I've been reading the short book Speculation as a Fine Art and Thoughts on Life by Dickson Watts and it's making me think about pliability, the ability to change an opinion, and the power of revision. "He who observes," says Emerson, "and observes again is always formidable". (this reminds me of the chair, always observing, testing, measuring).

Never "double up",  that is, never completely and at once reverse a position. When you're long, for example, do not sell out and go as much short. It may succeed occasionally but it's hazardous. Because if the market reverses and one then flips back to long and this change is then wrong, complete demoralization ensues. This is timely as our markets are reversing wildly these days. It's interesting to note that it takes a trader 3 positions for mental destruction to take hold–long/short/long and that turns wrong, and it's over mentally. Average down works 80% of the time to get you back to even –20% of the time it will bust you bad though. This is the common strategy and should be avoided.

Averaging up, does not work 4 out of 5 times, with a 20% chance of a huge gain and should be employed. The key is to cut the trade when the market comes back to your average line– do not let the market line turn to a loss, 20% of the time you will encounter a large gain from a runaway up market. To me this is like fishing. You know that you may have to try a few different times before hooking a big one. If you mentally follow the program and cut before the market breaks below your average then you can mentally frame this as a process and not failure though.

Run quickly or not at all.

Hold or close part of the interest.

Finally, some words of wisdom/thoughts on life:

Break antagonism with a joke. Recognize a fault but don't dwell on it. In youth a man forges his chains that bind him in old age. All see; few observe, fewer still compare. People forget in the rush, remember in the hush. In his secret heart, every man thinks the universe is too harsh on him. Genius consists of seeing instantly the vital point. At twenty, and again at sixty a man thinks he knows it all. Patience is sustained courage. Wisdom is seeing many things and concentrating on one thing. Old young men are invariably wicked; young old men, universally good. It is always the "unlucky man" who believes in luck. (didn't someone recently exclaim that the economy ran into some bad luck?) Beware of the "unfortunate man"; flee from the enthusiastic man. Some men are so mellow that they are rotten. A tiresome man— a man with a theory. Against flattery women are on guard. Men can be flattered into doing almost anything. All men travel in circles. A few increase the diameter of the circle —–( a shout out to the good men and women of the list!)





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