Saturday, July 19, 2008

The Anger Amazes Me, But Proves the Point

Last weekend I wrote a little article suggesting that perception, not necessarily actuality, moves the markets. In the article I quoted -- yes, quoted, not made up or voiced my opinion -- some positive facts about the economy taken from front page articles in Investors Business Daily. At first I was stunned by some of the responses which, among other things suggested that I was "smokin crack," was an elitist who "hung out with the likes of [the President], and that my head might be "screwed on backwards" if I didn't agree with the emailer's opinions. It really makes me wonder whether these people ever learned civility and manners. I have no problem with disagreements and readily confess that I am not always right. I am, however, ashamed for those who use name calling as a way to attempt to bully others into sharing their opinions. Name calling generally seems to be an emotional approach when someone disagrees but has no reasoned basis or facts to martial in support of their position. Name calling is nothing but divisive and has no power of persuasion, nor does it make any positive contribution to a dialog.

My bottom line in last weekend's article which was directed to trading was: "...if we can gauge the perception of traders, their current psychological bent, we are more likely to be able to give ourselves an edge in our trading. In general, and in the short to mid-term, it is the psychological, not necessarily the logical, that moves markets." Another way to say it is that the markets move on emotion at least in the short term.

Well, emotion is what I saw in some of the responses. One critic even chose humiliating sexual names for the President and Vice President of the United States. No matter what your political persuasion, I believe the Office of the President deserves to be treated with respect and dignity. How in the world referring to a President of the United States as slang for female genitalia moves the ball forward is beyond me from any reasoned perspective. However, these statements are clear and unequivocal examples of emotional responses triggered by that person's perception. It isn't logical, it isn't reasoned, and it isn't a fact. It is a response founded in emotion arising from a mistaken belief that I was trying to take a political stance. The attackers' positions spewed from a perception that I disagreed with their political values. I don't smoke crack, am not an elitist friend of "the likes of [the President]," and can see my face and chest at the same time in the mirror so it is probably not screwed on backward. Those are facts, but they are the direct opposite of the perception upon which the name-callers based their writings. They emoted based upon perception, and made no apparent effort to confirm that their perceptions were based on any facts.

The emotional responses in the Blog are rarely accompanied by supporting fact. They usually seem to be shouts of opinion. The same is true of emotional trading. Traders operating on emotion buy because they "like" a company and hold a stock when the price is falling because "it'll come back." I've heard more than one trader say he is hanging onto a particular falling stock because "it has been good to me." That doesn't seem to be a particularly clever way to cut losses, for example, but it is a way people's perceptions (right or wrong) control their trading. Because they may have made money in a stock before becomes the standard. "It has been good to me before." The truth is that my opinion is essentially irrelevant as to what a stock price will do. Because I think a stock will go up doesn't make it so. As a successful trader, I need something other than emotion to trigger my entries and my exits.

That is my point about the markets. They, like our name-calling friends, tend to overreact emotionally to their perceptions. It is precisely that human phenomenon of emotional reaction to market entries and exits that often results in losses for those traders. The traders who can achieve discipline and awareness of "mob" psychology are the ones who are more likely to have gained the edge and succeed.

The hot reactors are fodder for the market professionals. Trade like the emotional name-calling writers write and the pro will get their money every time. Ready, fire, aim is the emotional approach. It is fine and natural to be aware of and perhaps even defensive about one's perceptions, but, in trading, the thoughtful approach may work a lot better. By that, I mean that I would suggest a trader examine the fundamentals of a stock to be generally aware of what and how the company is doing and, in important addition, look at the reward to risk potential, and then set a specific entry and exit strategy before entering a position. Stopping the process when we perceive that it is a good company and our opinion is the stock will go up will probably not save the day. As you can see with an approach like that, our emotions may play a part but they do not control the trade.

One personal opinion that I want to share is that I believe humanity has a better chance with civility. Often the other guy, no matter what his political affiliation, has good ideas too. If we reject someone's ideas simply because they are from a different political party (or other difference), it is we who are likely to be the fool.

Emotional decision making strikes me as something similar to an angry bull charging a man with a sword; it may be what anger prompts him to do, but it isn't very smart.

by Bill Kraft, Editor
Copyright 2008, Makin' Hay, Inc.
All Rights Reserved


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To comment on Bill's article click on the "comments" link below.

103 comments:

Anonymous said...

Thanks for your excellent articles and research! Your work is greatly appreciated, even when I disagree. Regarding your current article on emotions - you are right on the money.

Emotional traders get their head handed to the by the pro's everytime. I speak from personal experience since it happened to me as a newbie trader.

Keep up the great work!

Patrick said...

Bill,

Very well said! I find your articles excellant, eventhough I do not read them all the time. I wish I had the discipline you had. Thanks.

myrle c. whiting said...

Mr. Kraft,
Thaank you soo much for your weekly article. I look forward to it each week and always learn something, which I appreciate.
I agree with you, people should try to maintain civility and just take some deep breaths and wait a few moments before they say unkind words. I believe kindness and gratitude are the most important attitudes we can aspire to.

