This is a quick post about some basic truths about trading which have never changed and will never change EVER!!! Still we try are very best to circumvent them. Below are some excerpts from a classic by Joseph de la Vega. ????? Joseph was born about 1650 in Espejo, a small town in Córdoba province (Andalusia, Spain), into a Spanish-Portuguese Jewish family. Yup 1650! And what that got to do with trading??? Well Joseph de la Vega wrote an excellent treatise way back in 1688 titled Confusions Of Confusions. Although not a descriptive account of the process of stock trading, Penso presented the history of speculation in stocks and acquainted the reader with the sophisticated financial instruments used. The dialogue format allowed the reader to understand the respective perspectives of the various market participants and the intricacies of speculation and trading. Penso also came up with four basic rules of the share market that are still of the greatest relevance today:
I quote below the following excerpt written by; Joseph de la Vega
“The first rule in speculation is: Never advise anyone to buy or sell shares. Where guessing correctly is a form of witchcraft, counsel cannot be put on airs.
The second rule: Accept both your profits and regrets. It is best to seize what comes to hand when it comes, and not expect that your good fortune and the favorable circumstances will last.
The third rule: Profit in the share market is goblin treasure: at one moment, it is carbuncles, the next it is coal; one moment diamonds, and the next pebbles. Sometimes, they are the tears that Aurora leaves on the sweet morning's grass, at other times, they are just tears.
The fourth rule: He who wishes to become rich from this game must have both money and patience.”
Now the million dollar question; Will we ever LEARN??????
Often money is lost learning patience.
ReplyDeleteAnon!
ReplyDeleteWell said but then look at this way if we all had the ability to keep patience and money then the world would have been full of Warren Buffets!!!
As for me I think I would be better off keeping my MONEY than patience :-)
Cheers
Hi..Manoj,
ReplyDeleteYou say he is from 1650..!!Amazing perceptions of the speculative markets.
This remind me of the book "As a man thinketh" by James Allen. It is very relevant even today.
I feel previleged to read this article. It makes my day. Thank you..
Best regards.
ilango
Ilango Hi,
ReplyDeleteYeah this was written in 1688 at the height of the so called TULIP MANIA!!!
I am glad you liked the post.
I also look forward to lil stories you put in your blog every weekend.
Cheers
On captial for trading,I remember in Market Wizards, one trader was asked would it be fine if I trade with 10k $.Wizard replied,it is better to flush one 100 $ note at one time than to trade with small capital as the pain in flushing will be less than trading with less capital.On second mentioned Rule in the article viz "best is to seize what comes to hand".My little wisdom is the quote of another trader who said."One of the worst mistakes a trader can make is to miss a major profit opportunity as 95% of profits come from only 5 % of trades.And if you donot stay with your winners you are not going to be able to pay for the losses".On third Rule in the article "at second moment profit in share mkt is coal" I may differ.Catch is hedging.Grab the book titled "Put options".We need patience,,I agree as the quote goes,"To be a successful trader needs courage,the courage to try,the courage to fail,the courage to succeed and the courage to keep on going when the going gets tough"We all are struggling.But we got to do it buddy as the adv in TV 18 goes.
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