Famous Traders – Japanese Housewife Trader’s & Video
Definition of ‘Japanese Housewives’
In the foreign exchange world, a collective term for the legions of Japanese housewives who resorted to currency trading in the first decade of the new millennium. With Japanese interest rates near zero percent for most of the decade, their motivation for currency trading was to increase the low returns on their portfolios.
These homemaker-traders are also called “Mrs. Watanabes.”
Investopedia explains ‘Japanese Housewives’
Japanese housewives have had a discernible impact on currency markets. Bank of Japan officials said in 2007 that the housewives’ trading activity helped to stabilize currency markets because of their tendency to buy on dips and sell into rallies.
A significant amount of this trading was carried out through online margin accounts, which offered leverage of 20 to 100 times. Carry trades, which involve borrowing in low-interest rate currencies and investing in higher yield assets, were also a favored strategy for many of the Japanese housewives.
Epic Traders – “The Father of Investing” Benjamin Graham
|Born||May 8, 1894
|Died||September 21, 1976 (aged 82)
|Institution||Columbia Business School, Graham-Newman Partnership|
|Alma mater||Columbia University|
William J. Ruane
Walter J. Schloss
|Contributions||Security Analysis (1934)
The Intelligent Investor (1949)
Benjamin Graham (May 8, 1894 – September 21, 1976) was a British-born American economist and professional investor. Graham is considered the first proponent of value investing, an investment approach he began teaching at Columbia Business School in 1928 and subsequently refined withDavid Dodd through various editions of their famous book Security Analysis. Graham’s followers include Warren Buffett, William J. Ruane, Irving Kahn,Walter J. Schloss, Chris Johnston and others. Buffett, who credits Graham as grounding him with a sound intellectual investment framework, described him as the second most influential person in his life after his own father. In fact, Graham had such an overwhelming influence on his students that two of them, Buffett and Kahn, named their sons, Howard Graham Buffett and Thomas Graham Kahn, after him.
Life and career
Benjamin Graham was born Benjamin Grossbaum in London, England, to Jewish parents. He moved to New York City with his family when he was one year old. After the death of his father and experiencing poverty, he became a good student, graduating from Columbia University, assalutatorian of his class, at the age of 20. He received an invitation for employment as an instructor in English, Mathematics, and Philosophy, but took a job on Wall Street eventually starting the Graham-Newman Partnership.
His book, Security Analysis, with David Dodd, was published in 1934 and has been considered a bible for serious investors since it was written. It andThe Intelligent Investor published in 1949 (4th revision, with Jason Zweig, 2003), are his two most widely acclaimed books. Warren Buffett describes The Intelligent Investor as “the best book about investing ever written.” Graham exhorted the stock market participant to first draw a fundamental distinction between investmentand speculation. In Security Analysis, he proposed a clear definition of investment that was distinguished from what he deemed speculation. It read, “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
Graham wrote that the owner of equity stocks should regard them first and foremost as conferring part ownership of a business. With that perspective in mind, thestock owner should not be too concerned with erratic fluctuations in stock prices, since in the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine (i.e. its true value will in the long run be reflected in its stock price). Graham distinguished between the passive and the active investor. The passive investor, often referred to as a defensive investor, invests cautiously, looks for value stocks, and buys for the long term. The active investor, on the other hand, is one who has more time, interest, and possibly more specialized knowledge to seek out exceptional buys in the market. Graham recommended that investors spend time and effort to analyze the financial state of companies. When a company is available on the market at a price which is at a discount to its intrinsic value, a “margin of safety” exists, which makes it suitable for investment.
Graham wrote that investment is most intelligent when it is most businesslike, a statement which Warren Buffett regarded as the most important words about investment ever written. Graham said that the stock investor is neither right nor wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.  Graham’s favorite allegory is that of Mr. Market, a fellow who turns up every day at the stock holder’s door offering to buy or sell his shares at a different price. Rarely, the price quoted by Mr. Market seems plausible, but most of the time it is ridiculous. The investor is free to either agree with his quoted price and trade with him, or to ignore him completely. Mr. Market doesn’t mind this, and will be back the following day to quote another price. The point is that the investor should not regard the whims of Mr. Market as determining the value of the shares that the investor owns. He should profit from market folly rather than participate in it. The investor is best off concentrating on the real life performance of his companies and receiving dividends, rather than being too concerned with Mr. Market’s often irrational behavior.