Your Ardent admirer

Cathy Whiting

Bill said...

Mr. Kraft,

Thank you for your eloquent response to the abusive emails. I've encounter this substitution of emotional insults for logic before. I will be forwarding your comments to the offending parties in my circle. :-) Thanks for the great rebuttal!

Thanks,
Bill

Anonymous said...

I'm not surprised by the comments that were directed to you. Since I've gotten involved with stock trading, and reading message boards, I have seen an incredible amount of crude offensive stuff. There are some very sick people involved in this stock trading world.

Anonymous said...

From you artile today it seems to show that the leftist loons are attacking civilized people again.

keep up the great articles we need to see both sides of a coin to make good decesions.
Keep Smiling Sam

Leo said...

Bill,
Bravo. Seems like current society has forgotten practices like decorum, modesty,and civility. Thanks for the courage to speak up. Regards. Leo

RDVSR said...

Don't know what happened to civility and intelligent disagreement. Perhaps the fact that people are "incognito" lets them become their worst selves.

Anonymous said...

I can't disagree with anything you have said in your article and it has been my experience in life that what you say for the most part is in fact true...the attack on your writings possibly come from the fear that these people are feeling about their lives or the state they think our country is or isn't in...what drives speculators is fear and greed and when the cycle changes they go through the emotional cycle with the change...an observation on my part. What do you think?

Anonymous said...

I copied last weeks article to read at the next union meeting, even though I suspect I'll get some of the same responses that you received.
(I am a retired Union Officer)
Wayne

Anonymous said...

You used reliably published facts to make your statement. So much reported in the media is hype, emotion, opinion without facts. Without doubt the media influences public attitudes, which in turn affect the economy which in turn affects the market. Besides all this, we need to learn gratitude for the blessings we have in this nation. Thanks, Don

Anonymous said...

Dear Bill,

I have been involved in trading for many years and had to learn the hard way. This is the second bear market I have seen and finally I understand how it all works.

I am somewhat amazed about the response to last week's article. Sadly this is a sign of our times though: Everything seems to be erratic, just like the market which after all, let's face it, only reflects human behaviour. Good trading comes from observation and not from emotional reaction. Unfortunately most people and that includes a lot of traders, even professional ones, are so immersed in their emotions that they are unaware just to what extent their subconscious is running the show. Judgement of any kind has simply no place in the markets and trading, in fact it should not be part of one's life in general.

I totally agree about showing respect; whether one agrees with the president or not, or anyone else for that matter.

All said and done our thoughts make our world, and our trading!!!

I LIKE YOUR COMMENTS VERY MUCH. THEY SHOW DEPTH OF KNOWLEDGE EXPERIENCE AND REASON!

Kind wishes

Mercedes Oestermann van Essen
(United Kingdom)

Anonymous said...

I read your column last week and thought about how many facts there are to rebut each point you made. Without criticizing, I submit that your statements were true, as far as they went, but failed to address the negatives that were equally true. I read this week's column with a chuckle or two, and I MUST agree with you that people allow far too much emotion to get into their trades, as well as their lives. Only two things govern the market; fear and greed. That may sound simplistic, but it is very rarely incorrect. Those of us who use the fear and greed of others can almost always profit from it.

Just one note regarding your comment about respecting the office of the President. The current president has acted with no respect for the office, and I find him to be the most contemptable person who ever sat in that office. He deserves no respect, from anyone.

Keep up the good work.

Bob Morton-Houston, Texas

Mike Leitner said...

Bill,
Thank-you for the calm, intelligent response to these irrational comments. In my experience, the people who approach issues in that manner have been bullies their whole lives. They refuse to take reponsibility for their actions and are always looking for someone else to blame. In many respects, I feel sorry for them. They lead miserable lives.

I receive a lot of financial-related emails each week, but MarketFN is the one I always open first because it teaches me so much. Thank-you again Bill.

markm said...

IBD writes with a political agenda. Research would show statistics about the economy that would completely refute the IBD story. Remember the words of Mark Twain, "there are lies, there are damned lies and then there are statistics".

Daniel Elizondo said...

Hello Bill,

I bought your book as soon it got released at amazon.com and I call it a door opening book... My first trading book I ever have. Next thing I knew, from your book I got many references, Before knowing it, got into the technical analysis world, proper candlestick charts interpretation, money management and so on... So yes, there is a BIG difference within those who trade emotionaly and systematicaly.

Want to share with you my frustration with average forums, which I quit visiting. They are full of uncivilized people like the one you described in your comment. People who rather call names than actually giving constructive and useful comments.

Good trade Bill.

Have a good weekend. I will get to study a DVD seminar that just got on the mail.

Respectfully

-Daniel

Jeff said...

Reading your post this week caused me to go back and read the comments to the previous post. It certainaly sounds as if a few of your readers were losing money in their trades, if they trade at all.

