Investing Theory – Market Speculation

Why should market speculation be profitable?

In this article I will explain why market speculation should be profitable.

Disclaimer: I have never owned a stock outside of my retirement accounts and am therefor basing this theory entirely off of intuition and logical analysis. I have never been a day-trader. Furthermore, the following analysis assumes that you make your investment choices based on logic, not emotion.

Caution: Invest at your own risk!

Markets have character.

Identifying market trends based on momentum or cyclical patterns is inevitable for all investors. No one ever bought anything without expectation. Communication of these expectations is what gives a market character. Example: Bob O’Brien points out that “May sell-offs on Wall Street typically turn into big recoveries in the month of June.” Anyone privy to this knowledge is more likely to sell before May, and more likely purchase sometime near the end of May. This selling before May increases the likelihood of the very May sell-off that we expected, and the purchasing near the end of may increases the likelihood of the June recovery.

Education promotes profitability.

The fundamental difference between Buyer A and Buyer B is their expectations which are a direct result of their education. If Buyer A knows nothing of the trend of the market, he is more likely to be surprised by a sell-off. If Buyer B has been educated by Mr Bob O’Brien, he is less likely to be surprised by a May sell-off and is more likely to be prepared to take profitable action.

What should I do?

First, I don’t recommend day-trading for any beginner investors, although I’ll likely try it soon for the experience. However, I am suggesting that there are significant profits to be made in speculation as opposed to simply dollar-cost-averaging dividend stocks, mutual funds or index funds.

Specialization. You don’t need to make money as a baker today and a candlestick maker tomorrow. You need only be good at one thing. Find a niche. While everyone else is distracted BP oil spills and the World Cup, educate yourself in some unrelated niche. It may be less exciting, but you’re more likely to find a winner before the distracted world is privy to your gold mine.

Disagreement and education is welcome – please comment!

Impossible IQ Test

If an apple a day keeps the doctor _____,
what number comes next in the following sequence?
0, 1, __?
A. 0
B. 2
C. 3
D. 10

Bill is Jill’s great aunt twice removed.
Will is the opposite of _____?
A. Will not
B. Won’t
C. Neglect

If some marbles are round and I have a bag of marbles,
how many blue marbles have I lost since kindergarden?
A. red
B. yellow
C. green

I am not Pope John Paul,
but I wouldn’t mind,
maybe for a week. 1+1=__?
A. 0
B. 1
C. 3
D. 11

Like which of these is kind of like the others
but like not really like the others at all?
A. Animal
B. Animal
C. Animal
D. Animal
E. Animal

A train left the station at 5am this morning
travelling at a constant velocity of pi angstroms
per Ancient Chinese fen. This IQ test is _____?
A. Not ridiculous.
B. Effective.
C. Fair.
D. All of the above.

Top 10 Richest People in The World

Rank Name Country NetWorth NetWorth Change Age Bio
1 Carlos Slim Helu Mexico $53.5 bil UP $18.5 bil 70 Assets in Latin America’s biggest mobile phone company.
2 Bill Gates United States $53 bil UP $13 bil 54 Software visionary and world’s biggest philanthropist.
3 Warren Buffett United States $47 bil UP $10 bil 79 Berkshire Hathaway, company added to S&P 500 index in Feb.
4 Mukesh Ambani India $29 bil UP $9.5 bil 52 Reliance Industries on global buying binge.
5 Lakshmi Mittal India $28.7 bil UP $9.4 bil 59 ArcelorMittal (steel) in India.
6 Larry Ellison United States $28 bil UP $5.5 bil 65 Oracle founder, acquired 57 companies in past 5 years.
7 Bernard Arnault France $27.5 bil UP $11 bil 61 LVHM (luxury goods): Louis Vuitton, et al.
8 Eike Batista Brazil $27 bil UP $19.5 bil 53 College dropout vows to become world’s richest man.
9 Amancio Ortega Spain $25 bil UP $6.7 bil 74 Inditex (fashion), 4500 stores in 73 countries
10 Karl Albrecht Germany $23.5 bil UP $2 bil 90 Supermarkets in Germany, Europe, and U.S.

