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The firm developed innovative solutions for its clients, including new methods to free up cash, get rid of debt and guard against rising interest rates or currency fluctuations.........
At the end, though, the story of Financial Products is not about math and financial formulas. It is a parable about people who thought they could outwit competitors and market forces alike, and who behaved as though they were uniquely positioned to sidestep the disasters that had destroyed so many financial dreams before them.
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Why do I write about the mishaps in large companies ? Because many of their people behaved as if they were God. Finally, their pride destroyed them.
Traders must prevent their egos from taking over their sense of judgment. If a trade is not going your way, review it, if neccessary take a loss and close it. Do not say "This will work out eventually" or "The Market will do what I want".
Always understand that risk can be more than anticipated. Therefore, protect yourself from losses. Always undertrade. (No overtrading, ever!)
3 comments:
Great Advice. Warren buffet also warned of derivatives being potential weapons of mass destruction. Read some of his experiences and predictions at the following link http://www.cnbc.com/id/28392900. Specially that "Recessions will create opportunities"
Dear Sudarshanji,
I believe this is an important subject you touched in your post. I am your staunch follower and I purchased the book "Timing the Market" on you recommendation. In this beautiful book this issue is discussed in Chapter "Money Management".
Mr. Curtis M. Arnold says- .........In our parable, neither id nor the ego are capable of making the correct decision. What is needed is the "superego." Like our conscience, the superego or money management system must override the other two. It must keep the trader from destroying himself by seeing that loses do not get out of control.
It can be seen how apt his comments are for a small trader as well as big organisations like AIG financial services. I think his views are applicable to all traders including big organisations; because after all even organisations are run by human beings having feelings and ego.
warm regards,
Anant
Sir,
Few days b4 u said that the short term up trend has come to an end... What are the next targets for the Nifty to cross in order to start a fresh up trend...?
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