Why bulls make the most money.

Going short may get trading profits, not big money: Here is why!

If you are short in a stock and that stock falls, what is the maximum potential profit? It is 100% assuming that the price touches zero.

Now, suppose a stock is overpriced at 100. You wait patiently for the market to correct itself. The price falls to 30. You buy the stock and this time slowly it crosses its early high of 100 as it touches 120 in another bubble like move. You make 400%.

This also applies to holding stocks during downturns. If your share is worth 100 and you hold it during a bear market, then finally it reaches 30. Now, you need a 330% return just to break even! This means, wise investors hold cash duting market declines.

For investors, the key to make money is to buy smart. That requires patience, lots of it.

During bear markets, people who have cash are able to buy blue chips at bargain prices. That makes money.
As a long term investor, your task is to make money over the long run. We know this is possible when you do not confuse trading with investing.

 Good To Great

Good To Great
Author: Jim Collins , Publisher: Harper
Gist of Collins book for first few chapters.
Good is the enemy of great.
There are many people around the globe who lead or have led good lives but only few people attain great lives. We don’t have great government because we have good government. Similarly, if one looks around the world, she would see that there are thousands of good companies but few great companies. Why? Perhaps, because it is easy to settle for a good company or a good life. Therefore, for vast majority of companies, the problem is that they are good and they are comfortable with it.

The underlying point here is, we should strive to become great. One such company was GE. It outperformed the markets for a long time as long as fifteen years. 15 years is a good time frame to judge as no company can just be lucky for fifteen years. Also, this time frame would exceed the tenure of one chief executive officer re-asserting the fact that the success of the company was not because of one good leader but because of their work culture as a whole.

My Notes: We must demand excellence from ourselves, and from the leading lights of our society. We improve as traders, every day by practice, practice and more practice.