Every couple weeks or so, bears show up and boldly try to call a top, acting like we don’t remember the last time they made the same call. You saw the ton of posts on the potential QE tapering last weekend and the potential negative consequences for equities. Guess what, there is no difference between being early and being wrong, depending on your time-frame of course. If your timeframe is eternity and you don’t take into account opportunity costs, then eventually you will be right, if this is what is important to you. I rather make money.

There are two type of markets – trending and range-bound and they come after each other in an endless cycle. Our job is not to complain about divergences and to ponder on the potential impact of central banks’ monetary policies. Our job is to take full advantage of healthy market and to manage risk.

All stocks that consolidated sideways for the past two to four weeks, are breaking out, one after another. This is what happens in trending markets. Price momentum is the catalyst. The fear of missing out trumps the fear of losing. They say that happy people pay happy prices, but bull markets persist because people don’t believe in them. Bull markets climb the proverbial wall of worry. People say that they don’t want to chase and yet corrections last a couple hours. The slightest dips are getting bought.

A bull market will bail you out and it will forgive your mistakes, but if you really want to outperform, you either have to pay attention to sector rotation or have the discipline to stick with your winners long enough to make a difference. When there are so many good looking technical setups out there, it is enticing to jump from stock to stock and chase after multiple small percentage gains, but looking back you will realize that this is not the wisest approach.

Refiners ($TSO, $CVI, $PSX…) and oil & gas svs ($FTI, $COG…) stocks started breaking out on Friday. Many of them are still close to their bases and it seems like the next beneficiary of an ongoing sector rotation, so you might want to pay attention to this sector. The success rate of breakouts will depend a lot on the price action in crude oil.

It is absolutely amazing how energy and basic material stocks could stay near multi-year highs given the strong price action in the U.S. Dollar. Other cyclicals have also been extremely strong – financials, homebuilders, industrials, even semi-conductors under the surface.

Short squeezes continue with full force and happen even in stocks with questionable fundamentals. In fact, big short squeezes always happen in stocks with questionable fundamentals. Their short interest would not be high, if everything was dandy there. I guess this is one of the reasons why two of the most controversial industries of the past few years, have been leading in the past month or so – solar and education stocks.

Large ticket stocks like $PCLN, $CRM and $GOOG are charging higher and for a good reason – the fastest way to gain market exposure is via high-liquid, high ticket momentum stocks.

There is always something to worry about. Yes, it is getting a little frothy out there with recent IPOs running wild. By no means, it is “1999-kind of” wild. Actually, IPOs outperforming is a good sign of risk appetite.

The new all-time high list is super-diverse and the number of stocks making annual highs is at levels last seen in 2010. Usually extreme levels lead to some form of mean-reversion, but trends could continue longer than contrarians could remain solvent. And as we have talked multiple times on this site, sometimes being a contrarian means staying with the underlying trend.

This is a reprint of my St50 weekly market review. You could see my latest list here.

The post Happy People Pay Happy Prices? appeared first on Ivanhoff Capital.

Here is how investing in growth stocks works.

The stock market is a forward-looking mechanism that discounts pro-actively, often 6 to 18 months into the future. Price momentum usually leads earnings and sales growth in the first phase of any long-term stock market trend. Then, if fundamentals don’t catch up, there’s a mean-reversion.

The market constantly discounts events and processes that haven’t happened yet. As a result, it will sometimes discount events that will never happen. With other words, sometimes is right, sometimes is wrong, but it is not stupid. It makes an assumption, sometimes based only on a good story, other times based on real fundamentals; it discounts that assumption pro-actively, but in the same time it is expecting positive feedback in terms of actual earnings and sales growth. If the latter don’t come, a correction follows. If earnings and sales growth numbers confirm and exceed market expectations, the trend continues.

