Saturday, December 06, 2008

More on Being Careful About to Whom You Listen

Last weekend an anonymous subscriber wrote a caution on the blog in which he noted: "Not to be a cinic [sic], rather a realist, please recognize these blogs are solely published to drum up business for their paid advisory trading subscriptions, books, seminars or a variety or of other sales pitches. Although there are often some merits to what they say, they are not written with YOUR best interests, rather the authors [sic] bussiness [sic] interests. Always be careful and cautious over ANY single persons [sic] opinions and questions [sic] their motives."

First, I want to say that of course one of the reasons I write these articles is to encourage sales of our subscription services and of my books. I have never made any pretense otherwise. However, I do agree, in general with the subscriber's message that all of us need to be careful to understand the motive of people who may be offering opinions and advice. One wonders, for example, why the quoted subscriber felt the need to offer his opinion and advice. What ox may he have to gore? We should always look to motive, his as well. Certainly one of my motives is to sell subscriptions and books but that doesn't mean that the information in the articles may not have value to the reader.

The part of his statement with which I do disagree in my own case is the writer's statement that articles are not written with your best interests in mind. The fact is that I do try to write these articles with your interests in mind as well as my own. That is why I write about strategies for various markets (like selling short), money management, business plans, education, and methods by which a trader can reduce risk (like stops and protective puts), all subjects treated in these articles. It seems like those types of articles are to the readers' advantage as well as to mine when folks decide to subscribe, retain me for a coaching session, or buy my book. There is no reason why we both can't get a benefit. In fact, I think things are always better when a situation is win/win rather than when I win, you lose or you win, I lose.

The fellow does make an important point, however. All of us need to be careful when deciding to whom we should listen. I have written on the subject before and I believe it is critically important. As an illustration, a year ago, I was invited to participate in an investment group engaged in lending money. One of the proposed borrowers was a builder in trouble. He had a number of lots but was not offering them as security since they were already pledged elsewhere. After the builder had made his pitch and was excused, one of our group confidently made two statements, to wit: 1. the housing crisis will be over in a year to a year and a half and 2. none of us should be involved if he can't afford to lose $200,000 (the pro rata amount to be loaned by each member of our group). I immediately knew two things: 1. the fellow didn't know what he was talking about because no one could possibly know when the housing crisis would end -- witness the fact it is now past a year and the crisis continues and 2. I did not want to be involved where the group mentality was that it would be OK to lose $200,000. My idea is to cut losses, not just to know I could afford to lose a specific amount and this deal had no cut loss.

All too many investors listen to the wrong people. I once had a trading teacher who said if you want to make $100,000 a year trading, you should be talking to people who are making $100,000 a year trading, not to Uncle Joe who lost his shirt in the market last year. So many investors listen to the wrong people. They may listen to someone at work or to a tip from a fishing buddy in making their trading decisions. That may be OK if the friend has a valid basis for the information, but often they don't. My suggestion is to make the effort to learn investing and trading so that you have a basis upon which to evaluate Uncle Joe's advice or the tip from the fellow at work. Indeed, that may require that you be a serious student. You may even want to go to a seminar or buy a book (maybe even mine). Failing to make the effort can entail a much greater cost. Imagine refusing to go to college or going to college but refusing to buy the texts because the college charges tuition or because the textbook publishers are trying to make money selling the books. While their motive may involve profit, it doesn't mean they are out to get you. Cynicism and paranoia are close cousins. Be cynical when evaluating sources, but avoid paranoia.

I know the readers aren't stupid. You know that I would like you to buy my book or subscribe to my service. What is also important for you to know is that if you don't, it is still OK with me. Trading has been good to me. I am happy to give some back even if that is my only reward for writing the articles in the Newsletter. Not everyone is trying to scam you. Of course, as the subscriber suggested some are. Let me suggest that with the use of common sense you can figure out who is and who isn't.

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.

31 comments:

Anonymous said...

Reminds me of a comment my Dad once made regarding advice on golf: "Amatures teach amatures how to play like amatures."

Anonymous said...

I just started trading in the market at the end of Sept of this year. With no background in the stock market or MBA (my degress are in Psychology). However, I alway take everything I read with a grain of salt, research it and then see how it may or may not apply to my situation. So far I am making great money, learning alot and have been able to apply that info to my personal goals in the stock market. I have to say that so far I have found Bill Kraft's info to be very valuable and I have just ordered one of his books from Amazon. If he is making a profit, so what? I am making a bigger profit from his advise! Like Bill said, you have to be able to screen thru all the advise givers out there (And there are lots, my mail box gets overloaded with e-newsletters) but I screen the advise carefully and move accordingly. So far, Bill has been right on. Thanks Bill!!