From Forbes: The World’s Billionaires and
The 20 Richest People in the World

Learning a Second Language

I’m occasionally inclined to learn a second language – wouldn’t multilingualism be fun? Sure, but what’s the point? Aren’t I getting too old? And who has the time?

What’s the point?

Continued learning has mental, emotional and social benefits. Learning another language can help keep our brains receptive and agile, be a regular outlet and source of pride, and can enhance our social lives, especially if you live in a culturally diverse environment.

“We have strong evidence today that studying a foreign language has a ripple effect, helping to improve student performance in other subjects.” – Richard Riley, U.S. Secretary of Education under Bill Clinton

And as long as you aren’t planning to learn Sentinelese, learning a foreign language can greatly enhance your vacation experience.

From Vistawide:
1. To increase global understanding
2. To improve employment potential
3. To increase native language ability
4. To sharpen cognitive and life skills
5. To improve chances of entry into college or graduate school
6. To appreciate international literature, music, and film
7. To make travel more feasible and enjoyable
8. To expand study abroad options
9. To increase understanding of oneself and one’s own culture
10. To make lifelong friends

Aren’t I getting too old?

From Ezine:
“Adults are generally able to concentrate for longer periods of time. They aren’t distracted by friends wanting to play football or thinking about what they want for Christmas next year. Mature learners also have their own learning strategy. They know what works for them and are able to plan their studies accordingly.”

Who has the time?

Let’s start by assuming you don’t spend too much time watching TV, shopping, pampering yourself, or consuming alcohol. There’s still ample opportunity for better time use, time saving, and multi-tasking. I should write a blog entry on this. If all else fails, you could always sleep less.

All kidding aside, learning a language does not take as long as you may think and depends entirely on identifying your goals (as usual) and developing an efficient approach. If your goal is to be able to understand the spoken word, listen to pop-music and watch foreign films with sub-titles. If your goal is to be conversationally fluent, get a pen pal and attempt conversations with foreigners at every opportunity, or ideally, take an extended vacation and immerse yourself in the culture. If your goal is to be able to read or write, you needn’t leave the sanctity of your own home. Just use the endless online resources, read poems and essays and books, and starting writing your own.

And finally, I have a bit of advice regardless of your language goals:
1. Perfect practice makes perfect. Have fun but take your practice time seriously. Focus.
2. Frequency and Repetition: Practice every day, for a short time, don’t burn out.
3. Learn the most used words first!
4. Learn words specific to your interests to keep learning fun and useful.
5. Deconstruct the language and pick a reasonable goal.

Happy learning!

Unleashing Your Brain’s Potential (Part II)

Last night, I finished Richard RestakMozart’s Brain and the Fighter Pilot: Unleashing Your Brain’s Potential while I should have been sleeping. It’s the first book I’ve actually read cover-to-cover since last October. I’ve never read a more mentally and emotionally uplifting book. I felt more alert and appreciative any time I read Restak the night before, even without participating in any of his suggested brain-boosting exercises.

Below are brief quote-summaries of the last several chapters that I read last night before finally falling asleep around 3am:

23. Learn about and experience art and music.

“Dalí employed double images in order to induce in his brain what he called ‘visual instability.’ Instead of taking common objects for granted, he suggested ‘misreading’ them.”

“Dalí was the first to point out htat one should reamin open to the magical metamorphosis implicit in everyday life.”

“In short, you can enhance your creativity by playfully altering your perceptions and trying to look beyond the obvious, most practical interpretations of what you see around you.”

Salvador Dalí‘s The Image Disappears looks similar to
Johannes Vermeer’s Young Woman Reading a Letter at an Open Window but with the hidden profile of Diego Velázquez.

Dalí’s Study for Slave Market with Disappearing Bust of Voltaire

24. Organize a physical exercise program that aims at brain enhancement.

“While any physical exercise can improve your brain’s performance, not every exercise is equally helpful. For instance, jogging and swimming exert a positive, indirect influence on general brain function by improving your cardiovascular fitness and your overall endurance. But neither of these exercises is specifically helpful to the brain. Since we’re aiming for a brain-enhancing exercise program, we have to concentrate on three key concepts: balance, strength in the legs, and dexterity.”

