Practical Speculation (Laurel Kenner and Victor Niederhoffer, 2003)

Watch out for news claiming bearish to be bullish or vice versa
If reported S&P 500 earnings rise in a year, the S&P 500 is likely to perform worse than average that year, and vice versa
Computers are generating the news

Earnings and the market move up and down together
The greater the earnings increases, the higher the market’s return
When earnings are up, it is time to buy stocks, and when earnings are down, it is time to sell
When the market’s price/earnings (P/E) ratio is high, it is time to sell

The trend is your friend in the last hour. (Alan Farley)
Never short-sell stocks when they are going up. (Simon Cawkwell)
Draw trend lines. (John Murphy)
Frequently, what is low will go even lower, and what is high will continue to rise. (Marc Faber)
The trend is your friend unless it is about to end. (Thomas DeMark)

The ratios used in TRIN often obscure, rather than clarify, market action. This is particularly true when market action is “mixed.”
The very process of smoothing TRIN with moving averages distorts the picture of relative volume flows
TRIN has a bounded scale for upside activity, but an unbounded scale for downside activity

Name calling - Calls evidence of stocks offering superior returns “blah blah.”
Glittering generality - “How can you be right all the time?”
Testimonial, bandwagon - Describes his distinguished, invariably bearish sources as the most perceptive on Wall Street, “the smart money.”
Testimonial - Quotes analysts with bearish forecasts
Plain folks - Does not read any financial books. Has no interest in statistics
Card-stacking - Relies on indicators as diverse as the strength of the dollar to the salaries of nannies in Greenwich, as long as they offer a bearish forecast

Avoid businesses requiring exquisite management. Buy a company that regular people can run
When evaluating an acquisition, picture what it will be like trying to sell it. Look for the type of business that buyers, especially public companies, will want to acquire
Avoid mixing acquisition analysis with some other need in your life. Don’t look to acquire a company because it will get you involved with golf or sailing, or because it is in a glamorous location, or because you have been laid off and need a place to work. It is hard enough to be objective analyzing an acquisition on its own merits without throwing in all kinds of personal needs and desires
Have a good accountant explain to you how inventory can be used to juggle earnings, and why, for some companies, it is almost impossible for a buyer to determine the accuracy of reported earnings for a given year
Time is the friend of a growth company and the enemy of the bargain or value company. The longer you are going to own, the more important to pay up for growth.

Isn’t it strange how the same people who laugh at gypsy fortunetellers take economists seriously?
Ask five economists and you’ll get five different answers, six if one went to Harvard(John Kenneth Galbraith)
An economist is an expert who will know tomorrow why things he predicted yesterday didn’t happen today (Laurence J. Peter2)

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