Let’s start with Confidence

 There is too much emphasis on confidence as the primary characteristic of successful traders. However, it counts for very little on its own without incorporating commitment, courage, and control. Confidence allows you to execute your trades in an objective manner. What is the biggest confidence killer to a trader? The unrealistic expectation that every trade will be a winner. Let go of this artificial belief and accept that some losses are the cost of doing business. The tenet is to make a profit, and realize one losing trade is not the end of your portfolio. Letting go of this, and other unrealistic expectations, allows you to trade in a relaxed state. Your confidence will grow exponentially. A relaxed state means lower stress and the ability to make better decisions. Even highly competitive traders accept some trades will fail, and remain confident in their trading abilities.

Commitment

 It is important to your continued success that you commit to improving your trading performance. Every profitable person I have met made an individual commitment to his or her personal and professional growth.  Pledge to give your best and learn to improve each day if you expect to maintain a high level of performance. Your investing education never ends. First, determine your investing preferences and find a trading style that fascinates you. It’s easy to commit to something we enjoy. Do not force yourself to trade metals, if your real love is in currencies. Second, budget your time and money for continuing education. Keep your interests fresh, and learn new approaches to sustain your commitment. This naturally leads to improved profits.

Courage

 Concentrate on developing courage now, or risk a shortened investment career. Trading is not for the weak hearted. The markets are unpredictable and even the smartest analyst will make mistakes. Eventually everyone experiences a sequence of losing trades and you will not be exempt. You have a choice between self pity and self reflection. The Genius Trader has the courage to look at their mistakes and learn from them. The average trader perceives this as too painful, and simply curses their bad luck.  You must journal every single trade. Over the years, as I continue to interview accomplished investors, they all keep some form of trading journal. This provides such valuable information that I incorporate into other areas of my life. A detailed trading journal will be a big revelation into the success behind your best trades, and possible causes behind your losers. Armed with these facts, self reflection becomes more productive.

Control

Do you have a high degree of control? Or, are your decisions clouded by your emotions? Do you practice risk management? Or, is your trading more like gambling in Vegas? Genius Traders control their emotions and follow their trading rules. Your ability to implement your trading plan, in a controlled manner, is vital if you want consistent profits. Unstable trading leads to poor decisions. Traders who make poor decisions are not in the game very long.  A set plan with specific trading rules makes for a less anxious environment. Back tested strategies allow the needed reassurance to follow through with complete confidence.

Steve Jobs, 54, will work from home on days he doesn’t work from Apple’s Cupertino, California, headquarters, company spokesman Steve Dowling said Monday. Dowling did not say exactly when Jobs returned to the office. The state of Jobs’ health and the timing of his return have been watched closely by investors and the media, because few CEOs are considered as instrumental to their companies’ success as Steve Jobs has been to Apple. He is seen as the visionary behind Apple’s popular iPod music players and the iPhone, which left far more experienced mobile phone makers scrambling to catch up with similar touchscreen devices. The Apple chief was diagnosed with a rare form of pancreatic cancer called an islet cell neuroendocrine tumor. He had surgery in 2004 and announced then that he was cured. Last year, Steve Jobs’ dramatic weight loss prompted new questions about his health, which Apple only intensified by saying in December that the CEO would not deliver the opening keynote at the upcoming Macworld conference. In early January, Jobs said in a statement that he was suffering from an easily treated hormone imbalance, but he reversed course less than two weeks later, saying his medical condition was more complex than he initially thought. Steve Jobs announced he would take a leave of absence until the end of June. Methodist University Hospital Transplant Institute in Memphis, Tennessee, said last week that Jobs had received a liver transplant. Medical experts who were not involved in Steve Jobs’ treatment have told The Associated Press that cancer cells not removed in the original surgery could have spread to Jobs’ liver. The hospital would not say when the transplant took place, but in a statement said Jobs was recovering well and his prognosis is good. Since Steve Jobs returned to Apple in 1997 after a 12 hiatus, the company has expanded from a niche computer maker to become the top producer of portable media players and an increasingly important player in the cell phone business. Job’s insistence on elegant design, and his ability to persuade consumers to spend more for it, has also given Apple’s Mac computers a boost.

