10 Illustrated Truths About Investing & The Markets

This morning, as I was catching up on my reading, I stumbled onto this gem from Business Insider of an interview with the founder of Robinhood, a mobile app to let individuals trade stocks with no commissions.

“It’s [Robinhood Gold] serving a need that we saw in a part of our core user base, which includes people using Robinhood for the first time as well as those who have been with us since the beginning. A really large percentage of those users have become more mature investors. The No. 1 thing they kept asking for was the ability to use a margin feature.

With margin debt levels at already record high levels, the demand by individuals to leverage themselves into the financial markets has always, without exception, ended extremely poorly. Since the vast majority of users of the Robinhood app have never seen a bear market, the real lessons of trading have yet to be learned.

It also brings me to today’s post.

One of the first rules that any successful long-term trader or investor will tell you is to keep a written record of your activities. This provides the basis for you to learn what you are doing right, but more importantly what you are doing wrong. The secret to investment success is actually quite simple and can be summed up as follows:

“Do more of what works and less of what doesn’t.” – Dennis Gartman

As I was reviewing some old trading notebooks this past weekend, a folder sheet of paper fell out of one of my 2011 binders. It was a printout of the “20-Truths Of Investing And The Markets” by Ivan Hoff of Ivan Hoff Capital.

I wanted to share my 10-favorites with you by adding some illustrations as well.

1. Stock prices run in cycles. Periods of re-pricing are usually quick and powerful.

Read: Soros – A Rudimentary Theory Of Bubbles