In the case with Tesla, the stock had doubled in the six months preceding the announcement of it first profitable quarter. The market has been expecting and discounting that event. Apparently, a bull market and a large short float (40%) have contributed to the size of the move, but the story of Tesla is not too different than the story of many other high growth technology companies with innovative products. In 2003, Blackberries were the hottest phones on the market. Blackberry stock quadrupled in the 12 months leading to its profitable quarter. Then, in the next five years, it quadrupled a couple more times (that 16X for those who have missed math at school).

Here is a graph comparing the market caps of the major publicly traded car companies – Tesla Motors, Toyota, Honda, Ford and GM. The German Daimler (owns Mercedes and Chrysler) and BMW have each a market cap of about 50 Billion Euro. Volkswagen, which also makes Audi and Porsche, has a market cap of about 75 Billion Euros.

Apparently, Tesla’s earnings and revenues are very far from its competitors’ numbers, but Tesla is a lot younger company. Every big tree starts as a small acorn. Blackberry was a $1 Billion dollar company in 2002. Then it became $80 Billion in 2007. Apple was a 5 Billion dollar company in the early 2000s.

Elon Musk might not have the marketing genius and presentation skills of Steve Jobs, but he is a long-term thinker like Jeff Bezos. He has e detailed long-term plan of how Tesla is going to take over the world. First start with an expensive, high-margin sports model. Then gradually increase its scope by creating cheaper vehicles that could be afforded by a larger number of people. Tesla is not just an expensive toy for people with a lot of money. It is a freaken spaceship on wheels, which is technologically superior just like Apple’s products were 3-4 years ago. Consumer Reports just called them “the best car they have ever tested”. Most importantly, the early adopters love Tesla and talk about with with exclamation marks. The hardest group to please is loving Tesla. What they love today, many of us are likely to love 2-3 years from now.

If Elon’s plans work out, 10 years from now, Tesla’s market cap could easily be close to the big players of today as electric cars will be seen everywhere. What if in the future all cars are electric? Tesla is already licensing its superior technology to Daimler and Toyota.

Of course, there is always a chance that the company might turn out to be a flop. The market is currently giving Tesla the benefit of the doubt. It has discounted a bright future. Remember that the market is forward looking and myopic at the same time. It doesn’t discount too far into the future, and for a good reason. The further you go into the future, the higher the uncertainty. For a long-term price trend to be sustained, Tesla will need to deliver some serious earnings and sales growth. The good news for Tesla is that it has already made good money for a lot of its investors, which means that Elon Musk has earned their trust and patience, just like Jeff Bezos has done. This will give him more room to maneuver and experiment.

There will be the inevitable 40%-50% corrections along the way, but a $100 Billion market cap is achievable in the next 10 years. How many people do you think are going to ride the whole trend? If history is a good indicator, very few.

The post Tesla Motors Could Be A 100 Billion Dollar Company in 10 Years appeared first on Ivanhoff Capital.

We live in fascinating times:

• Warren Buffett is on Twitter. At least he tweeted once – “Warren is in the house”, probably trying to subtly remind us that he still likes housing stocks. In 2008 he didn’t know how to listen to his voice machine and this is why Lehman went under. When all is said and done, he remains the best investor of all times. The Steve Jobs of Investing.

• A few weeks ago, the Associated Press twitter account was hacked, which caused a mini flash crash in the world most liquid asset – the S & P futures. We don’t even remember that anymore. A few weeks is nine months in social web time.

• News and rumors are breaking faster on the social web than on $2000 a month Bloomberg terminals. They are analyzed faster and with much deeper perspective on the social web too. No research shop could possibly compete with 30 independent analysts, who could devour any earnings or economic report in a matter of minutes. At least, it can’t compete on velocity.

The world is going faster. A lot faster. Does that mean that you have to become faster in order to survive and prosper. No! Velocity is not your forte in a world driven by high frequency algorithms that make several thousand trades in a second. Your only chance of survival is to become the slow money. To step back, look at the big picture, spot trends (catalysts) that are going to last for more than a few days and find a way to ride them.