SharesPost, which was founded by Painter’s business partner, Greg Brogger, launched publicly in June. Through the SharesPost Web site, Painter is trying to sell shares in several companies he helped found, including car pricing startup TrueCar.com. He also wants to buy shares in companies that are far from an IPO, like short messaging site Twitter and business networking site LinkedIn. SharesPost is one of a few private stock exchanges that are emerging to fight what venture capitalists call a liquidity crisis. These exchanges give stakeholders an alternative way to trade their shares in hot startups like Facebook for cold, hard cash without having to wait years for an IPO. Employees at startup employees often put in long hours but get salaries that can be 20 percent less than their peers at public companies. In return, they get stock or options they hope will be a path to sports cars and summer homes after their company goes public or is bought out. Services like SharesPost could help startup workers get some cash while awaiting a distant IPO that might never even get off the ground. Most people won’t be in on the action, though, since these exchanges are only open to a small pool of buyers. And it’s not clear how much or how little stock has changed hands through them. New York based SecondMarket, said it has completed about 40 transactions in the past year worth about $150 million. Still, if they manage to thrive, these exchanges could help the economy. By selling shares on a private exchange, an investor can free up funds to put into other startups. And institutional investors could use these services to broaden their holdings to include fast growing companies that have yet to go public. The methods of these private exchanges like  SecondMarket vary. SharesPost uses an online bulletin board to introduce buyers and sellers. SecondMarket links the parties and lets companies set up their own mini markets that they control, while Redwood City, Calif. based XChange is rolling out an online system that will allow buyers and sellers to connect and directly trade shares for cash. All are open just to institutional investors organizations like venture capital firms or pension funds that manage at least $100 million in assets and individual accredited investors. That category includes people with a net worth of at least $1 million, or salary of at least $200,000 for the last two years.

Auto club AAA said it expects 37.1 million travelers 12 percent of the U.S. population to take a trip of 50 miles or more from home this year, a decrease of 1.9 percent from last year. Gasoline prices had risen every day for nearly two months until Monday, but remain far below last year’s levels, when a gallon surpassed $4. National average pump prices are now 34 percent lower at about $2.68 per gallon. AAA says the economy, particularly the rising unemployment rate and sagging personal incomes, is to blame. Declining airfares, however, should bolster air travel trips by 4.9 percent, according to the survey. Last year auto travel trips plunged 10.5 percent. Many people who did not take a trip last year when gas hit $4 per gallon said they will be traveling this year to shake their cabin fever. But compared with 2007, travel over this holiday is still down 12 percent. Unemployment is at 9.4 percent and expected to top 10 percent, household income is dropping and Americans saw their net worth fall by a staggering $1.3 billion in the first quarter amid declining home values and investment portfolios. “There’s still a lot of economic bad news weighing heavily on a household’s decision to travel trips,” said Ken McGill, executive managing director for travel trips and tourism services for IHS Global Insight, which surveyed 2,700 homes about their travel plans for the AAA report. Also a drag on travel is the increasing savings rate by Americans. Americans’ personal savings rate zoomed to 5.7 percent in April, the highest since 1995. AAA projects that 88 percent of the trips, a total of 32.6 million travelers, will be made in a car, a 2.6 percent drop from last year. Cheaper airfares is part of the reason. About 2 million people are expected to travel by plane. Travelers will spend about $1,160 per household for their travel trip. Transportation and accommodations will account for about half of the cost with food and drinks taking 20 percent. The rest will be spent on shopping, entertainment and recreation.