“In order to improve balance and strength in the legs I suggest you take up tai chi, the ancient Chinese slow-motion exercise combining flexibility, bodily coordination, and lower body strength.”

25. Cultivate fine-motor-control skills involving your hands.

“A large portion of brain tissue is devoted to sensation from and motor power to the fingers. And enhanced brain functioning has been shown to result from improving, or at least maintaining, finger dexterity. Indeed, our ability to oppose the thumb to our other four fingers sets us apart from other species. That wasn’t always so. Prior to about 60 million years ago, the hand was a clumsy instrument. But that changed when squirrel-sized primates left the ground and began dwelling in trees. To accommodate that change, the thumb had to become more flexible, the better to grip branches. As an additional accommodation, nails replaced claws – thus making feeding easier. Finally, sensitive skin ridges developed on the surface of the palms.”

“Our earliest ancestor, the famous Lucy, walked on her two hind legs and could join her thumb, index finger, and middle finger to form a three-pronged grip that allowed her to pick up and handle unevenly shaped objects, such as stones.”

26. Regularly practice some form of mental relaxation.

“While meditation is another word for resting the mind, I prefer relaxation since meditation carries with it so much extra baggage.”

“Stress causes brain damage.” (Discussed in Chapter 15)

“The best way of reducing stress? …breathing.”

“The second stress-reducing exercise involves changing mental perspective, what psychologists call reframing. In Magister Lufi: The Glass Bead Game, Hermann Hesse described the process…”

“Sit comfortably in a chair and let your mind wander.”


27. Use technology to augment your brain’s functioning.

“Philosopher Andy Clark suggests in his book Being There: Putting Brain, Body, and World Together Again that ‘the battery of external props and aids – laptops, filofaxes, texts, maps… offset cognitive limitations built into the biological system [of the brain].'”

“‘Certain aspects of the external world may be so integral to our cognitive routines as to count as a part of the cognitive machinery itself.’ In short, consider technological aids as coextensions of your brain, capable of enhancing your brain’s performance.”

“According to Henriette Anne Klauser, author of Write It Down, Make It Happen, all of us should carry pen and paper everywhere since ‘you never know when inspiration will hit.'”

See also: Stuff White People Like: #122 Moleskin Notebooks

“When working on your computer journal, you might also want to combine your efforts with some creative and exploratory web surfing. Sherry Terkle of MIT says that ‘computers are objects to think with’ and suggests we consider the laptop not just as a technical instrument but as ‘the subjective computer.'”

28. Concentrate on and act in harmony with your natural abilities.

“Adult learning is self-directed.”

“So, in regard to your career, follow your strengths. But when it comes to aspects of your life other than your career, give some credence to the advice of Mark Twain: ‘Make it a point to do something every day that you don’t want to do.’ The basis for this masochistic-sounding advice? Simply put, the brain is both marvelously adaptive and at the same time more than a little lazy. This is particularly true when it comes to intellectual activity.”

“‘Every is ignorant, only on different subjects,’ as Eleanor Roosevelt put it.”

“Keep in mind the key ingredients to successful adult learning:
– A sense of challenge
– An optimum state of arousal: not anxious, but alert and vigilant
– A free-floating attention so that links can be made
– Some form of feedback process, such as learning along with others, or, if learning alone, creating tape-recorded summaries of new information as it’s learned
In practical terms, look for ways of sharing your new knowledge with others.”

…like sharing this post with your friends. 😉



Are you looking for Unleashing Your Brain’s Potential (Part I)?

xkcd: Malamanteau

xkcd: Malamanteau

Malamanteau is a portmanteau of portmanteau and Malapropism, whereas malamanteau is also a Malapropos of portmanteau. (BBC News America: Malamanteau Wikipedia)

Neologism is a newly coined word that may be in the process of entering common use, but has not yet been accepted into mainstream language.

Portmanteau or portmanteau word is used broadly to mean a blend of two (or more) words or morphemes and their meanings into one new word.

Malapropism or Dogberryism or acyrologia is the substitution of a word for a word with a similar sound, in which the resulting phrase makes no sense but often creates a comic effect. It is not the same as an eggcorn, which is a similar substitution in which the new phrase makes sense on some level. Occasionally a phrase, rather than a single word, replaces the original word, for example Stan Laurel said “What a terrible cat’s after me!” (i.e., catastrophe) in Any Old Port!

