. My objective simply is getting down to the message of the market. I avoid diving too deeply into technical formulations whose value has evolved over my past 20+ years at this game. Instead, I develop my perspective in a thoughtful way you should find relatively easy to grasp.
I strive to keep an open mind. Truly, nothing is set in stone. Time's progress serves to either support or refute any forecast. So, as technical evidence develops, I put it to the test. That's what the Risk Averse Alert is about.
Will tomorrow be a sunny day or is rain in the forecast?
Do you believe weather forecasts are useful? Do you see how, despite all the variables involved, "predicting" the weather still is possible? Notwithstanding inaccuracies, some useful insight is gained.
The weather and mass behavior share something in common, too. Both in fact are natural phenomena.
Again, "... there is nothing new in Wall Street, ... speculation is as old as the hills, ... whatever happens in the stock market to-day has happened before." That's because the stock market is not so much about the fortunes of publicly traded companies, but rather it is about the fortunes of those who invest in them.
Just as a meteorologist achieves "accuracy" employing forecasting models, Elliott Wave analysis simply raises power to assess probabilities in the stock market. This requires a degree of flexibility, of course. However, at any given time possibilities are finite. Thus, probabilities can be effectively weighed.
Are stocks being accumulated in a healthy, self-sustaining manner ... setting up conditions typically delivering investors incredible, long-term profits?
Or are strong hands trimming their holdings ... because in the big picture some new circumstance is changing the game — elevating risk — threatening a climate likely to bring steep losses to the bulk of ill-informed investors who make up the majority?
These are questions any serious long-term player should be able to answer with some reasonable degree of clarity. That's what I aim to deliver.
The Risk Averse Alert puts to practice timeless wisdom:
"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."
—Reminiscences of a Stock Operator
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"Speculation is far too exciting. Most people who speculate hound the brokerage offices... the ticker is always on their minds. They are so engrossed with the minor ups and downs, they miss the big movements."
There is no doubt about it. The big movements in the stock market lasting months and years make millionaires of patient investors. And then sometimes fast moves lasting weeks can turn stakes as little as $500 into sums upward of $100K.
Now, of course, there are many different investment vehicles. Yet if you believe as I do that, as goes the stock market, so go 90% of all stocks that make up the stock market, then being on the right side of the trade — bullish or bearish — is half the battle.
Truth is even typically speculative financial instruments meet moments when their trading is a relatively low-risk proposition. Your challenge, then, simply is knowing when to say when. So, get inside the alert center.
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Are you risk averse?
Warren Buffett says, "Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market."
Far better, I think, is to know when the risk of suffering a crushing loss is elevated.
This is easier to do than you might think!
Discover how. Yours is power to be gained making smarter investment decisions for years to come. This power is yours free. Simply e-mail...
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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.
Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.
Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.
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