How to win in any market: 9 rules for contrarian investing

[vodou]

While this is about stock trading, I think we can substitute the word "art" throughout and people can find this useful for our hobby too.

 

How to win in any market: 9 rules for contrarian investing

 

Posted Thursday, 3 December 2015

By Sol Palha

 

A little knowledge that acts is worth infinitely more than much knowledge that is idle.

Kahlil Gibran

 

When it comes to investing, the first rule thing you need to learn is effective management of your emotions. It is impossible to eliminate the impulse to act when euphoria or panic are in the air. While you cannot eliminate the emotion that pushes to you react, you can control your reaction. You can choose to run with the herd of fight panic and stand aside while the herd stampedes. The most important rule is to never let your emotions do the talking. This means not succumbing to panic or euphoria. If you fail here, then nothing can help you. All the rules in the world will fail to alter your outcome.

 

1. Management of your emotions: Panic and euphoria are useless when it comes to trading. Control them or be controlled by them.

2. Patience and discipline: these are two of the most important traits that you need to master, after the above rule. You cannot win in the markets if you are in a rush and lack discipline. You need to wait for the crowd to panic, before deploying large chunks of our money into stocks. If you decide to short the markets, do not oppose the masses just because they have jumped on the bandwagon. One must wait until the bandwagon is overloaded and threatens to buckle under its weight before you head for the exits and plan on taking a position that opposes that of the masses.

3. All forms of popular media should be avoided. In other words, if you are going to these places for investment advice you are probably not going to fare well in the long run. Use popular media to get a gauge on what the masses are doing.

4. Come up with a strategy before you start playing with real money. Don’t attempt to score a home run; your only reward will be loss and misery. The plan should include profit targets on each and every trade, and, an exit plan, in case the trade does not work out.

5. Technical analysis is very important in our opinion. All traders should have a firm understanding of the basic concepts of this field. Try to understand how to 2-3 technical indicators work. Doing so will greatly improve your odds of succeeding

6. Study and understand the markets you are going to trade in. We have put up an extensive list of resources, all of which are free here. Free Trading Resources

7. The law of balancing comes into play here. When you win a significant amount of money, help one person in your lifetime and your rewards will be 100 fold.

8. Options are a no-no. Under no circumstances, you should trade options until you have a firm grasp of the buying and selling stocks. Once you have locked in some profit, you can use some of this money to trade options if you still have the desire to do so.

9. Learn to relax. A stressed mind is no good to you. A diseased body is a body not at ease, so if you are not at ease, you will perform miserably in the markets.

 

Final words

 

A true contrarian never opens a position unless blood is freely flowing on the streets or the investment in question is despised or being ignored by the masses. Buy when the crowd is paralyzed with terror and panic and sell when the masses are jubilantly buying. When you are feeling ecstatic, flee for the exits.

 

Don’t be too confident as this is usually arrogance disguising itself as confidence. The stock market takes no prisoners Stops are an important part of trading; they help you minimize your losses. Never open a position without determining upfront how much you are prepared to lose.

 

Investing is all about emotions and overcoming them. Do not align yourself with the crowd for they are notorious for being on the wrong side of the equation.

 

 

''How do you know so much about everything?'' was asked of a very wise and intelligent man; and the answer was ''By never being afraid or ashamed to ask questions as to anything of which I was ignorant.

John Abbott

[delekkerste]

I like to collect what I like, even if others like the same stuff too, not just things that might be good value because they are neglected. Neal Adams Batman? Yes, please. Neal Adams Ben Casey strips because they are a contrarian value play? No, thanks, not interested, and never will be.

[tth2]

Very clever, being contrarian to the contrarians.

[comix4fun]

I like to collect what I like, even if others like the same stuff too, not just things that might be good value because they are neglected. Neal Adams Batman? Yes, please. Neal Adams Ben Casey strips because they are a contrarian value play? No, thanks, not interested, and never will be.

 

 

Collecting what you like is really whats built the OA hobby. Liking the art, nostalgia, and the good feelings that come associated with it are all paramount to collectors and appreciators of comic art.

 

One page that's truly special and head and shoulders above the rest is better than picking up 100 pages of true drek at a "great deal" to uphold contrarian ideals. Sometimes things are cheap because no one wants them and never will.

 

The head and the heart have been at odds in this hobby for as long as I can remember. If you only buy art when it's relatively cheap, waiting until you can get it at steep discount, playing the value angle solely, you're going to miss out and dozens and dozens of wonderful pieces that might be overpriced for today and underpriced for all time.

[Claudio]

This is a thread about ROI. No talking about nostalgia, good feelings and all that hippie carp.

 

 

 

 

 

[Lucky Baru]

If we are talking about ROI then what has been happening with Rob Liefeld's early X-title work is an example of contrarian investing. People laughed at Rob's work and it sold well below the other guy' works that started Image. Pages and covers could be picked up for a fraction of the other guys.

 

Rob's pages have been increasing in price. At the last Comic Link auction the went for 850.00 to 1300.00 a page.