I've found that people are far more uncivilized in email than they would ever be in face-to-face encounters. They can sling accusations and insults without recourse. Faceless encounters allow the meek to act with bravado.

Successful traders realize that perception is always greater than reality, and the article suggested and you reinforced. Successful traders will change their bias as the market's bias changes.

Unsuccessful traders stand firmly with their realities, failing to budge with the ebb and flow of the market. Eventually they'll be proven correct in their outlook, but they lose in the short run (opportunity costs).

I wish more of those head-strong, emotional people responding to your article would trade, as they've grossly missed the mark. That would make trading for us who move with the markets much easier.

Keep up the good work.

charlie said...

Hello Bill,
I look forward to your weekend blog and we all may have a different opinion about advice ,but I welcome all opinions I get!! Don't let a few name calling people influence your advice or opinions! Keep up the great work! Thanks

Stephen M. said...

Bill:
Your response is applicable in LIFE as well as trading. The person who approaches situations with calm rational thinking and methods that are based on the best facts available rather than personal bias will statistically fair much better than the one who sticks to his bias. I am also a man of principle as I am a man of deep Christian faith. While my faith makes me a man of principle on many issues that are moral and this influences my politics, it does not require that I throw away the brain that I believe God gave me to use wisely. Humans are capable of so much intelligence and we are only using 10% of the brain we have been created with? Seems to me that we were meant to use more of it and not less of it!! At the same time we were created with emotions to enrich our lives and aren't we so glad we have them. Civility as you said comes when people can live together in a way that honors each other instead of tears each other down. It means, in part, that I accept my responsibility to control my feelings, my words, my actions, in relation to others and do my part to to help and not hurt. It is unfortunate that someone has apparently hurt these people instead of helping them and hurting is what they know. Kudos to you for responding in a helpful way.
Stephen M. Carlson

Mark Bregman said...

Bill,

I subscribe to one of your services and I very much appreciate your weekly comments. In addition to your service I also subscribe to others that take a different point of view. I do this to gather a wide range of views that can help me form my own view of the markets and trading opportunities.

Additionally, I read different newspapers and blogs and seek diverse opinions and points of view that help me form my own view of what is happening in the world.

I am trained as a physicist. In the physical world we believe that there is an objective reality and our goal is to discover it. In the human world there probably isn't a single physical reality. We each form our own and I feel that it is important to acknowledge and understand others 'realities'.

Even more than a call for civility I think there is a need for tolerance of differing views and a desire to gather as many as possible.

In the world of trading this seems to obvious (at least to me) but is even more important in the rest of life.

jeanne d said...

Dear Mr. Kraft,

I love your articles and practical advice -- especially this one on emotion.

I don't know if you are aware of it, but this article is a perfect modern-day translation of 2 Peter 2, which states that those who despise authority and speak evil of dignitaries will perish in their own corruption. I taught college mathematics for 44 years and have seen this scenario played out repeatedly.

Keep up the good work.

Jeanne D.

Donato said...

I find it rather odd that people would offer offensive remarks to last weeks postings. For me, it only gave some assurance to stick to my investing strategy . . .

About a year ago I learned what “peak oil” was. And after very little research (foolishly) put 100% of my investing dollars into energy. After some nice gains recently (maybe not so foolish after all), I’ve been moving that money into the financials.

Yeah, I’m down a bit in the financials, and expect some more turmoil to follow. But how else do you make such good money with so little work? Again, your article just gave me a bit more confidence to stay the course. My biggest problem is choosing which stock to buy that Mr. Market put on “sale” for me.

Anybody upset with your writing probably didn’t hear (or read) Buffett say “The dumbest reason in the world to buy a stock is because it’s going up.”

Anonymous said...

Well done. I hope your blocked those bozos. They obviously have nothing to say, and nothing to contribute.

Anonymous said...

mr. kraft, i am just starting out to learn about trading, your newsletters help so much, and your book, my parents taught me that if you cannot say something nice, do not say nothing! enjoy your newsletters and print them for info. keep up the good work, thanks again, bud

Raymond said...

Bill,

Unfortunately, money is a reactor for the strongest emotions. That is why we should all pay close attention to the sentiment and news hype to swing from short to long or stay in cash when the market is in a dither.

The market is a perception of peoples expectations of the future. Perceptions are not just logical. Pure quantitative logic is for amateurs. Emotional logic must also be part of the equation.

I have been long on full margin in UYG, FRE, FNM since Wednesday based on the daily action of the VIX, VXN & VXO as well as the both the price and volume action of the sector ETFs for the financials transports, SPX NYSE DOW and NASDQ and industrials. I took 50% profit on Friday and am holding the rest with an automated trailing stop for a potential long run next week.

Apologies for the boast but I have more than doubled my profit target for this year.

It never pays to stay with the herd until the end of the fence (support / resistance). Great insight.

Raymond (Canada)

Anonymous said...

You find out what a person is made of when they are squeezed (like toothpaste) consider the source. Thanks for your wisdom.

Bob R said...