Being The Slow Money doesn’t mean that you have to think like Warren Buffett. He likes to joke that he loves businesses that could be run by idiots, because sooner or later it will happen. He says the he hates uncertainty and wants to invest in companies that are likely to be still around 10 years from now and with higher earnings.

The truth is that no one knows how the world will look like 10 years from now. Maybe people will still eat Cheerios, maybe they won’t. Who knows. We might be all on customized nutrition pills by then. Investing in companies likely to be around 10 years from now is not a guarantee of success. We don’t know how their shares will perform in the meantime. There are no sure things in the market. What is widely perceived as being safe, could be very risky, especially if the consensus opinion is on your side.

Being the slow money means that you don’t have to obsess with every move in the markets and try to find an explanation behind it. Being ‘the slow money’ means that you don’t need to own 50 different positions and to chase after every breakout to make a few percents. Being ‘slow money’ also means that you might have to cut from your exposure to the fast web…

The post I WANT To Be The Slow Money appeared first on Ivanhoff Capital.

The two big ones $DDD and $SSYS took quite a beating after $XONE had its IPO on February 8th.

There are two ways to look at an IPO in a hot industry:

1) It is positive. It shows that investment banks are confident in market’s ability to absorb the new supply. Stocks from the same industry that are already public often appreciate in anticipation of the new IPO.

2) Too much additional supply of shares is just like overbuilding capacity – it is not a positive in long-term perspective as it puts pressure on prices.

$XONE is a tiny company with current market cap of $500M. It is unlikely to be the major catalyst for the selloff in $DDD and $SSYS. The total market cap of the all publicly traded 3D printing industry is still relatively small for a small surge in supply to matter.

The main reason behind the pullbacks was probably earnings related and not living up to market’s expectations. Mr. Market constantly discounts evens that have not happened yet. As a result, it will often discount events that will not happen. This is not to say that it will remain blind-sighted forever. A good story is not a long-term catalyst. The market gave the benefit of the doubt to $DDD and $SSYS for quite some time and it bid their prices substantially during most of 2012, but it expected those two to start to deliver in terms of real, organic earnings and sales growth. It did not happen, so some dissapointed market participants just took profits and sold, which put downside pressure on the industry.

There was also a sentiment aspect to the pullback. All of a sudden, in January every local TV and radio were covering 3D-printing and talking about its ginormous potential. Wall Street loves to sell to front page headlines after a substantial move.

In March, both $DDD and $SSYS bounced near their rising 200dmas, where long-term buyers typically step up to support their holdings. Since, then they have been under quiete accumulation. Granted, they still have a lot of work to do in the process of building the right side of their new basis, but the whole sector seems to be setting up again.

From technical perspective, both $DDD and $SSYS had at least a couple of tight consecutive closes and have recently broken their downtrends to the upside. They have been making higher highs and higher lows.

$PRLB has been consolidating after its monstrous earnings gap in February and above $50, it could fly again. It has a small float of only 19M shares, which is a prerequisite for volatile moves.

It is earnings season, so don’t forget to check their earnings dates.

The post 3D-Printing Stocks Are Setting Up Again appeared first on Ivanhoff Capital.

1) Once a stock breaks out to new 52-week high from a proper base and on fresh earnings-related catalyst, you don’t know how far the re-pricing could get and for how long the new trend could continue. One of Stanley Druckenmiller’s famous quotes in ‘The New Market Wizards’ book goes something like this:

I never use valuation to time the market. I use liquidity considerations and technical analysis for timing. Valuation only tells me how far the market can go once a catalyst enters the picture to change the market direction.

I wholeheartedly agree with the first part, not so much with the second. I don’t think anyone knows in advance how far a stock could go after it breaks out and any projections are just guesses.

