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June 7, 2005 � Issue #223 | |
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News We are Moving to a New Building! Feature Article Change is Good!, By, T. Harv Eker
Recommended Psychology of Trading CD Program
Trading Tip The Market is Wrong? by D. R. Barton
Coming Workshops Learn Swing Trading from Two Pro's, Chicago, August 26-28, 2005 Chicago IL Listening In... Scaling Out
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In conjunction with our big change, our feature article today is about change.
CHANGE IS GOOD! By, T. Harv Eker
Sometimes we love change and sometimes we hate it. Regardless, it always takes a little bit of courage to leave something familiar and try something new. Why is change difficult for most of us? Because change necessitates that we move out of our comfort zones. T.
Harv Eker
Editors Note: Throughout the issues you will see certain words with odd spellings, such as Fre-edom and mort-gage. This is because spam filters are likely to block message that contain certain words and this is one solution.
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Psychology of Trading CD Series You will learn the tools and techniques that you need to transform your trading and investing results. Topics covered include:
The material in this CD series is one of the best overviews of the psychology of trading that Van Tharp has produced. Based on Van Tharp's years of experience working with traders and investors and modeling the best traits and characteristics of high performing investors. Only $249 It's one of the best investments you can make to your investment success. |
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The Market is Wrong? by D. R. Barton, Jr
"Economics is extremely useful -- as a form of employment for economists." -- John Kenneth Galbraith "An economist is someone who sees something that works in practice and wonders if it would work in theory." --Ronald Reagan The more I read the opinion of economists on economic journalists, the more I'm convinced that President Reagan had it right. On Friday (6/3/05), the markets certainly had a bearish day. The tech-heavy NASDAQ was off 1.5 percent and the Dow and S&P indices lost just less than one percent each. Most pundits ascribed the drop to a weaker than expected employment report. According to the Department of Labor, 78,000 new jobs were added in May. This number was about 100,000 fewer new jobs than analysts had expected. And it was a far cry from the 274,000 jobs added in April. There were three main reactions by the economists and economic journalists: 1. I told you so. This was (and always is) the consensus response. People who get paid for opinions can always rationalize those opinions. Past articles are used as proof they knew this was coming (even if the articles were six months ago). And Barron's, the Wall Street Journal, and other were certainly full of folks telling us they saw this weak jobs report coming, as well as its negative affect on the markets. If they told me Thursday afternoon, that would have been a bit more useful� 2. I got it wrong. This response is usually harder recognize, largely because the pundits only say this through silence. Their articles don't include past prognostications. Or they find something more interesting to talk about. There are those exceptions who fess-up when they mess-up. But alas, they are rare. One such rare gentleman is Dennis Gartman. He runs an exclusive daily newsletter, aptly called the Gartman Letter. It is very expensive, and very worth it. Dennis weighs in on macroeconomic news and the geopolitical landscape, as well the currency, commodity and equities markets. In Monday's letter, he defers to an another analyst who got part of the employment picture right that Dennis missed. And he says so clearly. What a breath of fresh air! 3. The market got it wrong. This is my all-time favorite response. I read one of these responses over the weekend in an article about the jobs report. (Name and article title withheld to protect the not-so-innocent.) Most economists and journalists are too savvy to come right out and say that the markets were wrong. They use words like "confused" or "muddled." Such was the case here. In this particular article, the writer implied that the markets were wrong because job growth was up year-over-year. The market shouldn't pay attention to monthly changes because these monthly numbers are too volatile, and should not even be released in a perfect world, he argues. Paying too much attention to the absolute monthly change in employment numbers made the market "muddled" on Friday, according to this writer. That's strange, because to me, the market looked very resolute in its desire to head straight down on Friday. I won't split hairs over whether employment numbers should be released monthly, quarterly or whatever. But it IS unusual for a journalist to say that the absolute number shouldn't be released - only the percentage relative to this time last year. This is akin to saying that market participants are too dumb to interpret raw numbers. Which I guess is why the market wasn't smart enough to go the right direction on Friday� Traders and investors are bombarded with data every minute of the day, it seems. And very little of it really matters. But keep your eyes open the first Friday of every month. The monthly employment figures are currently a "market-mover", especially if there is a surprise (a significant difference versus what the analysts expect). Don't fight the intra-day momentum created by these reports - unless, of course, your keen sense of economics tells you that the market got it wrong�
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Coming
Workshop...
Proven Tactics for Swing Trading Profitable Trading that Fits YOUR Schedule Chicago, Illinois August 26-28, 2005 Presented by Brad Martin and D.R. Barton
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Excerpts from Dr. Tharp's Mastermind Discussion Forum
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Quote of the Week If you don't like something change it; if you can't change it, change the way you think about it. ~Mary Engelbreit
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Feedback "I just finished Volume 5 of the Peak Performance Home Study Course... "I can summarize my learning experience in one sentence: "All causation is mental." This isn't my quote but, for me, it exemplifies the power of the mind. Robert Kiyosaki interviewed Dr. Tharp on a tape that was included in the CashFlow 202 game. I was completely absorbed by the approach (so different from most trading commentary), that Dr. Tharp used in his thought processes. What held my attention was the similar 'it's in your mind' component of the BE - DO - HAVE equation that Kiyosaki teaches. I see crystal clear that the seed of the results we get in our lives is germinated first in our minds. The growth or death of that seed also depends on our minds. To me, in hindsight, it's obvious that the most important part of trading is the one doing the trading. The trader is completely controlled by the trader's mind. "I heard it said once that, in healthy human evolution, we proceed from dependence to independence to interdependence as we grow and mature. This [Peak Performance] course has introduced ways to think dependently, independently, and interdependently; I believe there are useful ways to employ all three modes that will support successful trading. "The course taught me the basics of fishing instead of depending on someone to give me a fish. The real benefit is the fact that the material can put the power of the material where it should be - between the ears. I anxiously look forward to reviewing the course, using it as a model to build my trading business, and studying further with Dr. Tharp's material. "Hopefully, you find this useful and an encouragement to keep up the good work!" � Rick Redel |