Novel Investor

Compounding investing wisdom...

Paul Tudor Jones: The Mental Obstacles of Investing

by Jon

Investing is a process of self-discovery. Investors rarely find their strategy on the first try. It takes a few attempts.

The reason is simple. First, new investors aren’t handed a menu of investment strategies to pick from when they start. Second, no strategy comes complete with a full list of behavioral requirements that make it a good fit. It’s trial and error, for the most part.

And even when investors find a strategy that fits them, they’re bound to be tested at times that causes them to question their decision. Paul Tudor Jones highlighted two tests every trader will face at least once in their life: Continue Reading…

The Rise and Downfall of Richard Whitney

by Jon

A syndicate of bankers gathered on October 24th to plan out how to end the panic. As acting president of the New York Stock Exchange, Richard Whitney was the face of the operation. The rest ran the six largest banks in the country.

It was like history repeating itself. J.P. Morgan famously did something similar in 1907 when he summoned the leading bankers to save the financial system from collapse. Only this time things didn’t work out as before.

The day after Black Thursday (October 24, 1929), Whitney strolled up to Post No. 2 on the exchange floor and ordered 10,000 shares of U.S. Steel. “205 for Steel” was the bid. It was over $5 above the current asking price. He did the same for several other blue-chip stocks. In a matter of minutes, he placed $20 million in bids. The market reversed course and rallied into the close. It was enough to turn the tide through the weekend.

The selling resumed on Monday. And on October 29th, forever known as Black Tuesday, the market was in a full-on panic. Continue Reading…

Once in Golconda by John Brooks

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"Once In Golconda" Book CoverBuy the Book: Print | eBook

John Brooks chronicles the 1920s bull market, its key players including Richard Whitney, the aftermath following the Great Crash of 1929, and how the events of that era transformed Wall Street.

The Notes

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Peter Lynch’s Rules Worth Following

by Jon

Many investors, especially when they’re starting out, look for the best stocks, the fastest growers, the highest quality, or the quickest buck. It almost makes sense, at first but doing it that way and making money is harder than it appears.

A simpler, yet important approach, is to focus first on things to avoid.

Avoid the worst. Avoid expensive. Avoid things you don’t understand.

In a dive into Peter Lynch’s writing, I came across an article he wrote where he lays out 14 investing rules. Lynch is most commonly known for his “know what you own” stance. His rules also include some things worth avoiding. Continue Reading…

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