Chief Editor
The words of the Kenny Rogers’ ballad, in so many ways summarises for me what trading is about… “You got to know when to hold 'em, know when to fold em, know when to walk away, know when to run. You never count your money when you’re sitting at the table, there'll be time enough for countin when the dealin's done.”
You need to know when to play and when to stand back. I am confident that this rally “has legs”. But we cannot expect that the market will keep rising with out a breather. Yet last Tuesday the market took another run before settling down for the rest of the week. This peak was on much reduced volume from the previous day – typical of peaks that will run out of steam – albeit for a small period of time in this case.

It is all in the timing. Fact: So many retail investors seem to get this wrong. In the charts below I have marked where Fund Managers buy and where the public buy; where Fund mangers sell and where the public buy.

I have perhaps exaggerated a little to make my point but the broad view is true. I speak a great deal with both Fund mangers and investors – I am always interested in understanding their view of the market. Right now most Funds are fully invested, on the other hand anecdotally I hear stories of new investors saying they are in the process of opening up a margin-lending account. I don’t discourage that but rather signal caution after markets have had a good run. It is a time to be more cautious, develop a discipline and continue with skill and knowledge development through education. Opportunities will abound but skill will be required to pick the long-term movers.

In later issues we will look at the psychology of investing and risk management – two factors that contrast the Fund Mangers and general public approach to successful trading.

In the meantime, enjoy the ride!

Tom Scollon