2) Price trends often start and end before earnings trends. When $CRUS destroyed the earnings estimates in November of last year, many people were shocked to see the market reaction – a gap down from $41 to $37. At the time, it was perceived as a buying opportunity by many, citing the spectacular earnings growth. It has been all downhill ever since. The lower the stock went, the more attractive it looked to many, only to be disappointed as surprises often follow the direction of the established trend, until in the end – knowing when that elusive end could be is extremely useful. Poor reaction to what is perceived to be a good earnings report is usually one of the first signs that the price trend is over and since the price is the only thing that pays us, it is the main trend we should pay attention to.

3) Stay away from stocks with low relative strength, especially if they have been recent momentum leaders. In the majority of cases, you will be served better if you stay away from stocks making new 3-month lows (even worse – new 52-week lows) during bull markets. Most of stocks are there for a reason. No matter how appealing the seem from whatever perspective you chose to look at them, you will do yourself a favor not to touch them and go fish somewhere else.

The post Apple, Cirrus Logic and The Wisdom Of The Market appeared first on Ivanhoff Capital.

The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of such buyers in the 17th century.

This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future.

The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while.

Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices. In these bubbles, an army of originally skeptical investors succumbed to the “proof” delivered by the market, and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling. But bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: “What the wise man does in the beginning, the fool does in the end.”

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying
binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.

A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The
170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.

The post Warren Buffett On Gold appeared first on Ivanhoff Capital.

Me: Do you see yourself starting a new company in a few years and would you prefer to finance it yourself instead of taking outside money?

Paraphrasing Gavin – Even if I was able to finance it myself, I would still take outside money from selected sources. You get a lot more than just money when you work with the right investors. The insightful advice and connections you could receive are just as valuable, if nor more.

Then the whole conversation went into discussing the role of money in funding.

If you are a publicly traded company, you will sell your shares to the ones who pay the highest price and your bonds to the ones willing get the lowest interest rate. When it comes to funding startups, money is not a commodity and depending on its source, it comes with a lot of strings attached, not only in terms of advising as Gavin mentioned, but also in terms of exit strategies, which is a theme of a whole different conversation.

Where am I going with my rant? You have probably all heard of the JOBS act, which main purpose is not actually to create jobs, but to:

1) reduce the paperwork needed to become public, but in the same time allow companies to remain private longer

2) allow non-accredited investors to put money in the early stages of private companies

It is admirable that the JOBS Act will potentially give the opportunity to non-accredited investors to participate in the early growth stages of companies they love and which services and products they use. It could actually make many people better investors. The beauty of angel investing is that you are forced to be a long-term thinker and investor. You don’t have the comfort of liquidity. Once you are in, you are stuck for good. Long-term investors invest in people for one simple reason – regulatory and competitive environment could change, but people’s ability to adopt and seek success could remain a constant, if you bet on the right people.

The question is, if money is not a commodity in startups funding, will non-accredited investors actually benefit and have access to the “best” deals. Proper education and transparency could partially solve that problem and Angellist has been a pioneer there, but I can’t help but think that reflexivity plays a huge role in startups’ fortune. Funding is not just about enough money to keep the lights on and scale. Money always comes with some strings attached. In the case of experienced and well-connected angel investors and venture capitalists, it comes with valuable advice and a network that plays an important role in startups’ potential and success rate.

What really bothers me more as a public investor is the part about private companies being able to stay private longer and potentially go public at much higher valuations and a lot later in their growth cycle. I look at people like Howard Lindzon, who is extremely smart and he is spending so much more time, attention, efforts and capital on private markets. Does that mean that public markets are not what they used to be and don’t offer the same opportunities they once did?

Here is an old post (2011) by William Quigley, where he explains how the investing equation might have changed:

Let’s also keep in mind that public companies are generally a lot less risky than private ones. Less work and lower risk. That is how it used to be for public shareholders, but that era has ended for good. Let me give you some perspective on how much things have changed since the last tech cycle…

The investors who bought Microsoft shares at its IPO and held onto it for the same amount of time it was a private company – 11 years – were treated to several hundred billion dollars of capital appreciation, not the $650 million that Bill Gates, Paul Allen and the other early employees earned for their 11 years of grueling start-up work. Compare the Microsoft, Cisco, Amazon or eBay examples to what we see in the post-Google era.