[delekkerste]

BTW, there are times when some art that people actually like can be irrationally out of favor. Like back when "Watchmen" art wasn't thought of that highly - my feeling at the time was that people thought of it more about Alan Moore's story and less about whoever put ink to paper, so that art was relatively cheap for a while. Or, remember when Jack Kirby's X-Men #1 OA was out of favor after being priced too high and people slagged it off for not being Kirby's best work and this being the version of the X-Men that nobody cared about. Of course, now it's revered as an early Marvel #1 and every page is expensive from the book.

[AKA Rick]

I think this may apply to the logic of stocks and bonds where it's based on P/E ratios and financial valuation.

 

For collectibles however, such as ORIGINAL ART it's hard to not factor in those 9 rules listed.

 

1. Management of your emotions.

 

COUNTERPOINT: Collectibles including comic art are driven by nostalgia, which is an emotion. Where even if investing in a commodity such as gold at $1,000 per oz, buying comic books or comic art where the intrinsic value of the material itself is a few ounces of paper yet can trade for $0.25 to $250,000+. It's near impossible to take a Star Trek "Spock" role where it's about logic and remove emotion.

 

However, managing the emotional aspect of an unwillingness to take a loss to sell, or a must-have attitude to overpay in a bidding war can cause financial ruin.

 

2. Patience and discipline

 

COUNTERPOINT: With Original Art, they're one of a kind pieces, so reacting is at times key.

However, if a piece comes up that's a place holder, not quite what you're looking for, then that's where maybe patience is required to wait for the right piece. But most of us just buy what's in front of us, then if an upgrade comes along we sell what we have and trade up.

 

3. All forms of popular media should be avoided.

 

COUNTERPOINT: For Original Art, the marketplace is dictated by historical precedent, speculation is also based on trends and news stories, be it the recent influx of major motion pictures by Marvel (Avengers, Iron Man, Thor, Captain America, etc.) or television series by DC (Flash, Green Arrow, iZombie, Supergirl, Gotham, etc.) or The Walking Dead, those do influence demand and value

 

However, when shopping if something is listed for sale and still available at a certain price, that's not necessarily an accurate valuation, otherwise the item would be sold and not available. In truth, the mere presence of a piece being available (after let's say 3 months or so of being unsold) in certain terms means it's probably not worth as much as it's listed for/at at the time.

 

so In other words, if you are going to these places for investment advice you are probably not going to fare well in the long run. Use popular media to get a gauge on what the masses are doing.

 

4. Come up with a strategy before you start playing with real money.

 

COUNTERPOINT: There really isn't any for this one. It's smart to know you can't afford everything and you can't own everything, so pick what you want to acquire wisely.

 

5. Technical analysis is very important in our opinion.

 

COUNTERPOINT: It's true, historical precedent of past sales can be important for estimated valuation, but with original art they're all one of a kind and in an open marketplace environment like an auction, it just takes 2 to create a bidding war and throw technical analysis out the window.

 

6. Study and understand the markets you are going to trade in.

 

COUNTERPOINT: None here, it's it is smart to do research on what's available, what's sold as well as who's selling (for authenticity and reliability).

 

7. The law of balancing comes into play here.

 

COUNTERPOINT: I'm not sure how this applies to original art.

 

If it's about helping others and relationships, yes, the hobby is definitely about karma and relationships, especially when dealing with artists direct, but also art dealers and reps too.

 

If this is about balancing the portfolio for diversity, I'd say buy what you like not what you think others like or what others tell you to like. Putting all of your eggs in one basket may be for you, or you might be the type who wants one or a few examples of good art by a number of artists.

 

If this is about pulling your money off the table, selling what's hot while it's popular and reinvesting as an early onboarder of new emerging material, there's no right nor wrong of this gamble or choice. I've seen Kirby, Byrne and Miller all increase threefold in the past half decade where I've seen formerly hot artists like Ed Benes' values get cut in half.

 

8. Options are a no-no.

 

COUNTERPOINT: I'd say as maybe in correlation but not direct relation to this. Where options are betting on the future with a finite decision time to whether you win or lose, I'd say this about original art collecting. It's a hobby in part. It's not a necessity in another breath. Don't take out a 2nd mortgage on your home to fund your hobby. Think twice before getting into layaway payment plans and know you have your basic needs and overhead covered before you start spending money you can't afford to on something as non-essential as original art.

 

9. Learn to relax.

 

COUNTERPOINT: I'd agree here. Although it's hard not to get excited about a hobby where emotions play a role. But I'd say, keep looking forward, don't have 20/20 hindsight, move on and if you ever lose the opportunity to buy a piece, another piece equal or better will come along, so keep your money in your pocket and move on.

 

[vodou]

Glad we got some discussion going.

 

As two people (I think?) hinted at...you can find things you like that are temporarily out of favor and win two ways: now (for fun) and later (for making a return that beats other investments). We all know there is a lot more art out there than any of us can afford or have the space to nicely store (as opposed to floor to ceiling stacks in a leaky basement!) So it shouldn't be too hard for most collectors to hit both goals and still have to cull to what they can afford. Is anybody here saying that all the art they want is already in high demand and fully priced to market? All of it?? I don't think so. Or...broaden your horizons a bit

[suspense39]

http://www.nasdaq.com/article/investing-in-art-is-no-paintbynumbers-task-cm550974#/ixzz3tfv82axF