Inspiration

Stop, Drop and Think

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 1

The following is the 2nd part of an introduction post from new contributor Lance Chastain (see his bio below) on the importance of Observations.
You may read the first part here

:::::::

Picking up from where we left off last time….. 
 
We’ve all read about or heard of dramatic business successes or business makeovers or departments that were turned around into star performers. Maybe you’ve had the pleasure of being involved with one that provided real personal and professional success for everyone involved. I certainly have. What a sense of accomplishment…to see the smiles on people’s faces when they’ve accomplished something no one thought possible…to realize they’ve not only participated in it but have received real, personal tangible rewards for their efforts. What a rush. 
 
Now…. let me ask you a question.  
 
If we can do this for business and its wide ranging complexities, why can’t we do this as individuals? What’s stopping us? 
 
Just like in business, life throws a lot at us…its messy at times. Not accomplishing our goals or struggling over and over with the same things is frustrating. Failure is real…it stinks and its painful. Some of us start out in bigger holes than others and simply have to work harder. Spinning our wheels and wasting time is irritating. Being overly optimistic and not seeing and embracing reality is problematic for making the best choices. Allowing circumstances or sentiments (either good or bad) to dictate to us instead maintaining proper perspective can be a killer. 
 
That’s why I like Observations. While they’re a great deal of work, they’re continuous, active, objective, practical and constructive tools and guides to really improve the choices and decisions we make in every aspect of our lives.  
 
Here’s a sampling of a few I’ll be sharing over the coming weeks. (Note: when reading add “Observations” before each)
 
….on believing in people 
….on ignoring reality  
….on making hard decisions 
….on having people who believed in me 
….on working with incredible people 
….on letting people down who believed in me 
….on being too focused on myself 
….on not trusting my instincts 
….on being too demanding and intense 
….on having that “hard conversation” 
….on seeing things as they really are 
….on encouraging others and watching them grow and prosper 
….on my mentors 
….on really saying what you mean 
….on really saying what you mean (and wishing you hadn’t!) 
 
….and many, many more. 
 
As you can see from the short list above some Observations will be quite introspective and in-depth from a personal relationships standpoint. Others will combine both the personal aspects and the experience of having observed, mentored, managed, lead and coached hundreds of individuals throughout my business career. What I’ll be sharing is not from any text book or secret sauce or formula or quick fix for success. And one more thing….I promise you won’t get any of the noisy, hyped up “you can be a success too” garbage here. Just simple, straight talk containing the Observations from a life lived and filled with diverse experiences around living, failing, learning and succeeding. In the process, I hope my Observations will surprise you, make you think, encourage you to begin taking the time to create your own and ultimately provide the path to better decision making in every aspect of your life. 
 
In Chapter 8 of Tyranny Of The Moment , Thomas Hylland Eriksen sums up one of the book’s main points as follows: 
 
“ The main scarce resource for suppliers of any commodity in the information society is the attention of others. These vacant moments become fewer and shorter, since the people in question are subjected to powerful expectations that they should squeeze ever more impressions, commodities, experiences and pieces of information into their lives. The next impression kills the previous at an accelerating speed.” 
 
May we not allow the “next impression to kill the previous at an accelerating speed” as it pertains to our prosperity, peace and health and the necessary work of constructing our own personal Observations to help guide us towards the life we desire. 
  
I appreciate Tate’s willingness to allow me to contribute to the blog and look forward to hearing from you. If I’m not clear on a point let me know and I’ll work on it. If there’s an Observation you’d like for me to write about or, if you have Observations you’d like to share with me or discuss, I’d love to hear from you.  
______________________________ 
 
All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. Arthur Schopenhauer 

Lance Chastain Author Bio

My entrepreneurial business career spans 25 years and is both domestic and international in scope. I quit college to co-found my first business at the age of 20 and subsequently received the education of a lifetime during the next 17 years. I was blessed with the opportunity to apply that education in my second business and am now semi-retired at 45. I’ve traveled to 27 different countries and have extensive experience in Asia involving nearly every aspect of raw material sourcing, manufacturing, operations, procurement and logistics. I’ve been the recipient of numerous local, regional and national business awards and been featured on a nationally broadcast financial news program. You can reach me at lchastain1 at cox.net but it’s best to leave comments about the article in the comments section below.