You are far to defensive to write a blog. Blogs are notorious for name calling, and loud bousterous emotional responses. I am the one who wrote the opposing, factual response, confounding your frivolous quotes, about todays rosy economy. I do not name call or curse at anyone, but if I were to write a blog, I certainly would not be as defensive, and offended with opposing, harsh views. Maybe a blog with a comments section is not the best thing for you. It is not nice to be name called, but unfortunately a part of our times. When you put yourself in the public, with your opinion of how things are, and your views on the economy, trading, and world events, you should expect such harsh comments, or not write about controversial subjects.

papa_hog@higheronthehog.com said...

Bill, I have face similar harsh response for relatively benign comments in the first blog I ever wrote. So I wanted to write and let you know that your writings are very much appreciated, and that you should keep on keepin on! Let it role off like water off a duck's back. But it seem many people already beat me to it. All the coments I read were positive except for one that seemed to disagree but was civil about it. And then there was one who encourages you to quit blogging because it is commonly acceptable behavior to be vicious when ineracting with a blogger. What a shame it would be if only thick skinned people who welcomed harsh responses without getting their feelings hurt were the only ones who could or would wirte blogs! This would be like telling the birds that only certain ones should be aloud to sing! I think it is more like your other reader said.. that when people are able to write while hiding behind the veil of the internet, the meek become bold. It reminds me of my wife's little nine pound dog barking and growling at a wolf-dog that was confined behind a chain link fence! Had the fence been removed, I bet her dog would have behaved differently!

Anonymous said...

Very well put. I am proud you addressed the name calling problem directly. Name calling is inappropriate and simply a sign that one is unwilling to consider all sides of an argument to determine whether their original opinion is valid or still valid.

Best,

Maria

Anonymous said...

Hello, Bill, Do not be disturbed, you have simply received a typical comment from a Mental Midget, incompetent, Socialist, "Dumbocrap" probably part of the infestation coming to Denver in early Aug. Name call is the only way they can communicate! LEL

Anonymous said...

As usual, it looks like those who want to get into arguing instead of learning something, or presenting an interesting and intelligent statement, just can't resist using a comment response forum to make fools out of themselves. I don't know what planet people like that come from but I really don't have the time to bother with them. They will remain ignorant because they really think they already know more than anyone else. My dad told me 35 years ago that a scalded dog yells louder than anyone else. Some people just can't take the least bit of truth that exposes anything negative about their way of thinking. Looks like your simple little practical, down to earth trading comments touched a nerve. Keep up the good work. I think most everyone interested in growing profitable and learning to trade more successfully knows how much your article benefitted them. You are more tolerant than me. I would not give them any response, but I guess you responded to show others, especially younger ones, how meaningless their comments and attitudes are to being a success at anything, especially trading.

Anonymous said...

Good grief, I'm never heard such a whiner. Did you hire all these people to exault you? I read all the responses to your post you referenced. No one profaned you, no one called you names, no one insulted your parents, etc. What's the big deal. So someone jokingly said you were on crack! What's the big deal, get over it. Man, grow a little thicker skin! You write a poor me, follow up, and get all these kiss up posts, to sooth your ego. Get a real job, where your boss is barking down your throat, and you are scratching to make ends meet on a daily basis, like most of us.

Richard Burkett said...

Dear Mr Kraft,

I have a standard response to the "insult as debate" practice.

It goes like this ....

Dear Sir, or Madam (politeness cannot be overdone), I have a formula I use to determine how well thought out and reasoned a person's opinion may be.

It is simplicity itself. I merely count the number of words in defense of their position before the insults begin.

Your score was ______________. (fill in the blank, usually a very low number)

Don't be fooled by an answer like the one from "anonymous" at 9:35 last night. That score is ZERO. "Good grief. I'm (sic) never heard such a whiner." The insult BEGINS wirh "Good".

You will also note that a significant number of the zero scrores are also anonymous.

Hope this helps.

Robert said...

Comments to which you refer cause me to be saddened and ashamed of my fellow man. These actions refer to poor parentage and rearing. Why would someone subscribe to your postings if not with a desire to learn which requires something of an open mind.

Please continue as some of what you write is helpful.
Thank you,
Bob

Anonymous said...

I agree with all but two points. The first bears on "Name calling generally seems to be an emotional approach when someone disagrees but has no reasoned basis or facts to martial in support of their position. Name calling is nothing but divisive and has no power of persuasion, nor does it make any positive contribution to a dialog."

The current administration proved that name calling does have persuavie powers. It has used the technique extensively; especially in pointing out in numerous ways and on repeated occasions that "the democrats are soft on defense."

The second point is that I believe that the office of the president formerly commanded respect and dignity. However, I strongly feel that our current president has so badly trod all over the constitution that he has all but given up the right to expect to be treated with any kind of preordained "respect and dignity." And he certainly has not earned mine through his actions. Keep in mind there are those around the world who use the term "war criminals" when referring to him and his vice president. Is that better than the slang expressed by someone who may not have quite the detachment to write eloquently? I don't think so.

