Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

President Barack Obama: The Temperament of a Champion Stock Trader

InvestorEducation / Trader Psychology Jan 31, 2009 - 02:15 PM GMT

By: Investment_U

InvestorEducation

Best Financial Markets Analysis ArticleI think President Barack Obama would make an exceptional short-term stock trader.

I've never met the man, personally. And I know nothing about his stock portfolio or whether he even has one.


Yet what I've seen indicates that he would make a lot of money trading stocks. Why? Because Barack Obama has a world-class temperament. And so do all great traders.

Let me begin by saying I'm not endorsing or opposing any of President Barack Obama's policies here.

  • But I noticed that he took down the Clinton machine in the Democratic primaries without so much as raising his voice.
  • When his former pastor Jeremiah Wright made outlandish remarks and then took to the media to defend them, Obama distanced himself with dignity and class.
  • When his Republican opponent pointed out in the debates that Obama had the thinnest resume of any Presidential aspirant since Wendell Wilkie, Obama just smiled and shook his head.

Nothing rattles him. I like that in a leader. And in a trader.

Investment great Peter Lynch once remarked that, “A stock market decline is as routine as a January blizzard in Colorado. If you're prepared, it can't hurt you. A decline is a great opportunity to pick up bargains left behind by investors who are fleeing the storm in a panic.”

He also noted that, “Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and stock mutual funds altogether.”

Stock Traders - Moderate Your Investments & Maintain Your Temperament

At the very least, moderate the size of your investments so you can maintain your composure and temperament. Let me give you an example.

Let's say you bought 10,000 shares of XYZ Corp. at $75 a share. That's a lot of money for most of us. If after you bought XYZ, it promptly fell to $69 the next week, you would be down $60,000.

How would you feel?

  • It might make you think the deal you cut on your last car wasn't such a triumph after all.
  • It might make you think twice about private school for the kids.
  • You might wonder why your spouse is over there clipping coupons out of the Sunday paper.

In short, you might be agitated, nervous, or upset. Sixty thousand dollars is a lot of money to see disappear in a week.

But first off, you haven't lost anything if you don't panic and sell. After all, the stock has only fallen 8%.

Traders With Nervous Temperaments Imagine The Worst

Yet a person with a nervous temperament immediately begins imagining all sorts of negative possibilities:

  • The stock may never bounce back.
  • The market may never bounce back.
  • The company may have poor fundamentals. (And indeed it may, but this is something you should ascertain before you buy a stock, not after.)

But, if you bought a single share for $75 and witnessed the same decline, my guess is your reaction would be somewhat different. (Ho-hum. What's for dinner?)

Why is your reaction different this time? After all, the percentage move in the stock is the same.

The difference - because of the amount of money involved - is your nervous system's response to the news. And if your next decision is based on an emotional reaction, chances are you're going to regret it.

Traders With Good Temperaments Are Realistic & Unemotional

A trader with a good temperament considers things pragmatically, realistically - unemotionally.

  • He remembers that stocks rarely move up in a straight line.
  • He reminds himself that there is often no correlation between a stock's short-term fluctuations and the outlook of the underlying business.
  • He knows that bear markets are sometimes ferocious, so he uses trailing stops to protect his principal and his profits.
  • And he understands that investors who stick to a proven discipline rather than counting all the ways the sky is falling generally do better over time.

In short, a strong stomach, not a big brain, is what makes a successful trader. And my bet is that President Obama would make a good one.

But for now, I hope he sticks to his day job.

Good investing,

by Alexander Green , Oxford Club Investment Director Chairman, Investment

http://www.investmentu.com

Copyright © 1999 - 2009 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in