VMWare went public in 2006 at a $12 billion valuation. It quickly rose to a $30 billion market capitalization. Thus, the existing investors (parent company EMC in this case) captured over one third of the company’s likely terminal value. Google’s founders, pre-IPO employees and early investors also did quite well, capturing a respectable 25% of the companies likely terminal value. And what of those earlier tech giants – Microsoft, Cisco, Amazon and eBay? The founders and early investors of these extraordinary businesses captured less than 1% of the terminal values of their businesses while they were still private.

The valuations of today’s private tech leaders – Facebook, Zynga, Groupon and possibly Twitter – are such that I believe upwards of 50-75% of the terminal values of these companies will be captured by the folks who did the real work and took the real risks, those who quit their jobs and begged, borrowed and cajoled friends, families and angel investors to take a chance on their far-fetched idea.

Here is the important, and game-changing, point: in order to participate in the great wealth creation taking place in this and future technology cycles, you will have to be a founder, an early employee or a private investor. The so-called easy money will be earned before a company goes public. This is a radical shift from earlier technology cycles.

A couple years later, we can see that Quigley was right when it comes to the aforementioned popular tech companies. Facebook, Zynga, Groupon have been disappointments after their IPOs. The majority of value was created for founders, private investors and employees. Maybe it is too early to judge those companies? Maybe, we should wait 10 years, before we make any drastic conclusions?

The more important question. Now that there is so much money, allocated to private investments and so many of the companies go public a lot later in their growth stage and at higher valuations,  are we screwed as public investors or there is a way we could still make a decent amount of money? There is always a way.

There are just as many examples of recent IPOs, which have been extremely profitable for public investors as there are examples of IPOs that have been tragic.

Lululemon ($LULU) went public in the summer of 2007, when the market was crazy volatile, but near all-time highs. It was a $2 Billion company on its IPO day. It is a $10 Billion dollar company today.

Rackspace ($RAX) went public at some of the worst possible time – the summer of 2008, when most most people hated stocks and wanted out at any price. The rule of thumb says to ignore companies that go public during financial crises, because raising money in crappy maarkets is usually a sign of desperation. $RAX was about $1 Billion dollar company on its IPO day. Today, its market cap is about $6.5B. It was $10B only a few months ago.

Vips Holdings ($VIPS) was one of the only two Chinese companies to get listed on U.S. markets in 2012. It opened as a $200M company in March last year. Its current market cap is $1.4 Billion.

Many of the best performing IPOs of the past 5-6 years had an element of surprise in them. They either came from sectors that everyone hated or they went public when people were hating equities in general – in both cases, nobody expected them to perform well, which probably means that their valuations weren’t too elevated. There was one more very important ingredient they all shared – they spent a lot of time on the all-time high list.

The post Crowdfunding Startups And The Future Of Investing appeared first on Ivanhoff Capital.

Business people vote with their dollars, and are mostly trying to create near-term financial returns. Engineers vote with their time, and are mostly trying to invent interesting new things. Hobbies are what the smartest people spend their time on when they aren’t constrained by near-term financial goals.

Talking to smart people that are considered experts in their fields could give you a profound insight into future trends, but how actionable is the information you receive from them?

This morning, Howard Lindzon explained how he was convinced by a bunch of smart people to sell his Netflix ($NFLX) position just before it doubled:

I have no position in Netflix. I put one in in December (on the Stocktwits stream) when the stock was in the 90′s and went to hang with some very smart people who had me convinced the Disney Deal was going to kill them. I let outside opinions influence (people I trusted that were super smart) the price and catalysts that were the reason for my investment in the first place. Now the stock has doubled. The catalyst may or may not be fully priced in, but Netflix is dominating on engagement and eyeballs.

