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30 Major Causes of Failure

January 3, 2008 by 12 Comments

The 30 Major Causes of Failure:
How many of these are holding you back?

All text below quoted by Napoleon Hill from the book (list published in 1937):

Life’s greatest tragedy consists of men and women who earnestly try, and fail! The tragedy lies in the overwhelmingly large majority of people who fail, as compared to the few who succeed.

I have had the privilege of analyzing several thousand men and women, 98% of whom were classed as “failures.” There is something radically wrong with a civilization, and a system of education, which permit 98% of the people to go through life as failures. But I did not write this book for the purpose of moralizing on the rights and wrongs of the world; that would require a book a hundred times the size of this one.

My analysis work proved that there are thirty major reasons for failure, and thirteen major principles through which people accumulate fortunes. In this book, a description of the thirty major causes of failure will be given. As you go over the list, check yourself by it, point by point, for the purpose of discovering how many of these causes-of-failure stand between you and success. (This can and does apply to trading – trading for a living is a business)

  1. UNFAVORABLE HEREDITARY BACKGROUND. There is but little, if anything, which can be done for people who are born with a deficiency in brain power. This philosophy offers but one method of bridging this weakness—through the aid of the Master Mind. Observe with profit, however, that this is the ONLY one of the thirty causes of failure which may not be easily corrected by any individual. (not sure if I agree with this one, especially at #1)
  2. LACK OF A WELL-DEFINED PURPOSE IN LIFE. There is no hope of success for the person who does not have a central purpose, or definite goal at which to aim. Ninety-eight out of every hundred of those whom I have analyzed, had no such aim. Perhaps this was the…see #3
  3. LACK OF AMBITION TO AIM ABOVE MEDIOCRITY. We offer no hope for the person who is so indifferent as not to want to get ahead in life, and who is not willing to pay the price.
  4. INSUFFICIENT EDUCATION. This is a handicap which may be overcome with comparative ease. Experience has proven that the best-educated people are often those who are known as “self-made,” or self-educated. It takes more than a college degree to make one a person of education. Any person who is educated is one who has learned to get whatever he wants in life without violating the rights of others. Education consists, not so much of knowledge, but of knowledge effectively and persistently APPLIED. Men are paid, not merely for what they know, but more particularly for WHAT THEY DO WITH THAT WHICH THEY KNOW.
  5. LACK OF SELF-DISCIPLINE. Discipline comes through self-control. This means that one must control all negative qualities. Before you can control conditions, you must first control yourself. Self-mastery is the hardest job you will ever tackle. If you do not conquer self, you will be conquered by self. You may see at one and the same time both your best friend and your greatest enemy, by stepping in front of a mirror.

    6. [Read more…]

Filed Under: Books, Psychology, Subconscious

It Couldn’t Be Done

January 2, 2008 by 2 Comments

I’m going to start 2008 by posting a few inspirational and/or success blog entries. These types of exercises clear my mind of the past, force me to focus on the positives and hit the ground running in the New Year. They allow me to build a stronger family, a more successful business life and most relevant to this blog: continue trading successfully!

Enjoy the poem I found in the latest copy of Think and Grow Rich: The Original Version, Restored and Revised, it’s a favorite of Annie Lou Hill (Mrs. Napoleon Hill).

It Couldn’t Be Done
by Edgar Guest, 1941

Somebody said that it couldn’t be done,
But he with a chuckle replied
That “maybe it couldn’t,” but he would be one
Who wouldn’t say so till he’d tried.
So he buckled right in with the trace of a grin
On his face. If he worried he hid it.
He started to sing as he tackled the thing
That couldn’t be done, and he did it.

Somebody scoffed: “Oh, you’ll never do that;
At least no one ever has done it”;
But he took off his coat and he took off his hat,
And the first thing we knew he’d begun it.
With a lift of his chin and a bit of a grin,
Without any doubting or quiddit,
He started to sing as he tackled the thing
That couldn’t be done, and he did it.

There are thousands to tell you it cannot be done,
There are thousands to prophesy failure;
There are thousands to point out to you, one by one,
The dangers that wait to assail you.
But just buckle in with a bit of a grin,
Just take off your coat and go to it;
Just start to sing as you tackle the thing
That “cannot be done,” and you’ll do it.

