Principles of Professional Speculation

Introduction
In Trader Vic-Methods of a Wall Street Master, I introduced the basic principles of speculation for the amateur or professional trader. The purpose of this book is to go a step further and provide detailed analytical tools for market analysis and forecasting. It is a user’s manual. if you will, for the established pro. Its message is directed at professional traders, those who wish to be professional traders. and those who love the markets as a passionate hobby, in lieu of golf or other timeconsuming activities. The purpose is simple: to help improve your trading and. as. a result, to help you make more money.
To achieve any level of success in trading requires a significant investmerit in time and effort. All markets are the same in one important aspect: They constantly change. Keeping on top of everything takes discipline, research, attention to detail, and continuous study. But what is the best approach for that study? With all there is to master, what is the best way to decide what to buy and sell?
DEFINING A PERSONAL PHILOSOPHY
To answer those questions, you need to develop a philosophy of trading and investing. A philosophy is a particular view of life and the world that you believe is “the truth.” When you understand my philosophy of trading, you will have a solid, unchanging foundation from which to make day-to-day decisions.
My trading philosophy rests on some fundamental principles that I will describe shortly. Those principles grew out of my years of studying and thinking about economics.
Now there’s a funny thing about economics. It’s an area in which a great many highly educated people have developed many theories and strongly held opinions, and have produced mountains of research to support their theories and opinions-and they seldom agree with one another. Because economics is an inexact science, the study of it includes a large measure of subjectivity, of personal philosophy. Anyone who thinks or writes about economics will, to some degree, incorporate the influence of personal values and beliefs, and I am no exception.
What you will be reading in this book is my own vision of economic “truth,” developed from 28 years in this business. I describe some of the common theories held by the experts, and tell which ones I disagree with, and why. From my perspective, some of them are fallacies and distortions that have badly muddled investment decisions. If you already agree with me, fine. If you don’t, I hope you will proceed with an open mind. Economically I believe in the Austrian School of Economics; philosophically I am an Objectivist, the philosophy of Ayn Rand……
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