TED: Sir Ken Robinson: Bring on the learning revolution!

“The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty and we must rise with the occasion. As our case is new so we must think anew and act anew. We must disenthrall ourselves and then we shall save our country.” – Abraham Lincoln, December 1862

“Life is not linear. It’s organic. We create our lives symbiotically as we explore our talents in relation to circumstances they help to create for us.”

“It’s about passion and what excites our spirit and our energy. And if you’re doing the thing you love to do that you’re good at, time takes a different course entirely.”

“If you’re doing something you love, an hour feels like five minutes. If you’re doing something that doesn’t resonate with your spirit, five minutes feels like an hour.”

“We have built our education systems on the model of fast food; everything is standardized. It’s impoverishing our spirits and our energies as much as fast food is depleting our physical bodies.”

“We have to recognize that human flourishing is not a mechanical process; it’s an organic process. You cannot predict the outcome of human development. All you can do, like a farmer, is create the conditions under which they will begin to flourish.”

“Had I the heavens embroidered cloths and wrought with gold and silver light of blue and the dim and the dark cloths of night and light the half light I would spread the cloths under your feet, but I being poor have only my dreams. I have spread my dreams under your feet. Tread softly because you tread on my dreams.” – William Butler Yates

The Daily Show With Jon Stewart: Chris McDougall – Born to Run

“The shoes are the root of the problem. Without the shoes you can run painlessly and joyfully forever.” – Christopher McDougall

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Christopher McDougall
Daily Show Full Episodes Political Humor Tea Party

The Daily Show With Jon Stewart: Christopher McDougall
Born to Run: A Hidden Tribe, Superathletes, and the Greatest Race the World Has Never Seen

How to Say I Love You (Part 1)

It’s important not only to feel loved but to be able to share your feelings with others. When it comes to “I love you,” too often we gloss over these important words or don’t say them at all.

In a world where socialization is now dominated by digital communication we’re robbed daily of the necessary emotional intimacy of real-world intimacy. While we can now keep in contact with hundreds of friends compared to our parents’ measly dozen, we don’t necessarily get the same sense of belonging that their relationships may have provided. This disjunct comes from our inability to share ourselves openly and honestly with those we care about due to our lack of practice. It is important for the strength of our relationships and our own personal health to be able to feel and share these words with those that we love so that they may know how important and beautiful a roll they play in our lives.

Make eye contact.
Get over your anxieties and share something real. I’m an endless fan of intimacy.

Love comes in all shapes and sizes, but expressing love should always be a positive experience for everyone involved. Help their subconscious know that sharing your feelings is not a painful experience but one of deep satisfaction, glorious excitement, and endless appreciation.

“I love you” is not a question.
Say it with conviction and don’t wait for a reply.

Pronounce all three words clearly.
Some people are comfortable abbreviating this phrase and dispersing it casually amongst friends, but we’re not always looking for casual comfort, we need heart-felt honesty. And don’t whisper unless you’re absolutely sure they can hear every word clearly.

Follow through with action.
Many people have learned to take these three beautiful words with a grain of salt because too often the words are abused and used for manipulation. So follow through with action. I prefer hugs.

Be creative.
Yeah, we’ve heard all heard it before, (and if you haven’t, I love you,) and now that you know the rules you can probably fake it. For your sake, don’t. But when you really mean it, and you want to give these three beautiful words new life, be creative! Express your love in a letter, a poem, a song, or tailor it specifically to your partner. A romantic may appreciate flowers and candles or dinner and a movie. An active or outdoorsy person may adore a hike and a picnic. A nerd may love a cypher or an actor may love a monologue. A traveler may love a weekend road trip and a foreigner may like to hear it in their own language.

Don’t be stingy, be real.
Finally, there are plenty of cases where a quick and comfortable “love ya” or “you, too” are appropriate, but don’t forget to really open up to the ones you care about and tell them how you feel every now and then. It’s not just for their sake.

Related Posts:
How to Say I Love You (Part 1)