Monday, November 22, 2010

Investing first and investigating later

Specialists often develop a vested interest in their subject; the information they collect is never enough for them.  I was only interested in the information that was sufficient to make a decision; the rest would merely confuse the issues.  I called it “going for the jugular.”

I also developed the practice of “investing first and investigating later.”  It worked very well because if an idea was appealing enough to attract me on first hearing, it was likely to have the same effect on others.  If, on further investigation, I found it to be flawed I could always turn around and liquidate my position with a profit provided I was not the last one to hear it.  If the idea checked out, I was better situated to increase my position because I had already thought at a lower price or sold short at a higher one.

-George Soros

This corresponds with the idea of Bad news good action (bullish) and Good news bad action (bearish).  Markets often determine where they are headed before the average person can draw conclusions. 

If a market goes down on good news how should you invest?

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