Being a value investor, I buy shares of growth stocks at a price below or near it’s intrinsic value. Even though I am not a trader, I believe it is important to keep an open mind and understand the insights and strategies of traders. This is because whether you like it or not, there will always be speculators and traders in the markets. Their behaviors and actions will invariably affect market performances and impact the way you make money in the markets.
In The Little Book of Market Wizards: Lesson from the Greatest Traders by Jack Schwager, I realized that there are many relevant investment principles that are useful for investors and wealth builders. For example, to be a successful trader, you need to manage your ego and develop a set of trading methodology that best suits your character. The important thing to note is that losing money is part of process and you can never win all the times. This principle is applicable to investing as well. Most traders and investors lose money in the stock market because they try to avoid losing money. On the other hand, professional traders who become rich from stock market understand that they have to take losses in order to win the game.
Another reason why average trader lose money in stock market is because they don’t have the patience to wait for the right opportunities to arise. Far too often, I have seen many financial bloggers unable to resist their temptations to trade frequently. In the book, money guru, Jim Rogers highlighted the importance of trading only when you have strong convictions to do so. I reckon many Singaporeans tend to have herd mentality when it comes to investing in shares. Many Singaporeans claimed to be “long term investors” but whenever there are any significant market movements, they threw all cautions into the wind and wanted a piece of action.
In short, the book delves into the mindset and processes of highly successful traders, providing insights that all traders should find helpful in improving their trading skills and results.
- Each chapter focuses on a specific theme essential to market success
- Describes how all market participants can benefit by incorporating the related traits, behaviors, and philosophies of the Market Wizards in their own trading
- Filled with compelling anecdotes that bring the trading messages to life, and direct quotes from the market greats that resonate with the wisdom born of experience and skill
The Little Book of Market Wizards focuses on understanding one’s self within the context of successful investing. Mastery of our emotions and characters will determine whether we will succeed in making money from the stock market.