Dario said...

Hi Bill,

Everyone can decide if the advice is sensible and reasonable.
In my particular has helped me learn the strategies and then implement them and evaluate them myself. That is something that very few do. The idea is not to follow the advice crop, but should be tested and adapted to our personality and idiosyncrasy.

If the advice is to make money, because you do not pay for? I remember that "there is no free lunch."

Anyway Bill, I must make a constructive criticism. You put too much emphasis on conservative and defensive strategies. Ok, you already have pockets full and you have no need to take risks.

But ... returns over time ago, when you start with the trading and failure was not an option. Start with 50,000 and turn them into several millions requires aggressive strategies.

Returns time ago, and tries to capture these moments and transmitted the strategies that make the difference.

I imagine that you're not going to tell me that you've achieved this by making collars?

Thanks

Dario

Sam Stote said...

HI Bill,
You have me hooked by your straight takling, I just ordered your book. Thanks

F said...

Must be good money in writing market letters?

Anonymous said...

Quote: "What ox may he have to gore?" (end quote)


Perhaps he was gored?
Not by you, but by one or more others?

I'm reading your book, and I have never sensed any dishonesty on your part in these email newsletters.

I have found the free newsletters useful.

But I can't say that about many I have seen.

D. Williamson, D.C.

Anonymous said...

"Too conservative?" I have to post about that comment....I have no idea how long most of you have been trading. I am first an investor (25 years) and then learned trading (3 years)....If I had not had "conservative" advice to protect capital I'd be broke now. I have had success in buy/hold for years but as any trader knows, the strategy must change to shift with the market. being careful, "conservative," and protecting capital in this volatile environment are the tools that will keep you in the game. Risk is a necessary tool too, but when the market does v-shaped reversals every three minutes I am not good at playing in a casino....Thank you Bill for your sound, always steady advice. And yes, I hope you have made a ton on your book....I'm also a writer. Good trading to all.

Linda

George Franco said...

Dear Bill,
As a 70 year old new investor your articles in the newsletter have been factual, insightful and direct. Ignore the few critics...you are doing we new kids on the block ,a great service. Happy Holidays!!

Dario said...

Hey Linda... What? buy/hold? Rightly so you need protection.

Try the directional trading. Clearly, for this you need to know that the market is going to do. It's hard to know, but this does not imply that making a Collar is a way to succeed.

Calm down, breathe and think that we all have a say and to think differently. Even if you believe have had success with buy / hold.

papa_hog said...

I hae been faithfully reasing Bill's free newsletter for well over a year. he has never tried to "get" me. In fact, if you read beneath the surface, you will see evidence that Bill is man of integrity. Of course he hopes to sell books, etc. Who among us would write one for free? I teach high school math, but if I were not paid for the service it would not take long for me to clean out my desk and move on! I did buy one of Bill's books, and had faithully followed is advice on haveing an exit plan and sticking to it, I would have about twice the funds that I do now.

In fact, I am doing a study of one such strategy applied along with a fundamental screening sytem first, and the results, though not yet finished look extremely promising.

Keep on keepin on Bill!

Anonymous said...

The great thing with the internet and computers {DELETE} key, spam folders and personal choice.

I read Bill's Newsletters find value in them. Bought the book "TRADE YOUR WAY to WEALTH". I found value in the book. Glad I bought it and read it.

Great job Bill on the book and the newsletter. GOOD STUFF HERE.

Did someone complain about a Free newsletter, why?

Gemma Star said...

I have found that some people give good advice, albeit free, and others do not. Some charge for poor advice.

Bill's advice is consistently sound, reasoned and thoughtful. I look forward to reading what he has to say every week.

~ GemmaStar


PS: I have Bill's book on order and am grateful that he wrote it.

I haven't subscribed to the newsletter yet. I don't have the time to focus on something new right now, otherwise I would be a subscriber, Indeed, I will be a subscriber -- just not yet.

leveragedlady said...