Anonymous said...

Dear Bill, you are right when you say that the office of the president deserves respect and dignity. The president on the other hand, has earned no respect from citizens who have been mislead, decieved, economically crippled, and in some cases killed by dishonest and even criminal action on his part, in a ruinous disrespect of the American public and the world's sense of decency. George Bush has robbed the office he holds, and the United States of America, of dignity and much more. Most Americans are ashamed of him and of his horrible reign. It will only discredit your perspective to blur the difference between the office and man who is the target of so much well earned hatred. How many more of our people must die to justify his actions? Please talk about markets not war criminals. Your loyal reader.

Anonymous said...

Bill Kraft,
Pay no heed to these irrational, insensitive fools who resorted to this dastardly name calling. I have always found your articles very interesting and instructive. Pl. continue the good work and in the mean time I'll try to act with more discipline and less emotion in my trading.
Jay

Anonymous said...

Mr. Kraft,

I apologize on behalf of the uncivilized. That's why I typically don't read blogs. Too many opinions from uneducated players that want to make the homerun today when it takes time, patience, and education. If everyone knew what was going to happen, wouldn't every American be at their favorite place with their laptops placing orders and be muti-millionaires. I have an idea to help these people just by the way I order cold cuts in odd fractions (e.g. in 1/8th's versus the common quarter, unless what I want happens to fall within a quarter).

Instead of the bizarre looks I receive, I tell them why. I can't help it, I used to trade in 32nd's, then 64th's, then 128th's, 256th's, and I am sure 512th's is right around the corner. It's not my fault I can do calculus in my head and create algorithims on the fly. I bet you can tell I was a securities trader. Treasuries, FNMA, FHLMC, GNMA's, options, whole loans, AAA to unrated classes of of bonds, derivatives, etc. I refused to trade to subprime and I refused to hold those residuals which got me fired after 16 years with a company. The derivatives I held made sense and were liquid and I marked them daily (where I could sell them at that very moment in time), I didn't use different instrument's assumptions to place a value on a cashflow that you'll never get. When asked why, that's how the market does it. Then, I went and researched it, and guess what, this new boss of mine who put another company out of business after doing the same thing by loading up their balance sheet with cashflows they never received and derivatives that were not liquid was just doing what his buddy underwriter was telling him to do. Guess what guys, I was right, but by not being a yes man got me on the list. I even told them this was going to happen.

Anyway, I know a thing or two about equities and then people start asking me about which stocks to buy. Now if I knew that, I wouldn't be at the grocery store, my assistant would be. I tell them the basics (P/E ratio, growth, diversification, companies that have cash and pay dividends, I personally use Schwab, they have easy on line classes for the average joe, and I always tell them never trust your money with anyone else but yourself. You don't have to be an expert, but at least just don't trust your broker with every pick he tells you. He doesn't get paid unless you agree to do the trade. At least having some knowledge helps and your now broker needs to do a little homework before he sells you on a stock. For example, you have to know the basics). Before I know it, I have all these people around me writing things down.

It's tough when you're at a party and people ask what you do and I just respond, I am a trader, and they still want more. I get a piece a paper and draw them simple chart of the yield curve and then say I trade these securities at a point over these places on the yield curve. Then, it all begins again, I am at the grocery store.

Well, forgive those name bashers. Markets move on a dime. I started playing again in equities after taking a brief hiatus after May's bounce when GM dipped below 11, then fnma and fhlmc but I didn't wait for the bottom, so I had to quadruple my position to dollar cost average, then I got out because of my own emotions. The only person I am calling names is myself. I still own some, but I would have made so much if I held in there. I have doubled my money on five hundred shares. It would have been nice to double money on 2,500 shares.

Bottom line - you never know and that's what these name bashers need to realize.
B.

Anonymous said...

My experience too is that our population is a lot less civil than one would expect at all levels. Deep down, a lot of it is quite possibly guilt for ignoring the Boss'es Orders i.e. God's Word.

A nation without God is a godless nation, in contrast to "Blessed is the nation who's God is the Lord".

Anonymous said...

Very well stated, Bill. I'm afraid that chronic lack of respect has "evolved" in this nation and the world will not be a better place for it. OSTK, yesterday, is another example of your thoughts on emotion. (Bet someone was cursing about that too!)
LS

Anonymous said...

its quite clear ...........some of your readers are nothing more than socialists.
b

Anonymous said...

Bill,

You are so correct about emotions! I am new as a ST trader, but all I read is recognizing what psychological effect has on volume and price. One has to recognize reality prior to dealing with anything effectively. I am a flight attendant for a major carrier and I know that if my aircraft hold 200 people, there will be 200 perceptions of reality boarding. To effectively communicate, I must determine what the passenger's perception is regardless of whether I agree it or not. To make a living trading, I must figure out how the crowd mentality is reacting so I know when to enter and exit and which direction to play it! You are right on target!

K.

