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Gurus of the game

April 26, 2008

We humans love our heroes. We worship them, daydream about them, are obsessed with their thoughts and emulate them in our lives as much we can. We humans love our heroes.

This reaches a different level altogether, when the ultimate gurus and legends are created, exalted and emulated in the daily battle between the green and the red, the bull and the bear, the uptrend and the downtrend, optimism and pessimism and adorn in all these emotions is the stock investing community. This is not in only Dow Jones, or Nasdaq. Even in Beijing, Bombay, Hong Kong and the world over, where trading is done with the vigor of a battle.

After all each battle requires its own heroes to make tales of. The heroes of their games are the community’s hottest pin up boys. But strange is it, that gurus have markedly different approaches to the game.

Is it any surprise that the greatest pinup boy of stock marketing world, Warren Buffett believes in a completely different game than what his contemporaries like George Soros or Robert Rodriguez.

Amateurs are dangerous for they are unpredictable

Warren Buffett lived at a time when traders made millions out of a booming Dow. The era he lived were the resurgent 1950s. But he believed on a strategy of buy and hold. Value picks, and business models is what he sweared by and he picked up stocks which everybody looked beyond.

Robert Rodrigues made millions and billions by picking up stocks which were at their 52 week low. And when it made fresh new highs, he flipped. The result, we are talking about him today.

Joe Lewis, foresaw something which everybody refused to see and understand. In 1992, British government publicly acknowledged that it wont allow the sterling vs USD to rise above a certain limit. But the pound quickly rose, touched that level and stayed there. So the rest of the market speculated that, because anyway the pound won’t be allowed to rise any further, and most probably it will be contained by the Bank of England, so why not short sell it. And short sell did happen, by millions and millions. The pound fell, had a dip but again rose. Had a dip again and again rose. Joe and his ilk saw this and betted against the surging tide with the logic that there is inherently a huge huge demand for pound. So what he did, he went a Lock, Stock and Barrel. Long on Pound, for indefinite time horizon. Two weeks later, on a sunny morning, the pound surged and broke all levels, and limits and resistances to surge to an all time high. Joe was a billionaire by the close of the day.

They are heroes, heroes in their own rights. And heroes, for they saw things which the markets didnt or at best refused to acknowledge.

So what is your trading strategy, are you selling when everybody is buying or you are buying when everybody is buying?

 

Think about it, I am waiting!

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