Hedge fund manager Doug Kass gives people some needed reminders:

1. Above all, do your own homework! Do not rely on television
commentators, strategists, biased money managers (who are talking their book!) in your decisions. Do your own
research. Use the significant resources on the Internet to
accomplish this.

2. Use old-fashioned common sense! If things look too good, they
probably are and will turn down. If things look too bad, they
probably will turn around and improve.

3. Don’t be afraid to be a contrarian — in small doses! When everyone
(and their entire family) is long a sector or is avoiding a sector (and is
exceptionally glib about it), it should be a sign to go the other way.

4. Let your gains run and stop your losses! — Don’t average down.

5. Be a cynic and remain skeptical even when the good times are
This especially true as it relates to government statistics.

6. Let speculation be your guide! If investors all around you are
losing their heads, don’t lose yours.

7. Read and reread the classic
books on investing
In bull markets, the historical perspective is
disregarded. But in bear markets, or
volatile markets, the history lessons are invaluable as market
conditions/influences are nearly always repeated.

8. When times are tough (like the present), do not press your investments
and do not overtrade!
Mr. Market will be back up and running tomorrow …
and the next day.

9. In uncertain times do a simple piece of homework: Reassess why you own
each investment!
Omega Advisors’ Leon Cooperman taught me to draw a line in
the middle of a page and list how you view the assets and liabilities for the
markets and for each individual investment.

10. Do not forget point #1!


Ten Lessons to Be Learned in
the Recent Market Decline

Doug Kass
Street Insight, 10/6/2005 7:43 AM


Category: Markets, Psychology, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “Ten Lessons to Be Learned from the Market Decline”

  1. Read this List and Save Money

    The Big Picture has a list of reminders for a market downturn. Here it is: Hedge fund manager Doug Kass gives people some needed reminders: 1. Above all, do your own homework! Do not rely on television commentators, strategists, biased

  2. bill says:

    what are the Financials telling us? — the S&P Financial sector is at 6 month+ Relative Strength highs

  3. steve says:

    The link to “classic books on investing” goes to membership website. How about a list of some books for the noob investor? Especially, on how to succeed at rule #1–doing your homework. In other words, what do I look for in the research?

  4. TonyTheTiger says:

    #3 is debatable. One of the toughest lessons i’ve learned is when everyone is bullish, then you become bullish too….don’t fight the trend. Just know when to get out before the reversal kicks in. The MACD is a very good short term momentum indicator and of course volume, RSI and the A\D on reversals.