Filed Under: Books, Psychology, Subconscious

Higher Priced Stocks Give Best Gains

December 12, 2007 by 13 Comments

Lower Priced Stocks Don’t Double Faster!

I cringe every time I hear a novice or even a long time investor tell me that they only purchase low priced stocks because they offer quicker potential gains. A common phase I hear is:

“I like to buy $1 and $2 stocks because they can double easily and I can afford them”

You can afford them? To start, a $1,000 account is a joke but to actually say the above statement and believe what you are saying after thinking about it is insane. A 50% gain is a 50% gain regardless of how many shares are in your portfolio. So, should you be buying 100 shares of SIRI because you love Howard Stern and can “afford it” or should you be buying Apple (AAPL) because you love it as it crosses $100, $150 and $200 per share? The novice says they can’t afford a $200 stock. Please smack yourself because you can afford it but in your mind, you can’t afford a nice round lot purchase of 100 shares (who cares, you’re trading small to begin with – making money is your only concern). One share or one hundred shares: a gain is a gain and a loss is a loss.

121107_high_priced.png

I rather own 15 shares of Apple than 100 shares of Sirius or a similar beaten down piece of garbage. I could care less about the number of shares in my account.

I care about making money – MY PERCENTAGE GAIN AT THE END OF THE YEAR!

Hell, I would’ve bought one share of Berkshire Hathaway at $100,000 before I would consider much of the hopeless crap treading along the bottom of the market’s ocean.

“Stocks are priced low for a reason, just as stocks priced high are there for a reason”.

Like anything in life, quality is never offered at a discount. In most cases, life offers its best material possessions at premiums.

A $1.00 stock is trading this low because it is only worth this much in investor’s eyes. A stock priced at $100 or $200 is trading at these levels because of a quality that the lower priced stock does not have (in most cases). Institutions, such as mutual funds, banks and insurance companies will not purchase a stock at $1 based on strict internal rules and fund guidelines.

Stocks such as First Solar (FSLR) move quicker than dirt cheap crap due to the vast amounts of support from institutions that have the buying power to propel prices 100%, 200% or more in less than 12 months.

  • Apple (AAPL) is up almost 300% in eighteen months
  • First Solar (FSLR) is up almost 900% over the past 13 months
  • Baidu.com (BIDU) is up almost 400% over the past 18 months
  • MasterCard (MA) is up almost 400% over the past 18 months
  • Research in Motion (RIMM) was up almost 500% over the past 18 months
  • Garmin (GRMN) is up almost 300% over the past two years
  • Petrochina (PTR) was up more than 200% over the past 2 years
  • Mcdermott (MDR) is up more than 300% over the past two years
  • Google (GOOG) has doubled over the past year or so

The stocks above were trading at these prices June 1, 2006 (pre split adjusted):

  • AAPL: $62.17
  • FSLR: $27.89 (12/1/06)
  • BIDU: $83.43
  • MA: $47.51
  • RIMM: $65.91
  • GRMN: $97.12
  • PTR: $106.45
  • MDR: $44.84
  • GOOG: $382.62

So, would you rather own low priced media mentioned stocks such as SIRI ($4.51 on 6/1/06 and $3.50 today) or the higher priced $40, $50, $60, $100, $200 and $300 priced stocks above. I’ll take the 300%, 400%, 500% and 900% gains of the higher priced stocks over the losses or minor gains from the lower priced options.

121107_fslr_daily.png

A quick study of stock market history will prove that the majority of stocks priced at $2 or less will be de-listed or bankrupt before they ever give an investor a triple digit return. High quality stocks are typically representative of high quality companies that usually have innovative products or services that are increasing revenues and earnings thus peaking institutional interest. You have all watched more stocks double or triple from the $25-$100 range on this blog than any other price level during the past year (chrisperruna.com is one year old this month).

I bought BIDU at $103, MA at $107, FSLR at $101 and AAPL at $130 this year alone (I rounded the cents). How many sub $5 stocks did I buy this year? NONE!

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Filed Under: Education, Psychology, Stocks

Market Corrections, Bears and the Big Picture

November 8, 2007 by 13 Comments

Market Corrections:
Market corrections are healthy as they allow advancing stocks to take a step back and breathe. Corrections of 5%-10% allow the leading stocks to shake out all weak holders while setting up support levels and sometimes new base formations. Humans (traders) are typically sheep so they pile in at the top and run for the doors at the bottom. Don’t follow the crowd, so don’t panic during a market correction.

