STREET DOGS

BUY low, sell high! That’s the shortcut to a fortune right? Wrong! It is just one of the many loss-causing clichés that the crowds chant as they lose money year after year.

There are many other do’s on Wall Street that are really don’ts, such as the necessity of reading the financial pages and watching the evening TV business report so you are in touch with important developments in the economy and its leading industries. Or the need to get advice from a socalled Wall Street wunderkind who wears a threepiece suit and talks to other wunderkinds.

These aren’t the answers and they won’t put profits in your pockets. It’s unfortunate that so many investors embrace their ideas as the key to financial well-being.

Buy low, sell high is a cliché, not a blueprint for action. It blinds investors to the professional’s approach of buying high and selling higher.

Being in touch with all the financial and economic news won’t put your investments in the plus column either. In a world of computers and instant communications, the financial markets respond to the latest news long before you read it in the press. In addition, the market is a discounting mechanism, and stocks sell on future and not current fundamentals.

Finally, relying on the advice of Wall Street wunderkinds — the brokers and analysts — won’t get you very far. The overwhelming evidence is that their advice is inferior to the advice you will get from a set of darts thrown at a stock page.

What you need is a good system and to stick with it. If it doesn’t regularly beat the market, then get a new one. — Stan Weinstein, Secrets for Profiting in Bull and Bear Markets

Michel Pireu — e-mail: pireum@streetdogs.co.za