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To Know Risk, Know Thyself



Our professors and partners have come from as far away as Australia to contribute their wisdom and guidance. Throughout the next two days we will be highlighting some of their ideas on managing risk and staying in the game as catalysts for discussion.


- Keep greater than 50% of assets in long-term, fundamentally driven positions.

- Research those core positions until you know them in-and-out, both in terms of the fundamental drivers (competition, industry etc.) and the trading patterns of the stock.

- Trading is opportunistic; if the opportunities can't be clearly seen and understood, don't trade.

- Keep a trading journal, tracking both transactions you make (thought process, entry trigger etc.) and hypothetical trades you don't make.

- Know yourself and how your moods and feelings affect your thinking - "if you don't feel well, physically, you're likely to lose."

Key themes:

- What to look for when secret shopping retailers as investment research.

- There is NO magic bullet, short-cut, riskless rewards or talking head/guru type who will run your book. Markets are strictly every person for themselves.

- Investing is a job, not a lucrative "hobby."

- Specialty retail names must always be thought of as a "trade" (even if you hold them for multiple years).

Outlook for the financial markets:

- The big picture trading range (a market in which the major averages fail to make much progress, either up or down) is the most likely scenario in my view.

- "Breakouts" and "breakdowns" should be viewed with skepticism (rather than chasing them either way).

- For what it's worth (and largely as a function of the above "range" thesis), I am positioning myself in fewer names and watching those names extremely closely while trading less.

Thoughts on controlling risk and staying in the game:

-"Conviction" is often thinly veiled hope. That is something to consider before buying dips on market "over-reactions."

- Understand the logic of the person on the other side of every one of your trades.

- Emotion can't be eliminated; it can only be understood with respect to how it affects each trader, individually. In other words, you will be emotional; learn to deal with it.

- Get to know others involved in your positions, even (and especially) if they disagree with you.

If I could give one piece of advice to attendees...

- "No one can make you feel inferior without your consent" - Eleanor Roosevelt

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No positions in stocks mentioned.

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