This is a typical example of how knowing too much could hurt you – being too smart for your own good in a way. Also a reminder that if you don’t know why you are in a stock, you won’t know when to exit – meaning that you are likely to exit when you get scared, which usually is the worst possible time to do so.

From another side, I know people who have been bullish on Tesla ($TSLA) months before the electric car maker started to appear in the main-stream press and people to rave about its stock. Here is a screenshot of an email conversation I had with Dustin Schneider (who is one of StockTwits’ hackers behind the curtains) in September 2012:

Listening to geeks (engineers, industry experts, marketing gurus, experienced angel investors and venture capitalists, insightful visionaries and futurists)  is always…smart. They see and talk about future big trends before anyone else. Blindly acting on their recommendations in the stock market….is a whole different situation. I always like to repeat to myself that it does not matter how smart you are or how incredibly genious your investment thesis is. Unless and until the market agrees with you, you won’t make a cent. The beauty of the stock market is that you don’t need to be first or original in order to make money.

The post Does Talking To Smart People Help Your Market Returns? appeared first on Ivanhoff Capital.

There are two main reasons – rebalancing and momentum. For example, Nasdaq 100, which consists of the 100 biggest non-financial stocks listed on the Nasdaq Stock Exchange, rebalances its holdings once a year (the majority of the changes happen in December each year, but there are sporadic changes during other months too). Basically some the biggest losers of the year are replaced with some of the best performers that are not yet members of $QQQ. Over the long-term, this approach has helped to get rid off smaller-cap stocks that are in a downtrend and keep winners in their best growth years – a form of simplified, long-term trend following if you will. Of course, it is not a perfect approach, because no matter how much Apple, Microsoft or Cisco Systems drop, they will remain in the index due to their enormous size.

The curious thing is what happens in the immediate months after the rebalancing. The results might surprise you:

As you can see, both the new stocks and the removed stocks have substantially outperformed the index itself, as the losers have done so by a much bigger margin. This is not a one year phenomena as this study by Ryan Detrick, who is a Senior Technical Strategist at Schaeffer’s Investment Research, clearly shows:

The post Nasdaq 100 Rebalancing – When The Losers Become Winners appeared first on Ivanhoff Capital.

2. To make money in the stock market you either have to be ahead of the crowd or very sure they are going in the same direction for some time to come.

3. Accepting losses is the most important single investment device to insure safety of capital.

4. The difference between the investor who year in and year out procures for himself a final net profit, and the one who is usually in the red, is not entirely a question of superior selection of stocks or superior timing. Rather, it is also a case of knowing how to capitalize successes and curtail failures.

5. One useful fact to remember is that the most important indications are made in the early stages of a broad market move. Nine times out of ten the leaders of an advance are the stocks that make new highs ahead of the averages.

6. There is a saying, “A picture is worth a thousand words.” One might paraphrase this by saying a profit is worth more than endless alibis or explanations. . . prices and trends are really the best and simplest “indicators” you can find.

7. Profits can be made safely only when the opportunity is available and not just because they happen to be desired or needed.

8. Willingness and ability to hold funds uninvested while awaiting real opportunities is a key to success in the battle for investment survival.-

9. In addition to many other contributing factors of inflation or deflation, a very great factor is the psychological. The fact that people think prices are going to advance or decline very much contributes to their movement, and the very momentum of the trend itself tends to perpetuate itself.

10. Most people, especially investors, try to get a certain percentage return, and actually secure a minus yield when properly calculated over the years. Speculators risk less and have a better chance of getting something, in my opinion.

11. I feel all relevant factors, important and otherwise, are registered in the market’s behavior, and, in addition, the action of the market itself can be expected under most circumstances to stimulate buying or selling in a manner consistent enough to allow reasonably accurate forecasting of news in advance of its actual occurrence…….The market is better at predicting the news than the news is at predicting the market

12. You don’t need analysts in a bull market, and you don’t want them in a bear market

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