Global trade is expected to plunge by 9.7 percent this year according to World Bank, while total gross domestic product for high income countries contracts by 4.2 percent, the bank said. It said economic growth in developing countries should slow to 1.2 percent but excluding relatively strong China and India, developing economies will contract by 1.6 percent. The bank’s latest forecast is a sharp reduction from its March prediction of a 1.7 percent global contraction, which it said then would be the worst on record. Economic damage to developing countries “has been much deeper and broader than previous crises,” warned the report, issued Sunday in Washington. “Unemployment is on the rise, and poverty is set to increase in developing economies,” it said. The global economy should start to grow again in late 2009, but “the expected recovery is projected to be much less vigorous than normal,” the report said. It said banks’ ability to finance investment and consumer spending would be hampered by the overhang of unpaid loans and devalued assets. “To break the cycle and revive lending and growth, bold policy measures, along with substantial international coordination, are needed,” the World Bank said.

S&P said the changes reflected its assessment that volatility will remain in the financial sector and the industry is expected to face tighter regulatory oversight. S&P also said loan losses, which have plagued the industry for more than a year, are likely to continue to increase and could grow beyond expectations. BB&T Corp., Capital One Financial Corp., Regions Financial Corp. and Wells Fargo & Co. were among the largest banks that saw their ratings cut by S&P. Widescale changes to the industry because of the credit crisis and ongoing recession will dramatically alter the banking landscape, S&P credit analyst Rodrigo Quintanilla said in a release. “We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions,” Quintanilla said. “Financial institutions are now shedding balance sheet risk and altering funding profiles and strategies for the marketplace’s new reality. Such a transition period justifies lower ratings as industry players implement changes.” S&P did note that recent capital raising efforts in the sector will help defray some of the losses banks are facing. Lower credit ratings make it more expensive for companies to borrow money and can sometimes lead to difficulty accessing credit. Low ratings can also affect investments in a company’s debt as some institutional investors are required to only hold debt rated at a certain level. Ratings were also cut on Associated Banc Corp., Astoria Financial Corp., Carolina First Bank, Citizens Republic Bancorp Inc., Comerica Inc., Fifth Third Bancorp, Huntington Bancshares Inc., KeyCorp, Susquehanna Bancshares Inc., Synovus Financial Corp., U.S. Bancorp, Webster Financial Corp., Whitney Holding Corp., and Wilmington Trust Corp. The ratings of Carolina First Bank, Citizens Republic Bancorp, Huntington Bancshares, Synovus Financial and Whitney Holding were cut to junk status from investment-grade levels. The other banks all saw their ratings remain at investment grade levels.

Prices at the pump rose 0.6 cents to $2.669 a gallon, according to auto club AAA, Wright Express and Oil Price Information Services. Prices are a nickel above where they were a week ago and 30.8 cents above month ago levels, but remain $1.408 below year ago levels. Consumers are now paying about $1 billion a day for gasoline compared with about $600 million a day over New Year’s weekend and $1.5 billion a day or more a year ago, Kloza said. The more than 60 percent increase in prices so far this year. Gas prices also rose 48 straight days in 2007. In other Nymex trading, gasoline for July delivery rose less than a penny to settle at $2.053 a gallon and heating oil fell 2.2 cents to settle at $1.8156. Natural gas for July delivery jumped 32.5 cents to settle at $4.182 per 1,000 cubic feet. In London, Brent prices fell $1.48 to settle at $69.44 a barrel on the ICE Futures exchange

