Monday, August 31, 2009
Born in Acton, Massachusetts, Jesse Livermore started his trading career at the age of fifteen. He ran away from home with his mother's blessing to escape a life of farming his father wished him to have. He then began his career by posting stock quotes at the Paine Webber brokerage in Boston.
While working, he would write down certain hunches he had about future market prices, which he would check for accuracy later. A friend convinced him to put his first actual money on the market by making a bet at a bucket shop, a type of gambling establishment that took bets on stock prices but did not actually buy or sell the stock.
By the age of fifteen, he had earned profits of over $1000 (which equates to about $20,000 today). In the next several years, he continued betting at the bucket shops. He was eventually banned from most bucket shops for winning too much money from them. He then moved to New York City and devoted his energies towards trading in legitimate markets. This change would lead him to devise a new set of rules to trade the marDuring his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly.
.Livermore sometimes did not follow his own rules strictly. He claimed that his lack of adherence to his own rules was the main reason for his losses after making his 1907 and 1929 fortunes.
The popular book Reminiscences of a Stock Operator, by Edwin Lefevre, reflects many of those lessons. Livermore himself wrote a less widely read book, "How to trade in stocks; the Livermore formula for combining time element and price". It was published in 1940, the same year he committed suicide.
Livermore first became famous after the Panic of 1907, when he short sold the market as it crashed. He noticed conditions where a lack of capital existed to buy stock. Accordingly, he predicted that there would be a sharp drop in prices when many speculators were simultaneously forced to sell by margin calls and a lack of credit. With the lack of capital, there would be no buyers in sight to absorb the sold stock, further driving down prices. After the crash and its aftermath, he was worth $3 million.
He proceeded to lose 90% of that 1907 fortune on a blown cotton trade. He violated many of his key rules; he listened to another person's advice (he preferred working alone) and added to a losing position. He continued losing money in the flat markets from 1908-1912. He was $1 million in debt and declared bankruptcy. He proceeded to regain his fortune and repay his creditors during the World War I bull market and resulting downtrend.
He owned a series of mansions around the world, each fully staffed with servants, a fleet of limousines, and a steel-hulled yacht for trips to Europe. He married Dorothy, a beautiful Ziegfeld Follies showgirl when he was about 40 years old.
Livermore continued to make money in the bull markets of the 1920s. In 1929, he noticed market conditions similar to that of the 1907 market. He began shorting various stocks and adding to his positions and they kept declining in price. When just about everyone in the markets lost money in the Wall Street crash of 1929, Livermore was worth $100 million after his short-selling profits.
Friday, August 28, 2009
Paulson & Co., Inc. had assets under management (as of June 1, 2007) of $12.5 billion (95% from institutions), which leapt to $36 billion as of November 2008 Under his direction, Paulson & Co has capitalized on the problems in the foreclosure and mortgage backed securities (MBS) markets. In 2008 he decided to start a new fund that would capitalize on Wall Street's capital problems by lending money to investment banks and other hedge funds currently feeling the pressure of the more than $345 billion of write downs resulting from under-performing assets linked to the housing market.
John Paulson is not related to former Goldman Sachs CEO and U.S. Treasury Secretary Hank Paulson. A September 26, 2008 Wall Street Journal opinion written by John Paulson suggested an alternative to the Treasury Secretary's plan for stabilizing the markets.
In September 2008, Paulson has bet against four of the five biggest British bank. His positions included a £350m bet against shares in Barclays; £292m against Royal Bank of Scotland; and £260m against Lloyds TSB. He eventually booked a profit of as much as £280m after reducing its short position in RBS in January 2009. Paulson & Co., the hedge fund run by billionaire John Paulson, may have lost out on about 218 million pounds in profit after failing to close a short position in Barclays. On August 12, 2009, Paulson purchased 2 million shares of Goldman Sachs as well as 35 million shares in Regions Financial.
In this year's Forbes ranking of global billionaires, Paulson is number 76 with an estimated $6 billion. He had a net worth of $300 million at the beginning of 2007.
hedge-fund manager John Paulson has been quietly buying shares of troubled banking giant Citigroup Inc. (C 5.25, +0.20, +3.95%) in recent weeks, the New York Post reported Thursday. Paulson has acquired about a 2% stake in Citi.
Wednesday, August 26, 2009
James Harris "Jim" Simons is a mathematician, academic, trader, and philanthropist.
For over two decades, Simons' Renaissance Technologies' hedge funds, which trade in markets around the world, have employed complex mathematical models to analyze and execute trades—many of them automated. Renaissance uses computer-based models to predict price changes in easily-traded financial instruments. These models are based on analyzing as much data as can be gathered, then looking for non-random movements to make predictions.
In 1982, Simons founded Renaissance Technologies Corporation, a private investment firm based in
Simons lives with his wife in
In 1976, Simons won the American Mathematical Society's Oswald Veblen Prize in Geometry, for work that involved a recasting of the subject of area minimizing multi-dimensional surfaces and characteristic forms..
In 1978, he left academia to run an investment fund that traded in commodities and financial instruments on a discretionary basis.
Renaissance employs many specialists with non-financial backgrounds, including mathematicians, physicists and statisticians. The firm's latest fund, the Renaissance Institutional Equities Fund (RIEF), is designed to handle upwards of $100 billion. RIEF has historically trailed the firm's more well-known Medallion fund, a separate fund that only contains the personal money of the firm's executives
In 2006 Simons was named Financial Engineer of the Year by the International Association of Financial Engineers. In 2007 he was estimated to have personally earned $1.7bn.
In a statement released to shareholders, the fund announced it had sustained losses of up to 7% in the wake of the 2007 Subprime mortgage financial crisis but managed to end the month of August with a positive performance of +0.7%
Tuesday, August 18, 2009
Monday, August 17, 2009
Sunday, August 16, 2009
Saturday, August 8, 2009
No one can predict what the market will do the next . One can access the available market information and make informed projections. In some cases, there will be many possible price movements the market may make. In other cases, the market almost must move in one direction.These are the trades that we search out. we prefer to enter let the market move in our direction
and exit. Be aware, however, that the market will do whatever it wants! No market analysis in infallible. if you think it moves side ways stay in a position and give it a few seconds. if it goes against you double your average positive trade it's a clear sign to exit and move ahead.
Thursday, August 6, 2009
i was back to trading today
more races than usual and
a pleasing result.
it's really all about maintaining
your capital first and not getting
carried to high losses
take care of your losses early
and profits from positive trades
will add up slowly.
all in all another positive day