Graham was critical of the corporations of his day for obfuscated and irregular financial reporting that made it difficult for investors to discern the true state of the business’s finances. He was an advocate of dividend payments to shareholders rather than businesses keeping all of their profits as retained earnings. He also criticized those who advised that some types of stocks were a good buy at any price, because of the prospect of sustained stock price growth, without a good analysis of the business’s actual financial condition. These observations remain extremely relevant today.
In recent years, Graham’s “Mr. Market” approach has been challenged by Modern Portfolio Theory (MPT), which is based on the hypothesis of efficiency of financial markets. A popular proponent of MPT is, for example, William J. Bernstein, whose book The Intelligent Asset Allocator extends Graham’s The Intelligent Investor via an appreciation of long-term trends and the near impossibility of understanding the market at large. Modern Portfolio Theory, which is widely taught in American and British business schools, posits that it is generally impossible for any individual to consistently outwit the market, thus denying the possibility of any distinction between “market price” and “value” of a security.
Nevertheless, Graham’s approach retains a widespread and dedicated following and has demonstrated historical success in terms of investment returns. Indeed, numerous academic studies, including “Contrarian Investment, Extrapolation, and Risk”, “Good news for value stocks: Further evidence on market efficiency”, “The Cross Section of Expected Stock Returns”, and many others, have demonstrated that value stocks have outperformed growth stocks and the market in general over virtually all multi-year periods.
According to The Snowball (a biography of Warren Buffett), Graham had an affair with his deceased son’s girlfriend (Marie Louise Amingues) and used to travel to France frequently to visit her.He later separated from his wife Estey in New York, after she refused his offer of living in New York for six months and France for six months. Marie Louise was content to live with Graham without marriage.
- Security Analysis, editions 1934, 1940, 1951 and 1962 and 1988 and 2008 ISBN 978-0-07-159253-6
- The Intelligent Investor, editions 1949, reprinted in 2005; 1959, 1965, 1973  with many reprints since
- Storage and Stability: A Modern Ever-normal Granary, New York: McGraw Hill. 1937 ISBN 0-07-024774-9
- The Interpretation of Financial Statements
- World Commodities and World Currency, New York & London, McGraw-Hill Book Company. 1944 ISBN 0-07-024806-0
- Benjamin Graham, the memoirs of the dean of Wall Street
Famous Traders – Martin Schwartz
Marty Schwartz is a Wall Street trader known as Buzzy. He started his career on the American Stock Exchange as an independent trader after he saved up $100,000. Schwartz became a terrifying trader who worked with options, futures as well as stocks. After 12 months of trading independently, he reported earnings of $600,000; a year later, it was twice that. Other traders soon began to notice the pace with which he changed positions and that he never held on long to any financial instrument. This earned him the nickname of “day trader.”
Martin Schwartz participated once in the U.S. Trading Championship that was organized by Stanford University and which consisted of nine matches. He made a spectacular show and won over other participants by earning more money than his competitors did together.
Book review of Pit Bull: Lessons From Wall Street’s Champion Trader by Martin “Buzzy” Schwartz. After working several years in what he considered to be a dead-end job as a financial analyst at E.F. Hutton, Schwartz quit the firm, accumulated a nest egg of $100,000 and on August 13, 1979, bought a seat on the American Stock Exchange where he began trading stocks, options and futures. He quickly became an expert at trading S&P futures, and in his first full year as an independent trader made $600,000 and a year later earned $1.2 million.
The stress of trading contributed to him developing pericarditis, which nearly killed him. Inadvertently, he has written a cautionary tale on the dangers of being addicted to making money. This is one of those rare autobiographies where the subject unintentionally portrays himself in an unfavorable light. Yes he had it all, house in the Hampton’s, Park Ave apartment, extravagant vacations and money. But reading the book I just kept feeling pity that he lived such a life. It seemed that he lurched from crisis to crisis, yelling and cursing his way to resolve the issue of his day. Yes he seemed like an honest man, but I could not help but thinking that he created many of his problems, with his life’s approach. He was very much a loner, control freak – he could not seem to build an organisation to manage money. It truly was a one man show with his endearing wife that supported him.