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Take the Fear Out Of Options With a Straddle

Posted By Barry Brush |  Subscribe in a reader | Comment 2
2DIME’S INVESTOR NOTES
Monday, January 14th, 2008
 
 

A Simple Trade to Take the Fear Out Of Options

How many times have you selected a stock, evaluated it, chosen an option strategy and entered the trade only to have the stock move against you?
 
When I first started trading options, this seemed to happen to me all the time. It seemed easy to find great picks. I would buy call on a breakout and watch my investment soar often for a gain of 100% or more.
 
As my mood soared with the stock my emotions took over and I would start imagining all of the material treasures I would now be able to purchase. The impish voice of greed would begin talking to me and I would ride the play higher and higher to greater returns never taking any off or moving up my stops.
 
The next market cycle or price wave would kick in as more savvy traders took some profit off the table. My greed would tell me the play still had room to grow; but my fears began to overcome my hopes as the trade inevitably descended below a 100% rate of return. My fear would approach panic as my paper profit evaporated.
 
I would stay in the play until I was back to zero figuring that some how it would revisit 100%. I never sold until I was afraid I might loose everything I’d put at risk. This Battle inside my head between the emotions of Greed and Fear went on until I eventually paid for the luck I had had in my first six months of trading by bringing my account balance back to where it had started.
 
If any of this sounds familiar, you are on the right track. If you are there now, you have probably figured out that you should do something different. If you don’t know what it is that you aren’t doing, I suggest that you begin a trading journal. Who knows, perhaps the weather or what you had for breakfast may be adversely affecting you. More likely than not, it is only greed and fear at play.
 
If you are new to Options, Let me suggest a simple fool proof trade to get a grip on your financial future. The cool thing is that with this one, there is no room for greed or fear. All option traders should be able to make money if the underlying stock changes its price. The only constant is change and change is good. Up or down, it is good. We are going to expect and profit from change. We are not going to buy and hold anything. You can’t buy anything with paper profits, except maybe a failed mortgage company. BO! FA! FA! FA!
 
This trade is not about being right or wrong, it is about winning. You should be able to win with it 85% of the time, while minimizing your risk to about a 15% per trade. There are three steps to it.
 
First, find a stock that you think will move significantly in the next three weeks. You can find one based upon News, Rumor, Earnings or perhaps one of those scanners a lot of sites promote. It can be a good event or a bad event. It just has to be important enough to prompt a move in the stock.
 
Second, simultaneously buy a put and a call on either side of the at-the-money strike price. (Option strike price closest to the stock price)  Try to have your play in place three weeks prior to the upcoming event. Purchase options with approximately 3 months remaining until expiration. There, you’ve “straddled” a price point of an underlying stock. You now have the right but not the obligation to buy or sell 100 shares of your stock pick at the same price, the strike price.
 
Third, relax, don’t worry – make money. If your “event” causes the stock to move in advance of the event or at the event it doesn’t matter. Give it some time, perhaps as much as a week. If its good news and the stock goes up, your call will bring a profit WHEN YOU SELL IT. Or if its good news and the stock price falls because it wasn’t good enough, your put will make you smile WHEN YOU SELL IT. You can sell at a profit or put on a stop at a profitable level. That’s up to you. I personally like to sell. I’m a “now” kind of guy.
 
A normal expectancy would be for the profitable move to yield twice as much as the other side looses. Two to one odds are the norm. One quick note: After you capture your profit, you might hesitate before unloading the opposite option.(s) Often a fast moving stock will reconsider its direction and retrace a bit, giving you the opportunity to recapture some of the initial decline on the loosing side that occurred as the stock made its initial move.
 
