Silver Speculation: Are you Ben Graham selling to an optimist today?

Warren Buffett calls it "by far the best book on investing ever written".  The Intelligent Investor by Ben Graham is a widely acclaimed book focusing on the concept of value investing. In this book, Ben Graham says: "The market is a pendulum that forever swings between unsustainable optimism (share price becomes expensive) and unjustified pessimism (share price becomes cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists."


Silver is currently on a unsustainable bull run. The volume today on SLV (Silver ETF) is mind boggling and on pace to become one the highest volume days ever. Are you selling to an optimist today?


Read some of Ben Graham's books and enrich yourself.

Wyckoff Creek – Understand this and increase your profit potential

Wyckoff Creek is a zone of resistance near the top of a trading range. This resistance must be overcome with a significant sign of strength to justify upside potential (jumping the creek).  This sign of strength is indicated by price spread, volume action, and a strong close.
A good buying opportunity presents itself, when the stock comes back top the creek and tests at a low volume. Our markets have been in a trading range over the past 3 months. Several stocks jumped the creek recently. See NIFTY & SENSEX charts. Look through the slide shows.  Buy those that backs up (coming back to ice) with lower volumes.

 
Source: http://knowledgebase.mta.org

Market Technician Extraordinaire

Richard Wyckoff was one of the greatest minds in Wall Street.  He developed several rules for optimal trading. He summarized these rules in the book “Studies in Tape Reading”, which is a classic in tape reading and stock market tactics.  What is Tape Reading?  According to Richard Wyckoff, it is “rapid-fire common sense”.  He adds that Tape Reading is “the only known method of trading which gets you in at the beginning, keeps you posted throughout the move, and gets you out when it has culminated.” 

Human psychology works differently.  The instinct is to buy when the stock prices are going up – why miss the bus and lose the opportunity to make a lot more money.  Or, hold on to the stock at higher prices in the hope of making more money. This is Greed.  The instinct is to hold on to the stock when the market starts to fall -  the prices might move back up? This is Hope.  The instinct is to sell when prices stay low for a long time (in a bear market) – the prices might go even lower and the possibility of losing more money. This is Fear.

Think about the people who bought SENSEX at 21,000 and those who sold SENSEX at 8000.  There is greed and hope when there should be fear. There is fear when there should be greed.

You might say that this is easier said than done?  Read Richard Wyckoff’s books and see if you can devise a buy and sell strategy. More importantly, can you stick to your strategy? If you can, you have the potential to become a market technician extraordinaire.

Reminiscences of a Stock Operator

A Classic on the Art of Trading and Speculation.  The following are quotes from this inspirational book, which is an account of the life of Jesse Livermore, the boy plunger.

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"I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock."

"The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements."

"The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor."

"I absolutely believe that price movement patterns are being repeated. They are recurring patterns that appear over and over, with slight variations. This is because markets are driven by humans -- and human nature never changes."