Obviously he was a true trader and was good at it. He goes into quite amount of detail at the end of his book about his methodology – though it did seem to lack certain elements. Mostly an EMA following and order fading strategy. I am not sure one could pick up this book easily and start trading like Martin Schwartz – communication most likely was not his strong suit. However if you do nothing else read in detail several times his methodology – there are some gems in the writing. The following is a list of take-aways I noted as I read the book:
- Your grubstake must be large enough to allow time for you to be successful and that no one trade can take you out.
- Martin, even on his honeymoon he was trading – unbalanced obsession.
- Show me a trader and I’ll show you someone that understands gambling. Vegas is good place to work on discipline.
- Change tables (i.e. take a break) after a winning streak.
- Confidence is part of trading, if your not convinced you can not win, you should not start.
- When its so bad you want to puke, you should double your position.
- When you loose your own money, you suck it up and move on, when its other people’s money its like the whole world is watching. The psychology is very different.
- The change in his career came when he learned to divorce his ego from the trade.
- As a trader you need to be a; gambler with good feel for numbers, know how to think, know what to think about, perform well under fire and the importance of money management.
Epic Traders – Jesse Lauriston Livermore w/Video
Jesse Lauriston Livermore
|Jesse Lauriston Livermore|
|Born||July 26, 1877
|Died||November 28, 1940 (aged 63)
New York, New York
|Cause of death||Suicide|
|Net worth||US$100 million (1929); US$5 million (1940)|
Jesse Lauriston Livermore (July 26, 1877 — November 28, 1940), also known as the Boy Plunger and “Great Bear of Wall Street”, was an early 20th century stock speculator. He was famed for making and losing several multi-million dollar fortunes and short selling during the stock market crashes in 1907 and 1929.
Born in Shrewsbury, Massachusetts, Jesse Livermore started his trading career at the age of fourteen. He ran away from home with his mother’s blessing to escape a life of farming his father intended for him. He then began his career by posting stock quotes at the Paine Webber brokerage in Boston.
He married his first wife, Netit (Nettie) Jordan of Indianapolis, at the age of 23 in October 1900. Less than a year later, he went broke after some reverses in his stock trading; for a new stake, he asked her to pawn the substantial collection of jewelry he had bought her, but she refused, permanently damaging their relationship. They separated and finally divorced in October 1917. His second wife was Dorthea (Dorothy) Wendt. They had two sons, Jesse Jr. and Paul. His third wife was Harriett Metz Noble.
While working, he would write down certain hunches he had about future market prices, which he would check for accuracy later. A friend convinced him to put his first actual money on the market by making a bet at a bucket shop, a type of gambling establishment that took bets on stock prices but did not actually buy or sell the stock.
By the age of fifteen, he had earned profits of over $1,000 (which equates to about $23,000 today). In the next several years, he continued betting at the bucket shops. He was eventually banned from most bucket shops for winning too much money from them. He then moved to New York City and devoted his energies towards trading in legitimate markets. This change would lead him to devise a new set of rules to trade the market.
During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one’sposition as it goes in the right direction and cutting losses quickly.
Livermore sometimes did not follow his own rules strictly. He claimed that his lack of adherence to his own rules was the main reason for his losses after making his 1907 and 1929 fortunes.
Reminiscences of a Stock Operator
The popular book Reminiscences of a Stock Operator, by Edwin Lefèvre, reflects on many of those lessons. Livermore himself wrote a less widely read book, “How to trade in stocks; the Livermore formula for combining time element and price“. It was published in 1940, the same year he committed suicide. There is some speculation that this partnership between the two men was not their first collaboration. Since Lefèvre was a writer and journalist, it is thought that he was one of the friendly newspapermen that Livermore employed for both information and planted articles.