A fourth step is a remote possibility if you have picked a mover; but I’ll cover it any way. If nothing happens, nada, no movement, zero; sell both sides and go shopping for another trade. You will most likely be able to limit your loss to around 15% of your initial investment. Say the “Straddle” cost you $100 for the Put and $150 for the Call your total investment would have been $250 and your total risk 15% or $37.50. I’m not a mathematician but you could probably loose on 7 out of 10 of these and still make money.
 
No Greed, No Fear, No Worry. I’d much rather win than be right or wrong. Wouldn’t you?

Cheers, 2Dimes / Barry Brush
To contact me send an email by using the Contact form (link above) and Tate will make sure I get it.  The best option is to submit your comment to the blog here )

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Barry on Navigating the Emotions of Stock Options Trading

Posted By Barry Brush |  Subscribe in a reader | Comment 0
2DIME’S INVESTOR NOTES
Wednesday, December 12th, 2007
 
 

“You Have the Option to Remain Silent.”

"Any Emotion You Display Can and Will Be Used Against You On the Trading Floor."

so…. “SNAP OUT OF IT!”

I have heard it said that "Trading is as much psychological as it is skill."  I personally think it is much more psychological than skill because much of the skill consists of being able to control the emotions which are along for the ride on every trade.

If you trade for a living like I do, you understand full well the psychological ups and downs which accompanied last months 10% correction. Control of them was the key to eking out a pay check.

As for myself, an ex-fighter pilot, having graduated from a career with a commercial airline, I’m supposed to have superior skills in emotional stability and control.  I used to get paid to take hundreds of people from point A to point B without ever needing to see the ground or the sun, and often two or more hours from the nearest landfall.  If  I preflighted the aircraft and properly planned for the flight, i.e. made sure I had enough gas, and precisely followed a checklist from start to finish, I always reached my goal; 100% of the time. Well, .. maybe not 100%, but close.

In my new career as an options trader, the trades I make are not exactly like that; but one can draw a tight parallel to the emotion involved.  The checklist I run now before I place a trade runs something like this. I pick an equity that is fundamentally above average. I preflight it to verify it will take me to my planned destination. Earnings and Sales Growth, Accumulation and Distribution, DELTA and then, just like every trader I know, I make my pick jump through a series of technical hoops based on price pattern, position and volume before pushing the thrust levers up and putting my money on the runway in harms way.

Usually all goes well and the flight to prosperity continues;  but every once in a while a malfunction occurs, usually a direct result of an overlooked piece of analysis known as a glitch, a screw-up or simply a mistake.  In the cockpit, we used to say if you screw something up unscrew it as soon as possible. When things go wrong what can we do?  We bite the bullet. We accept responsibility and take the appropriate action. Exit the trade to preserve capital. Then, we reflect on the cause so as to avoid it in the future.

As simple as that? What about that emotional fog of doubt that lingers? What do you do with that? What do you do when you start talking to yourself and beating up on yourself.  Thinking to yourself, Oh! I screwed that up, or You dumb a–!  Or why did you do that?  What will he/she think of me now? I was really stupid to gamble that way!

Unfortunately, these thoughts can only be escaped through experience and the emotional battles you win over time. My advice to new traders is to never ever think badly about yourself. You are your own best friend and the best asset you own. You are an excellent money manager!  And well, you’ll be rich! Nothing else is acceptable.

If it were simple ………;but it’s not, is it? Those things called emotions; Greed, Fear, Hope & Doubt are always lurking. They fluxuate, expanding and contracting over the life of any trade. They must be recognized and controlled to achieve success.

I think that trading options has the potential to be a little more emotionally charged than equities. Options have an innate factor of increased leverage. Their spirit or volatility colors them a little brighter than stocks. Their rapid price movements and fluxuations can “whip” an equity trader in and out of trades with regular frustration. While a 7% stop loss on a stock may be sufficient, a mental 30%-50% stop is often necessary in order to stay with an option trade to maturity. The mental stops I use require continual price and volume technical analysis of the underlying equity. A 5% decline in the stock price can mean a decline to 0% in a near term option. Conversely, a $2.00 move up could result in a 40% – 100% gain. I admit to watching some of my trades go to 0% only to bounce back to a 400% gain. Its pretty exciting stuff; but it can also be a trying, stressful, emotional ride.