Anonymous said...

rediculous how people resort to ugly just because they may not agree with you. I suggest your opposing opinions must have come on the heels of their expousing their (knowledge) for sake of ego. Ah, alas, only man likes to eat others for the some emotional whim. Thank god beasts of the field don't do the same.

keep up the good work. I enjoy your articles and find them thought provoking with much common sense. Common sense is learned, not birthed. Perhaps then, your nay sayers have not yet learned what you know. Obviously! statistics might argue that if one has the same opinion, then nationally, it is likely so of 75,000 others. So then, you have my opinion about your articles!

P.

Anonymous said...

Have you not figured it out. The Democrat must flunk economics or at least not have the intelligence to pass it in school. They do not think, they feel. Unfortunately we do not have a Republican running as a Republican this year. If you want that bunch to hear what you say, you have to emote. My God, throwing facts at them hits that part of their brains that does not deal with facts. Should Barack Hussein Obama win this year, I will have to leave Texas and move to Montana or West Virginia. Most of those people think more than they feel.
B.

Anonymous said...

Thank you Mr. Kraft for your original article and for this one. I think you drew your words from facts. I have felt that this slowdown may be driven by the media as much as anything else.
D.

Anonymous said...

I really enjoy reading your comments every week. In reply to the negative and emotional responses you received, all I can say is if it weren't for these type of people, I don't think I would be as successful in my trading as I am now. They are the ones who help me bring in the profits. Thank you.

Dan R.

Bill Kraft, MarketFN.com said...

Thanks, formerly newbie trader. We do have to guard against emotional trading if we hope to succeed.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Patrick. I believe discipline is something we can work to achieve, but it certainly isn't easy, especially where money is concerned.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Cathy. I'm glad you enjoy the articles.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Bill.
Bill Kraft

Bill Kraft, MarketFN.com said...

Well, Anonymous, I'm sure there are sick people in every endeavor, but I tend to think of it not so much as a sickness, but rather simple thoughtless incivility perhaps resulting from a lack of training or at least awareness that others may have differing points of view. Anyway, thanks for your comments.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Sam. I've had attacks from all political sides in the past. I suspect it is more a failing of training and manners than a specific political persuasion though this time it did seem to come from a distinct political bias.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Leo, I do believe a little more couth wouldn't hurt our society.
Bill Kraft

Bill Kraft, MarketFN.com said...

Well, RDVSR, you are probably right. I also suspect there is a high component of anger directed at facts that don't fall into line with the beliefs of some. It sure would be nice to return to a higher level of civility and reasoned discussion, wouldn't it?
Bill Kraft

Bill Kraft, MarketFN.com said...

Anonymous, I agree with your observations that much of the anger probably does result from fear some are feeling about their perceptions of the state of the economy and of the country. I seem to see the most intense reactions, incidentally, when I try to point out a positive and some with negative outlooks become irate when they see a fact that is contrary to their postulate. Kinda strange to me, but I suppose it is just another facet of human nature.
Bill Kraft

Bill Kraft, MarketFN.com said...

Good luck at the next union meeting, Wayne. If only it can open a reasoned dialog, eh?
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, and right on, Don.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thank you, Mercedes. We are certainly in agreement on your point that many traders just don't realize that their trades are being controlled by their emotions. Unfortunately, until they see that light and deal with it, it seems unlikely that they will enjoy trading success. I appreciate your comments.
Bill Kraft

Bill Kraft, MarketFN.com said...

Bob from Houston -- of course there are facts that are negative as well as the positive facts I set out. Part of my point was that the ones I listed were ones that have not been so well publicized. In fact, before seeing them in the article I had quoted, I was unaware of them specifically myself. I do know that there are many sides to most stories and the teller can spin depending on which facts he chooses and which he chooses to ignore. Many Presidents have failed to act with respect for their office. Extra-marital sex in the Oval Office comes to mind, for example. Whether we respect any particular President or not is our own affair. It is the *Office* of the President that is deserving of respect, not necessarily any individual who may be holding it at the moment. Thanks for writing, Bob.
Bill Kraft

Bill Kraft, MarketFN.com said...

Mike, thanks for the kind comments. We are definitely on the same page.
Bill Kraft

Bill Kraft, MarketFN.com said...

Well, markm, if you are going to dispute IBD's facts, as is your right, you need to provide facts of your own. Precisely which of the facts I quoted is not a fact? It is not enough to claim that research "would show" something when the other guys research *does show* something. Thanks for your comments.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Daniel. I'm really glad you found my book so helpful and "door opening." Trading for me has been a never-ending educational process. Good trading to you.
Bill Kraft

Bill Kraft, MarketFN.com said...

Amen, Jeff.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Charlie. I agree. I, too, welcome the thoughts of others. Whether we accept or reject those opinions, they generally supply food for thought, and even when we disagree, may shed new light on a subject.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thank you, Stephen M.
Bill Kraft

hollandmad3@yahoo.com said...

