Thursday, March 13, 2014

Market Wisdoms - Dennis Gartman

1. Trade like a mercenary guerrilla. We must fight on the winning side and be willing to change sides readily when one side has gained the upper hand.

(Don't get fixated which we are guilty most of the time)

2. Capital comes in two varieties: Mental and that which is in your pocket or account. Of the two types of capital, the mental is the more important and expensive of the two.

(Mental recovery is longer than financial recovery)

3. In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral. That may seem self-evident; it is not, and it is a lesson learned too late by far too many.

(Theory versus Reality)

4. "Markets can remain illogical longer than you or I can remain solvent," according to our good friend, Dr. A. Gary Shilling. Illogic often reigns and markets are enormously inefficient despite what the academics believe.

(Illogical and Irrational is how we describe financial markets)

5. To trade successfully, think like a fundamentalist; trade like a technician. It is imperative that we understand the fundamentals driving a trade, but also that we understand the market's technicals. When we do, then, and only then, can we or should we, trade.

(Common sense and trend)

6. Keep your technical systems simple. Complicated systems breed confusion; simplicity breeds elegance.

(Rocket science is not proof of profitability)

7. An understanding of mass psychology is often more important than an understanding of economics. Markets are driven by human beings making human errors and also making super-human insights.

(Not all quantitative economics can explain human behavior)

8. The market is the sum total of the wisdom ... and the ignorance...of all of those who deal in it; and we dare not argue with the market's wisdom. If we learn nothing more than this we've learned much indeed.

(Who can fight the market?)

9. Do more of that which is working and less of that which is not: If a market is strong, buy more; if a market is weak, sell more.

(If you avoid doing what is wrong, rights will take care of your profits)

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