I use a couple of tools to put the emotional beast in its place. First, I compartmentalize my emotional thoughts by recognizing them. Then, I substitute or overlay them with information I have learned through my training and education. In Pilot speak, its like flying a Category III instrument approach, where you don’t “know” you are landing until you feel the wheels touch down. Its just like trading where you rely on your knowledge, your indicators and memorized procedures to get the job done. Educate yourself and trust your knowledge. I often reassure myself by saying: “I am an excellent money manager”.

I have to confess that some times those negative thoughts are very resilient. When I started trading, I had to come up with a simple way to combat them and add emotional stability to my trades. I adopted a short cut I call: “SNAP OUT OF IT!” I used it a lot at first. Here’s how it works. It is a physical mind trick I still use today, although thank goodness very rarely. Let me explain.

If you run into me, you might notice I wear one of those affinity rubber wrist bands. My current one says “END HUNGER.” (from some kind of a diet program I think.) It doesn’t matter what it says. What matters is that it stays on my wrist and I can use it to control my emotions. If I ever catch myself thinking one of those negative thoughts, (My favorite is: “You Dumb A_ _ !) I stretch the band about 3 inches off my wrist and let go. OUCH! Then I caress the sore spot and say something like “Well I’ll be rich!” It is kind of a psychological punishment for bad behavior and reward for good combined. It really works. Afterward, I dispassionately move on to do what I am really good at, making a living trading stocks and options; staying cool, calm, collected and rich.

Cheers, 2Dimes / Barry Brush
To contact me send an email by using the Contact form (link above) and Tate will make sure I get it.  The best option is to submit your comment to the blog here :)
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Do You Have a Millionaire Mind?

Posted By Barry Brush |  Subscribe in a reader | Comment 0
2DIME’S INVESTOR NOTES
Friday, November 16th, 2007
 
“Pick a penny up and all day you’ll have good luck.
TGIF! I think I have almost recovered from last weeks time change. Are we still saving daylight or did we just give back what we saved all summer? Did we really save anything? I’m confused. Calling it Daylight Shifting Time might be more accurate.

I did a quick poll of my friends and family and no one seemed to know much about the whys or what’s of Daylight Saving time so, I did a little research. The official spelling is Daylight Saving Time, not Daylight SavingS Time. The main purpose of Daylight Saving Time (called "Summer Time" in many places in the world) is to make better use of daylight; and, to save energy.

Studies done by the U.S. Department of Transportation show that Daylight Saving Time trims the entire country’s electricity usage by a small but significant amount, about one percent each day, because less electricity is used for lighting and appliances. Similarly, in New Zealand, power companies have found that power usage decreases 3.5 percent when daylight saving starts. In the first week, peak evening consumption commonly drops around five percent.

Energy saving aside, a poll conducted by the U.S. Department of Transportation indicated that Americans liked Daylight Saving Time because during the summer "there is more light in the evenings and so you can do more.”
Did you know? And…. On August 8, 2005, President George W. Bush signed the Energy Policy Act of 2005. This Act changed the time change dates for Daylight Saving Time in the U.S. Beginning in 2007, DST will begin on the second Sunday in March and end the first Sunday in November. The Secretary of Energy will report the impact of this change to Congress. Congress retains the right to resume the 2005 Daylight Saving Time schedule once the Department of Energy study is complete. Cool! So What!

So, in short, Daylight Saving Time gives us the opportunity to enjoy sunny summer evenings by moving our clocks an hour forward in the spring. I can hardly wait.

While we are on the topic of “Saving:” have you ever thought about your relationship with money and how the preconceived notion about money that a person carries around with them affects the amount he or she is able to accumulate.
 