The best selling title this May was THQ Inc.’s “UFC 2009 Undisputed,” which sold 679,600 units on Microsoft Corp.’s Xbox 360, and 334,400 on Sony Corp.’s PlayStation 3, for a total of just over 1 million. In comparison, “GTA IV” sold 1.3 million units last May on both platforms. Nintendo Co. Ltd.’s “Wii Fit” sold 352,800 units this May for the No. 2 spot, down from 687,700 a year ago. Games for the Wii took five of the month’s top 10 titles. All 10 sold a combined 2.6 million units, compared with 3.7 million a year ago, NPD said. “The video games industry continues to struggle with difficult comparisons to last year,” said NPD analyst Anita Frazier in a statement. Frazier said every sales category declined from a year ago except for portable hardware, bolstered by new versions of the Nintendo DS, including the DSi and the Lite. Hardware sales plunged 30 percent to $303 million while software sales were down 17 percent to $449 million. Accessories sales fell 25 percent $112 million. During the month, Nintendo sold 633,500 DS portable consoles and 289,500 Wii systems, while Sony sold 131,000 PlayStation 3 systems, 117,000 PlayStation 2 consoles and 100,400 PSP portable devices. Microsoft sold 175,000 Xbox 360 units.

The International Air Transport Association, which represents 230 airlines worldwide said passenger traffic for 2009 is expected to contract by 8 percent from a year ago to 2.06 billion travelers. Cargo demand will decline by 17 percent and some 100,000 jobs worldwide are at risk, it said. The association expects the industry fuel bill to shrink by $59 billion, or 36 percent, to $106 billion this year, accounting for 23 percent of operating costs with an average oil price of $56 a barrel. But crude oil prices have rallied in recent weeks, breaching the $70 a barrel level on Friday on hopes of economic recovery.  IATA Bisignani urged governments to avoid protectionist policies and reiterated his call for more liberalization such as the lifting of restrictions on routes and cooperation between airlines to bolster the global airline industry. “It would be a cheap and effective stimulus liberalizing key routes today would create 24 million jobs and $490 billion in economic activity,” IATA said. Over the next three years, he said about 4,000 aircraft are scheduled to be delivered. This year alone, airlines are expected to spend about $25 billion to take delivery of more than 800 Western built jets, draining cash for a second straight year. “Aircraft ordered in good times are being delivered in recession,” Bisignani said. “Finding customers to fill them profitably will be a challenge.” IATA said carriers in all regions were expected to report losses, with Asia Pacific to be the hardest hit amid a sharp slowdown in its three key markets Japan, China and India. The region’s carriers are expected to post losses of $3.3 billion, worse than the previous forecast of $1.7 billion but better than the $3.9 billion losses last year. North American carriers are expected to lose $1 billion, far better than its $5.1 billion losses in 2008, thanks to early capacity cuts and limited hedging by U.S. airlines. Despite strong traffic, Middle East carriers will see losses deepen to $1.5 billion as the region’s intercontinental hubs are vulnerable to recessionary impacts in Europe and Asia. A collapse for demand in premium services in all major markets will see European airlines lose $1.8 billion. Latin American carriers are expected to lose $900 million and African airlines $500 million.

Another theme that I see emerging is one I touched on briefly yesterday. The fiscal carnage of the credit crisis is going to change the way people spend their money. We have seen the stock market drop like this before but always had the value of our home equity to fall back on. A lot of people have seen their net worth halved in the last two years. That changes the way you think and spend. It will be a long time before we see people go on a spending binge fueled by home equity and credit cards. People will think before they spend. Obviously this favors companies like Wal-Mart. I think grocery stores like Winn Dixie and Safeway will benefit as more people dine at home. Companies that offer quality at a good price are going to do very well in the era of the new consumer and when they get cheap enough to buy them.  The next trend is one where I am far behind the learning curve. China is going to continue to grow as a fiscal and political power. Suspect there will be huge hiccoughs along the road but now that the door has been opened to the world’s most populous nation is open, it will step onto the stage. There are back doors ways to play China by buying companies that do business there and I have purchased some of those in the past. Regulatory and political issues have kept me from buying China based companies, but this is a thesis I have been revisiting. I am talking to everyone I can find to learn more about the risks and rewards of owing Chinese stocks. I will keep you updated as I climb the curve. Buying cheap stocks with a margin of safety is and will always remain rule number 1 for me when investing. However, if I can find stocks that meet my criteria that can ultimately benefit from underlying trends I consider that a two for one special, something rarely seen outside of happy hour.