Keep cash in reserve.
Livermore says you should resist the temptation to be in the market all the time. Again, patience is a virtue and waiting for the right opportunity is better than being foolishly invested. There are times when you should be 100% in cash.
Park 50% of your profits from a successful trade, especially where you doubled your original capital. Put it in the bank, hold it in reserve.”
This, in fact, is the rule Livermore regretted not paying enough attention to. He went broke a number of times from not following his rules.
Good time for Uncle8888 to remind himself again!
Compounding investment gains year on year is what many retail investors like to think. Up, up, up and away!
No. We must pay more attention to Jesse Livermore's Golden Money Management Rules which he himself regretted not paying enough attention to them.
The Truth is Mr. Market can give; but can also easily take it back without giving us any advance notice. By the time, we realize it it is often too little late!
More cash is rotting?
Charles Munger "There are worse situations than drowning in cash and sitting, sitting, sitting. I remember when I wasn’t awash in cash — and I don’t want to go back"
ReplyDeleteHis boss, Warren Buffet may not agree. Ha Ha!
DeleteMay be what he said was before he worked for Buffet?
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