The accumulation of money or gain for family and civic benefit is at the focus of my trading career. I would hope that it is near the center of yours as well. I believe that before achieving success as a trader, one must be certain his attitude towards money is in sync with one’s ability to accumulate it. That would mean you would have developed a set of money rules to go along with your trading rules. Simple Rules, like: Never pass a penny that you see on the ground without making an effort to pick it up.
 
It is not that the penny has any “real” worth in that you could actually use it to buy something. It is that the penny even without “worth” is still a very large and significant mental symbol whose real value lies inside your minds attitude toward wealth. I believe that if you see and pass up one lonely penny on the sidewalk, you are setting off an avalanche of negative values toward money in your mind which in turn will color your ability to attract and accumulate meaningful wealth.
 
I know you will still think I’m dumb to go out of my way to pick up that penny; but at least you’ll know why I did it. Sometimes, I’ll even go down for dimes and quarters that others are oblivious to. You might even hear me say to myself…..”Well, I’ll be Rich!”
 
So what other “Money Rules” come to mind? How about…”Always think good thoughts or congratulatory ones about the monetary successes of others, no matter who they are, whatever political party they represent or religion they espouse.” It’s a tough one but:
 
The slightest negative thought about your or another’s monetary situation will have a long term negative impact on your prosperity. You may still be able to accumulate wealth, but just think of the fortune you could be missing.
 
Like a lot of folks, I’ve made some unwise financial decisions in life and have been burned pretty badly by them. I carried the wounds from some of those misadventures around with me for years; avoiding this risk and that. Then one day I was fortunate enough to accept a friend’s invitation to attend a free 2 day seminar put on by T. Harv Ecker called “The Millionaire Mind.” What an amazing wake-up-call! All it cost was a 4hour drive to Atlanta and two night’s room and board at the Westin Peach Tree Plaza.
 
I credit those two days with permanently deleting any baggage I was carrying that had anything to do with an inability to attract, accumulate and most importantly hold on to money. It was emotionally cleansing and wealth enabling. As a part of assembling your trader’s toolbox, I recommend you find a seminar near you and attend.
 
secrets to millionsBy the way, his book “Secrets of the Millionaire Mind – Mastering the Inner Game of Wealth” is in print and available on Amazon.com for almost postage only.
 
 Better yet, ask around. Perhaps a rich friend has a copy that you could borrow.
 
Cheers, 2Dimes / Barry Brush (To contact me send an email. To support@selfinvestors.com and Tate will make sure I get it.)

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Napoleon Hill of Think and Grow Rich Discusses Carnegie, Power of Mind

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 6

Napoleon Hill is one of the greatest personal success gurus that ever lived and was certainly a big influence on all the self proclaimed gurus you see today.  Hill first read his classic Think and Grow Rich about 4 years ago and I credit that book with giving me the extra push I needed to begin building SelfInvestors.com from scratch.  I purchased the audio set several months ago and have been listening to those as well.  To hear this man speak his passionate wisdom in his own voice is a great way to pass the time in the car!  (I have to thank Chris Perruna for the heads up on the audio set Your Right to Be Rich).  Keep in mind this is not a recitation of the book, but rather of lectures he did around the country.

I just came across some rare video footage of Napoleon Hill over at YouTube.  There is very little video footage of Hill out there so it’s certainly worth a look.  He discusses a lecture from Andrew Carnegie and the one principle that Carnegie spoke of that changed the course of his own life forever.  The power to take possession of your own mind and direct it to whatever ends you may desire.


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Secrets of Success in 3 Minutes

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 0

I’ve been meaning to share this site with my readers for awhile now and finally getting to it.  It’s a great site from TED (Technology, Entertainment, Design) which is an annual conference where industry experts across a variety of industries are challenged to give the talk of their lives in 18 minutes or less.  The website provides more  than 100 of these presentations for free and more are being added.  I thought I’d share a short one here from Richard St. John , who interviewed 500 highly successful people over the course of a decade and found common characteristics among them.  Some of us have heard a few of these traits of success before but it always helps to be reminded of them!

UPDATE: I can’t get this video to work, so you can view it at the site.

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