Good article, Bill. Your readers may want to go to www.stockgumshoe.com, where the ads for all the investment services are "demystified"- for free. It's a great website. I used to wonder what stock was being teased, or method of investment, but no more. In the meantime, you are absolutely right-you have to learn to earn. Keep up the good work. Your book was well worth the small investment in it. The importance of making a plan, and sticking to it, helped me a great deal. When I didn't do that, I got burned. So, keep up the good work, Bill. Sincerely, E. Stein

Bill Kraft, MarketFN.com said...

To Anonymous who refers to his Dad's thoughts on advice on golf. We also need to remember that Ben Hogan, Jack Nicklaus, Arnold Palmer and Tiger Woods have all written books on playing golf. Their advice is probably worthwhile. I can assure you that my advice on golf falls into the category your Dad warned against.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thank you Anonymous with training in psychology. I am personally convinced that training in psychology may be an even better background for traders than a background in finance. Witness Dr. Alexander Elder and his extremely useful books. Dr. Elder was trained as a psychiatrist and has become a very successful trader as well as author. After all, it is people who trade.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Dario. You are right, I have definitely used aggressive strategies and they have taught me the dangers of risk. I am sure you will be surprised to hear that I have done well with collars -- not by just putting them on and forgetting them, but by starting a collar and then trading the calls dynamically. As Will Rogers once said: "I am much more interested in the return of my capital than of the return on my capital." Admittedly that is more true now than it once was. Thank you for writing.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Sam. Hope you enjoy the book. Let me know what you think.
Bill Kraft

Bill Kraft, MarketFN.com said...

Dear F, there certainly can be. I don't get much for the free one you read, though. Hope you enjoy.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks for writing, D Williamson. I would suspect the fellow has been a victim and I agree he makes an important point.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Linda. You make some important points that are certainly in line with my own thinking.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, George. I didn't take that fellows comments personally. In fact, in general, I think his point is well taken. Glad to hear some of the new kids on the block are enjoying things. Happy Holidays to you as well.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, papa_hog. I wish you great success with the system you are testing. Thanks, too, for what you do. Our youth definitely need good math teachers.
Bill Kraft

Bill Kraft, MarketFN.com said...

I'm not sure it was a complaint about our Newsletter, Anonymous. Rather, it was a general warning to beware of the motives of those writing free blogs. I 'm not sure why the writer chose our forum to write, but it did not seem to be a direct or personal attack. Anyway, thank you for writing.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thank you, GemmaStar. I'm glad you are enjoying the articles.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thank you, E Stein. I'll definitely check out that website. I appreciate your note.
Bill Kraft

Bob Stevenson said...

Hi Bill,

First of all let me admit to you that even though I had subscribed to your newsletter I have been receiving so much mail from people trying to convince me that theirs is the "Only System" that I have been deleting most of the messages coming into my email. For one reason or another today as I was going through the emails I happened to stop on your newsletter. Glad I did.

You made a lot of sense. It is pretty easy in this time to become cynical, especially after a few bad experiences with people you feel you can trust, only to find out they are in it "for the money only"! I don't have a problem with people making money, only those that do it solely at the expense of others, with total disregard for what they do to others, and having as their sole motivation self aggrandizement.

If you are making money, and I'm sure you are, selling your books, more power to you. I for one appreciate your candor. And to be most honest, as I start to review your newsletters, I find they make a lot of sense, and give some quite valuable information for traders in today's markets.

Please, keep up the good work, and I won't be as quick to delete your offerings in the future. Hell, I might even buy a book or two of yours..... :)

Sincerely,

Bob Stevenson

Bill Kraft, MarketFN.com said...

Thanks, Bob. We are on the same page as far as it concerns people who are only trying to take advantage of others. Glad you liked the Newsletter and I hope I can continue to write helpful articles.
Bill Kraft

Anonymous said...

ENJOYED YOUR FIRST BOOK,MADE A VERY NICE PROFIT ON YOUR SIMLE SYSTEM-QQQ- PAGE- 114.$20,0000 PROFIT.LOOKING FORWARD TO YOUR NEW BOOK.KEN

Anonymous said...

Hi Bill -

Just want you to know that I
really appreciate your fair and
honest comments regarding the
"wary author." Thank-you Bill
for a very satisfying read.

Charlie

Bill Kraft, MarketFN.com said...

Thanks, Ken. Always nice to hear from someone who is making a profit.
Bill Kraft

Bill Kraft, MarketFN.com said...

Thanks, Charlie. I appreciate your comments.
Bill Kraft