110807_nas_mnthly.png

Look at the overall BIG PICTURE before making major decisions on a short term intraday or daily chart.

Even weekly charts can fake you out when you start to see red across your portfolio screen (during a large market correction).

Market corrections and flat markets allow intelligent investors to study conditions carefully while they sit on the sideline patiently awaiting the defining trend. Money is made on the big moves, not the minor day to day moves. Corrections allow big moves to establish themselves.

Don’t go crazy over the minor day to day moves! Look at the BIG PICTURE!

110807_dow_mnthly.png

As for Bear Markets:

  • Keep in mind that nearly 75% of all stocks follow the general market trend
  • Your cash doesn’t need to be committed to the market at all times. This philosophy is suited to making the most money in bull markets or markets trending higher
  • It is psychologically and emotionally healthy to get out of the market from time to time, especially after a losing streak
  • It is essential to keep up your watch lists during bear markets and/or general market corrections as many present and future leading stocks are building new bases
  • Stocks that correct the least and display the highest relative strength ratings tend to be the leaders of the next up-trend or bull market. Take note of all stocks that are base building during corrections; a cup with handle, flat base or major moving average support.

110807_nas_fib.png

Signs pointing towards a correction or bear market:

  • The major indexes will advance on below average volume
  • Stocks making new 52-week highs will be limited
  • Stocks making new lows will increase
  • Major indexes will fall below the 50-day MA and/or the 200-day MA
  • Index averages will start to under perform. Relative strength lines will head south
  • Major publications will tout hot stocks at key market reversals (market tops)
  • Institutional (smart money) will bail on huge volume
  • General market index down days on excessive volume (always above average)
Filed Under: Education, General Market, Psychology

Friday Morning “Chinese” Breakfast

October 5, 2007 by 1 Comment

Mike Steinhardt from HEDGEfolios uploaded a great post today Comparing China’s Stock Market to the NASDAQ of the late 1990’s. As you know, I wrote about the technical comparison on Wednesday in my post titled Is Shanghai a Nasdaq Déjà vu

Please understand that we are offering opinions based on fundamental and/or technical data. With that said, you must realize that the market doesn’t care about our own personal opinions and will do what it wants, how it wants, when it wants. So, comment on what you think about what we are presenting (both technical and analytical).

I completely agree with Mike when he says:

“The dangers in comparative analysis are heightened when we only look at the similarities and then extrapolate a similar ending. Instead, we must look at the differences as well and when we do that, we still need to avoid the expectation that the ending will follow previous examples.”

And

“The chart overlay tells one part of the story. Of course, markets are much more complex than just looking at a chart. All the factors I mentioned and many others I have not discussed make the market. The chart is just a composite image of them and by only focusing on a picture we oversimplify everything else that is going on.”

That last sentence is the most important as I would expect readers of this blog to understand that we never try to predict anything and that technical tools are just a portion of your overall system. We as humans do tend to oversimplify markets when plotting them on a chart, forcing our eyes to see repeating patterns (that may not be there).

“I wouldn’t make a new entry into China’s stock market but then again, I have been saying that for over a year – a year in which the SSEC has gone up about 200%.”

I have taken part in the mania with individual stocks in the Chinese market in 2007 but I am becoming skeptical of the sustainability of the current rise. Is this due to my over-analysis of what may happen based on past events? Am I playing games with my own mind by trying to see something that is not there?

Maybe, maybe not! I took a position in my sixth Chinese stock (of 2007) this week and it’s showing a quick profit but I am skeptical as it was a pure spec play. I have a tight stop and I am not leaving much room for disaster in case things start to turn on a dime. As said on Tuesday, I was keeping my exposure low with a smaller than normal position (a very tight R factor).

Maybe the bubble will burst in China, maybe it will deflate slowly and then move even higher; whatever the case, I will take my individual signals while keeping an eye on the bigger picture. Thank you for the analysis Mike, I really appreciate your input.

“Will the chart of the decline mirror the pain we felt on the Nasdaq? I have no clue.”

Neither do I!

Filed Under: Blogs, China, General Market, Links, Psychology, Wall Street
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