Hello Bill, Dont be sad about the bad people in the world who cant accept the truth of how the markets are run , Stocks are valued by peoples perception and how much people are willing to pay , And right now our consumers confidences are being shaken and they are either running for the exits or the experienced are holding I would short oil and call on corn futures Keep on telling the truth and let your critics be dammed

Bill Kraft, MarketFN.com said...

Thank you, Mark. Good thoughts, well written.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Jeanne D.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Donato. It's tough to pick the bottom (or the top), but I understand and appreciate your decision and reasoning.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Bud and good luck with your trading education. It never stops.
Bill Kraft

Bill Kraft, MarketFN.com said...

It doesn't sound like a boast, Raymond from Canada. It sounds like excellent trading. Congratulations and keep up the good work.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Anonymous.
Bill Kraft

Bill Kraft, MarketFN.com said...

Hi Bob R. Just because name-calling is common on blogs doesn't make it right, or smart, or mannerly, or civilized -- only common. If common is what they choose, they have defined themselves. As mothers used to say, if Johnny jumped off a bridge would you, too?
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, papa hog.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Maria.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Anonymous. We try to keep our eye on the ball, and in this forum, it is trading and the dangers associated with allowing emotions to rule in that realm.
Bill Kraft

Bill Kraft, MarketFN.com said...

Dear Anonymous who addresses me as a whiner -- glad we got over the name calling.
Bill Kraft

Bill Kraft, MarketFN.com said...

Great plan, Richard B. Thanks.
Bill Kraft

Bill Kraft, MarketFN.com said...

Bob, your question about why one would subscribe if they didn't like the blog or weren't interested in learning about trading puzzles me, too. I'm guessing there must be some need to hide behind anonymity and get emotions released. Who knows.
Bill Kraft

Bill Kraft, MarketFN.com said...

Anonymous with the political tirade against the current administration, please take it to a political blog and let's try to address trading issues here.
Bill Kraft

Bill Kraft, MarketFN.com said...

Hi Loyal Reader. Thanks for the email. It was a subscriber, not I who brought up the President and used sexual connotations to describe him. That is what led me to talk about the *Presidency*, NOT THE PRESIDENT!!! Everyone, including you, has their own opinion to which they are entitled, and you are right, this is not a political forum. It is for trading. For those who want to argue politics, please take it to an appropriate forum.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Jay. I think we become better traders as we remove emotion.
Bill Kraft

Bill Kraft, MarketFN.com said...

Interesting contribution, B. Thanks for writing.
Bill Kraft

Bill Kraft, MarketFN.com said...

Clearly, LS, we can't please them all. As long as folks consider the issue of emotion in their own trading, the articles served their purpose.
Bill Kraft

Bill Kraft, MarketFN.com said...

Wow, K, a bullseye in my estimation. Understanding the crowd's perception can help us be much better traders.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, P. Glad you like the articles.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks for writing, D. One thing we know for sure is that there are some good things going on as well as bad. Maybe it is just that the bad makes for more interesting news.
Bill Kraft

Bill Kraft, MarketFN.com said...
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Bill Kraft, MarketFN.com said...

Dan R, you are right on the money. I have to be thankful in my life for the emotional traders, too.
Bill Kraft

Bill Kraft, MarketFN.com said...

Sounds like good advice hollandmad. Thanks.
Bill Kraft

KEN said...

Dear Mr. Kraft,
I am a fairly recent subscriber to your market FN weekend newsletter email. I have not posted on your blog before, and frankly do not get involved in the blogging world for the reasons you so eloquently pointed out in this week's letter. I have often been criticized with demeaning comments when I have stated that the world would be a much better place if only people would show a little more courtesy towards one another.
I believe it is parents today who do not take enough time to teach their children to respect others with the common courtesy that was once taken for granted in this great country of ours.
I am very appreciative of the knowledge that you hand out freely to the lesser educated investors and I have the utmost esteem for your work. Your book, Trade your way to wealth, has opened up a whole new world of risk management in my investing and has saved me from making silly mistakes and taught me how to manage my money better than I ever have before.
Please be aware that you are truly respected throughout the mature serious investing community and do not let a few misguided souls deter you from your good work.

Brian said...

My impression is that as a letter writer you seem to be on board with many other letter writers who consistently beat an optimistic tone no matter what the market environment. Projections like this are always to the upside and when you can't write about how far the market is going to go up you find some other optimistic shall we say useless stuff write about , ala your last letter.

What I was saying as I was reading your letter was "that's all great" but how does that help me trade now? It doesn't really unless you're telling me how to spot stocks that are going to make the next big move (i.e. relative strength concepts) which you aren't so it's all useless to me and it smacks of the same mindless optimism that so many letter writers have. That's where I think part of people's anger is coming from. It's disgusting to me too but hilarious at the same time. I subscribe to several letters and most are either always calling for the bottom each week or a couple months ago calling for ridiculous projections that never materialized (i.e. SP 1500). And what's really maddening is that at some point they're bound to be right and they'll start pounding their chest about what a great call they made. That's the BS. And I would imagine there is already enough BS in the markets now for most people to have to deal with let alone even more.

