Wednesday, March 15, 2006


Looks like I just went over $A400,000 in net worth... Three hundred thousand US Dollars remains elusive though due to the weakness in the Aussie Dollar. Did some GOOG daytrading again today - made money but could have done a lot better by just holding onto my position from the beginning of the day to the end. The stock soared when a judge released a fairly favorable opinion on the case between DoJ and Google. I sold into that spike and then did a couple of bad trades before buying into the final upswing of the day and selling 70 of my 100 shares at the close. Using daytrading buying power that allows additional intraday borrowing is on the one hand dangerous on the other hand it imposes discipline to close overly large positions by the end of the day.

Also am almost finished Mark Tier's book "Becoming Rich". Don't be put off by the title and somewhat self-helpy style. It really is an excellent book on developing an investing/trading philosophy. Of coruse there are some contradictions here and there in some of the things he said. The key messages are a delineation of the the main components of master investors' systems - primarily Buffett and Soros are discussed and finding where you have an edge in investing and focus on that just as the masters do. In my strategy I don't any more try to pick what I call "industrial stocks" for long term investment. I can see what is a lousy firm to invest in but don't know what is neccesarily the best opportunity. I focus instead on:

1. Picking good managers for long-term investment

2. Using my knowledge of macroeconomics etc. to try to time the market

3. Use my knowledge of time series analysis, pattern recognition etc. to do short-term trading.

Some people are good at real estate, some in the stock market etc. There isn't anything you have to invest in, despite what people commonly say. If you can't see where you have an edge then focus on finding good managers and advisers. Easterling's book which I completed reading mainly drives home the point that you need a very long term horizon for passive index style investing to work for you. If you are in your 20s and don't want to retire till 60 at least you will probably do fine (but could do better). Dollar cost averaging will help you. Rebalancing and bond strategies the book discusses will help more. But if your time horizon is 10-20 years you may need something more radical given the probable secular bear market that we are in....

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