Over the past decade, I have studied many of the legends of Wall Street and have noticed several overlapping similarities in their thinking. The following list outlines great lessons from wall street legends, regardless of their investment style or background (these are not in any particular order):
- Trade on what you see happening, not on what you think will happen. (i.e. trade in the now)
- Always keep your losses small and never argue with the market, you will always lose.
- You don’t need to a lot of money to do well, you need to have rules and follow them!
- Only trade when you have an edge. If your edge is not clearly defined- stay away.
- Develop a sound set of money management rules.
- Focus on what matter most, your bottom line.
- All your positions should pay you to be involved. If they don’t, something is wrong. (this doesn’t only go for stocks that pay a dividend. This means that when you buy a stock, it should go up soon after you buy it)
- Study and learn history, otherwise you are doomed to repeat it.
- Take responsibility for all your actions, do not make excuses.
- Do not try to pick tops or bottoms, instead capture the bulk of the move.
- No one gives permission. Seize the moment.
- Do more of what works and less of what doesn’t.
- Hard work, focused dedication and drive are vital to being successful.
- Post analysis- be your biggest critic.
- Plan for every possible outcome, then trade your plan.
- Separate your emotions from your decision making process.
- Be positive and happy. Develop a spirit of opulence. Life (and the market) is full of good.