I don't know what you were telling your subscribers a month or so ago but I would venture to guess it wasn't even a cautious tone because so far as I can tell you are a perpetual bull regardless of what the market actually does. And that doesn't take much skill.

Bill Kraft, MarketFN.com said...

Ken, you are very kind and I appreciate your email. I think we as a nation have become too concerned with "I" and our own self esteem and have forgotten that the other guy deserves respect as well (until proven otherwise). Thanks for writing and I am happy you found the book helpful.
Bill Kraft

Bill Kraft, MarketFN.com said...

Hi Brian, and thanks for writing.

As subscribers to my services well know, I have not "beat an optimistic tone" about the market, but, rather, warned of the coming bear market before it arrived and continued caution in my weekly summaries to them. The fact is, I have been bearish for months. It would be better to know what you are talking about before you make false accusations.

If you believe that it is useless to realize that emotional trading makes for bad trading and that steps need not be taken to attempt to improve trading with the use of discipline, you simply should not be trading - period. The point I was trying to make and which I evidently did not get across to you was that things are not ALL bad. That doesn't mean they are all rosy either. Believe it or not, there are shades of gray. Emotional traders don't seem to see that and their perceptions can lead them to a path of ruin. Successful trading is not just about spotting stocks as you suggest it is, but rather it is about a plan, risk management, exit strategy and reward to risk ratios.

Since my articles are useless to you I apologize for wasting your time and suggest you just stop reading them. That would probably make both of us happier. After all, I only became a multi-millionaire as a trader, what could you possibly learn from me?
Bill Kraft

Anonymous said...

Bill Kraft,

Don't let some of these negative comments from irate people bother you. Many people have been hurt in this downturn of the economy and many others are pessimists and see a glass that is half empty. You on the other hand see a glass that is half full. Like Jim Cramer says, "there's a bull market somewhere." Besides, life is too short for us too dwell too long on the bad stuff. It's also very easy for people to vent against someone they don't know who has an Internet site. So don't take it to heart...some people can be downright ornery and nasty, but most of us appreciate your logical non-emotional approach to the markets and trading.

C/ya & God bless............................ Joe :-)

Bill Kraft, MarketFN.com said...

Thanks, Joe, I appreciate the encouragement. I really don't take the negativism to heart; I just would like to see people treat each other with more dignity and respect. I know I am doing very well and most who engage in the name-calling and ill-mannered behavior are not. I feel sorry for them and would only hope they are not treated as they treat others.
Bill Kraft

Alexander said...

Mr. Kraft,
I enjoy reading your newsletter and am happy to be a subscriber. This article made me think of an article I read in Business Week a while back about how the great master Mr. Buffet picks his positions. I was surprised to see that his decisions were not supported by the Gordon Model, or CAPM, or some other complicated financial formula; instead he simply read to companies annual report. I think the average investor simply does not devote the time and effort to understanding the organizations they are investing in. Instead of devoting the time to doing our homework we rely on hope and then emotion gets involved because we have no one but ourselves to blame for our poor investments. Reading annual reports is not very exciting, but I prefer it to getting blindsided by a poor decision.

Anonymous said...

As an unemotional reader, tell the "emotional" person to move to Venezuelathen he/she could be in total agreement with the government

Bill Kraft, MarketFN.com said...

Hi Alexander. It is important to do some work when investing, isn't it? It seems that a lot of losing traders play the market like a lottery and "hope" to make a fortune. In the trading community, hope rhymes with dope. Thanks for your insight.
Bill Kraft

Anonymous said...

Friend,

I did pass on your comments last week. I must say that I found the comments interesting and encouraging. There are many things to be thankful about, even in the state of Michigan- where unemployment and daily manufacturing news has been volatile and to say the least entirely disruptive towards a hopeful mindset.

Bottom line is “We” got ourselves into this mess, and “I” must do my part to help alleviate my portion of the mess that is attributable to me!
Not to many people are willing to share in that perspective, and it’s part of the problem facing our nation- that is called responsibility.

Keep up the good work.

John

Bill Kraft, MarketFN.com said...

Thanks, John.
Bill Kraft

Neil said...

Bill... I agree with you and applaud your article.

This may be political, but I will share a thought that I believe aligns with yours:

Everyone makes mistakes - no one is always right - If you have an advisor who thinks they have all the answers, run for the door. Beyond that, if we could work out a way for congress (members of each party) to have to vote for a minimum % (say 20%) of the other parties bills which are introduced, then maybe they could vote for the other parties best ideas to meet their minimum % requirement and lo and behold, maybe, just maybe, our congress could accomplish something worthwhile.

It is a shame that people hide behind the anonymity of the computer and can not have the common courtesy of decent manners.

I appreciate your weekly articles. Keep up the good work.

Regards,

Neil J. Coisman

Bill Kraft, MarketFN.com said...

Thanks, Neil.
Bill Kraft