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Kindle Notes & Highlights
by
Gunther Max
Read between
April 9 - April 10, 2015
Always play for meaningful stakes
The only way to beat the system is to play for meaningful stakes. This doesn’t mean you should bet amounts whose loss would bankrupt you.
Resist the allure of diversification
The fact is that diversification, while reducing your risks, reduces by the same degree any hope you may have of getting rich.
Always take your profit too soon.
by reducing your greed, you improve your chances of getting rich.
Always bet on the short and modest. Don’t let greed get you. When you have a good profit, cash out and walk away.
Don’t ever try to squeeze the last possible dollar from a set.
Since you can’t see the peak, you must assume it is close rather than far.
Take your profit and get out.
Decide in advance what gain you want from a venture, and when you get it, get out
But most of the time you will be required to call your own endings.
An ending is a time when you withdraw, breathe a sigh of relief, and briefly relax.
You think, “Okay, it’s over. I’ve done what I set out to do. I’ve won my medal. I’ll sit here a while and enjoy it”. Or you think: “Well, all right, I lost, but it’s ended. I’ll rest, and think, and plan. And tomorrow I’ll race again.” Either way, you have come to an ending.
Decide where the finish line is before you start the race.
When you reach a previously decided-upon ending position, cash out and walk away.
When the ship starts to sink, don’t pray. Jump.
“Getting stuck in a losing venture is the worst money pain there is”,
In all cases, the idea is to cut losses early. You take small losses to protect yourself from big ones.
Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.
Ideally we should welcome our small losses, since they protect us from large losses.
Get in the habit of taking small losses. If a venture doesn’t work out, walk away and try something else. Don’t sit on a sinking ship. Don’t get trapped.
The successful speculator bases no moves on what supposedly will happen but reacts instead to what does happen.
Design your speculative program on the basis of quick reactions to events that you can actually see developing in the present.
The truth is that the world of money is a world of patternless disorder, utter chaos. Patterns seem to appear in it from time to time, as do patterns in a cloudy sky or in the froth at the edge of the ocean. But they are ephemeral.
The Axioms not only acknowledge it but are built on the basic assumption that luck is the most powerful single factor in speculative success or failure.
The truth is that the price of a stock, or anything else you buy in hope of making a profit, will rise if you are lucky.
The market does what it does. It makes no predictions and offers no promises. It just is.
“Okay, I’ve done my homework as well as I know how. I think this bet can pay off for me. But since I cannot see or control all the random events that will affect what happens to my money, I know that the chance of my being wrong is large. Therefore I will stay light on my feet, ready to jump this way or that when whatever is going to happen happens.”
Never hesitate to abandon a venture if something more attractive comes into view
Never get attached to things, only to people. Getting attached to things decreases your mobility, the capacity to move fast when the need arises.
If you have a good reason to believe a faster payoff is possible in Hey Wow, why not make the switch? It’s the same money no matter where it’s invested.
Never get rooted in an investment because of the feeling that it “owes” you something – or, just as bad, the feeling that you “owe” it enough time to show what it can do. If it isn’t going anywhere and you see something better, change trains.
When a hunch hits you, the first thing to do is ask whether a big enough library of data could exist in your mind to have generated that hunch.
My personal rule is to be highly skeptical anytime I have a hunch that something I want to happen will happen.
By contrast, I’m much more inclined to trust an intuition pointing to some outcome I don’t want.
It is unlikely that God’s plan for the universe includes making you rich.
God may do much for you, but one thing He plainly isn’t concerned about is the size of your bank account. That’s your problem. Yours alone.
random events crash around blindly, hurting some, enriching others, and not caring which is which.
Optimism means expecting the best, but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic.
The pro doesn’t have optimism. What he has is confidence. Confidence springs from the constructive use of pessimism.
Confidence comes not from expecting the best, but from knowing how you will handle the worst.
But Sam and Judy made one fundamental mistake. They weren’t pessimistic enough. They didn’t ask how they would save themselves if the cards fell against them.
Knowing how you will handle the worst: that is confidence.
And so Sam and Judy walked into a venture with no exit.
Before committing your money to a venture, ask how you will save yourself if things go wrong. Once you have that clearly worked out, you’ve got something better than optimism. You’ve got confidence.
The trick, he said over and over again in any number of contexts, is to disregard what everybody tells you until you have thought it through for yourself.
How can an investment medium ‘owe’ you money? A person can owe you.
if you lose money on a precious metal or a work of art, it is illogical to personify the investment medium with thoughts about ‘owing’. Not only is it illogical, but it can lead you into the chasing kind of behavior that is likely to cost you still more money.
You lose some money on Sears stock, let’s say. Of course you want to gain the money back. But why does the gain have to come from Sears?