Wall Street success
Livermore first became famous after the Panic of 1907 when he sold the market short as it crashed. He noticed conditions where a lack of capital existed to buy stock. Accordingly, he predicted that there would be a sharp drop in prices when many speculators were simultaneously forced to sell by margin calls and a lack of credit. With the lack of capital, there would be no buyers in sight to absorb the sold stock, further driving down prices. After the crash and its aftermath, he was worth $3 million.
He proceeded to lose 90% of that 1907 fortune on a blown cotton trade. He violated many of his key rules; he listened to another person’s advice (he preferred working alone) and added to a losing position. He continued losing money in the flat markets from 1908–1912. He was $1 million in debt and declared bankruptcy. He proceeded to regain his fortune and repay his creditors during the World War I bull market and resulting downtrend.
He owned a series of mansions around the world, each fully staffed with servants, a fleet of limousines, and a steel-hulled yacht for trips to Europe. He married his second wife, Dorothy, a beautiful Ziegfeld Follies showgirl, on December 2, 1918, when he was 41 and she was 18.
Livermore continued to make money in the bull markets of the 1920s. In 1929, he noticed market conditions similar to that of the 1907 market. He began shorting various stocks and adding to his positions, and they kept declining in price. When just about everyone in the markets lost money in the Wall Street crash of 1929, Livermore was worth $100 million after his short-selling profits.
One of Livermore’s favorite books was Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay, first published in 1841. This was also a favorite book of Bernard Baruch, a stock trader and close friend of Livermore who also was one of the few people that did well in the crash of 1929.
After the Crash of ’29
Dorothy finally filed for divorce and took up temporary residence in Reno, Nevada, with her new lover, (and later 2nd husband) Walter Longcope. On September 16, 1932, Dorothy divorced Livermore on grounds of desertion. They had been married 14 years. Dorothy retained custody of their boys.
On March 28, 1933, Livermore married 38 year old Harriet Metz Noble in Geneva, Illinois; there was no honeymoon. It was Harriet’s fifth marriage; all four of her previous husbands had committed suicide. Livermore would be no different.
Through unknown mechanisms, he yet again lost much of his trading capital, accumulated through 1929. Thus, on March 7, 1934, the bankrupt Livermore was automatically suspended as a member of the Chicago Board of Trade. It was never disclosed to anyone what happened to the great fortune he had made in the crash of 1929, but he had lost it all.
|“||All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis.||”|
|—Jesse Livermore, How To Trade In Stocks|
In late 1939, Livermore’s son, Jesse Jr., suggested to his father that he write a book about his experiences and techniques in trading in the stock and commodity markets. This brought a flash of life back into Livermore, and the book was completed and published by Duell, Sloan and Pearce in March 1940. It was titled How To Trade In Stocks. The book did not sell well, World War IIwas underway, and the general interest in the stock market was low. His methods were still new and controversial at the time, and they received mixed reviews from stock market gurus of the period.
On November 28, 1940, Livermore shot and killed himself in the cloakroom of the Sherry Netherland Hotel in Manhattan. The police revealed that there was a suicide note of eight small handwritten pages in Livermore’s personal notebook. It was reported in the November 30 issue of the New York Tribune. The press wanted to know what it said, and the police tersely responded: “There was a leather-bound memo book found in Mr. Livermore’s pocket. It was addressed to his wife.” A police spokesman read from the notebook: “My dear Nina: Can’t help it. Things have been bad with me. I am tired of fighting. Can’t carry on any longer. This is the only way out. I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me. Love Laurie”.
He left behind two sons Jesse Jr. and Paul.
Famous Traders – Dennis Gartman
|Occupation||Editor and publisher|
|Employer||The Gartman Letter|
Dennis Gartman is an economist, commodity analyst and has published The Gartman Letter, a daily market commentary, since 1987.
Gartman has conducted numerous presentations and courses on issues relating to the capital markets and derivatives for various brokerage firms, central banks and U.S. government entities.
Gartman has been a frequent guest on leading financial television and radio networks and wrote “Dennis Gartman’s 15 ‘ridiculously simple rules’ for trading,” which originally appeared in the October 1989 issue of Futures Magazine.