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GMAT, Trading, and Work

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March 7, 2011   Leave a Comment  

First off let me tell you that I am extremely busy.  Any downtime that I have had at work has been almost completely squeezed out of my schedule.  The two man team that was my division is now a one man team (me) so it is safe to say I am quite a bit busier than I was last week; a trend I don’t see letting up anytime soon.

Fortunately the GMATs are only 2 weeks away and could not come soon enough.  I managed to post another 710 (49 math, 38 verbal), this time on a Kaplan CAT test.  Word on the forums is that Kaplan CAT tests are harder than the real thing so I’m very encouraged by this result.  I am drilling math because I feel if I don’t manage to get a 50 or 51 on my GMAT it was a wasted attempt.  I’m aiming to complete about 80 math problems a day to build up some mental endurance. 

The biggest roadblock for me so far has been bombing the latter part of the math section due to fatigue and the questions getting more difficult.  A promising note was getting the last 10 quant questions correct on the Kaplan CAT test I took over the weekend.  The second biggest roadblock is the fact that I still have yet to answer the first question on any practice test correctly.  Since this question holds the biggest boost or decline in score this is something I desperately need to fix if I want to break 750.

On the trading front all is going well.  I started a Wall St. Survivor practice equity account to test some theories and refine some methodology.  So far in the past week I am beating the market by 1.63%.  Also, using fractals as a signal and Elliott Wave Theory to gague market direction,I am up 5% in 2 weeks trading forex, which is another encouraging figure.

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Wise Words from Warren Buffet

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March 4, 2011   Leave a Comment  

Warren Buffett, the oracle of Omaha, was on CNBC’s SquawkBox yesterday morning. After listening to the majority of the interview there are some very important take-aways that every long-term investor should listen to. If you are thinking to yourself that you aren’t a long-term investor then my question to you is what is your retirement plan and where is your IRA? Here are some ideas from Buffett.

1. Invest in what you know, and don’t fool yourself into thinking you know things that you don’t truly know.

The hosts kept trying to hammer down Buffett’s opinion about commodities, bonds, and futures, as every investor surely is interested in what Buffett thinks. The fact of the matter is, however, that Buffett doesn’t think about these things. Buffett knows companies. More specifically, as he said time and time again in the interview, he knows that Coca-Cola is a good company, that people want cheap auto insurance, which GEICO provides, and that people chew gum. He can’t tell you where oil will be in 10 minutes, 10 hours, or 10 months. He claims he is simply not intelligent enough. Whether intelligence is the issue at hand is a completely different story, but the fact remains that he knows he is not knowledgeable to profit in commodity speculation – the reason why he doesn’t trade it.

2. The American People are Resilient

Warren Buffett is very confident in the American people. There is fear in America about the growth of China, but Buffett first says there is little to worry about that because as an emerging nation they are expected to have growth out pace America, a well established and developed nation. He claims we are no smarter, or more hard working as we were when he was young, yet we have improved our well-being by 6-fold and will continue to do so. In his annual letter he said we are in the face of prosperity as we were in 1932 and 1941.

3. It is better to own an asset that produces output than one that doesn’t

This may seem like a no-brainer until you turn on the TV and see the umpteenth million cash for gold commercial this week. Buffett declared if you took all of the world’s gold and put it in one spot you would get a 67ft cube worth $7 trillion. He also said that it would be nice to look at, but if you asked it to give you anything it would just sit there and do nothing. Without someone out there willing to pay you more than what you paid for it, it is worthless. He said if you gave him $7 trillion dollars and gave him the choice of all the farm land in America, 7 Exxon-Mobiles, and a trillion dollars in walking around money (a roughly $7 trillion value), he would take the farms and companies. The reason is simple – because they produce output rather than rely on other people’s speculation to produce return.

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Getting where I want to be on GMAT

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Feb. 24, 2011   Leave a Comment  

My studying took a hit lately (read:  I didn’t touch a book last week), but I did muster up the motivation to take a practice test on Monday and was pleased to get a 710.  Unlike my 640 on a Kaplan test this 710 was on one of the GMAC practice tests, which can be downloaded on www.mba.com.  It is supposed to be a very accurrate read of what your score will be on the actual test.

I am pleased with where I am, but I need to study more.  Something that will be easier now that I have new material to study.  I previously went through all of the Manhattan GMAT books, but now I have the Kaplan GMAT book, Kaplan math workbook, and Kaplan GMAT in a box flash card.  The last item will be of use to me while at work as I need to start drilling sentence correction (my weakest area).

On another note I have started practicing trading again, both forex and equities and have developed a system for creating an equity trading system which I will go into further details about once I actually make the spreadsheets needed to take the next step.

Filed Under: Personal, Trading Tagged With: , , , , ,

GMAT: Take Three

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Feb. 14, 2011   Leave a Comment  

My first milestone, the Kaplan practice GMAT test, has come and passed.  My study plan originated with this being the halfway point from the start of my studies to taking the GMAT.  I feel it was a very good gauge of where I am and how I will perform under the pressures of the test.  I was able to sufficiently stress myself out as I wanted to reach my target of 650.  According to the many who have taken the practice Kaplan and the GMAT it is safe to add 80 points to your Kaplan score to get a good gauge on your GMAT score.

I did not reach that target of 650, instead coming in at a respectable 640, but overall the experience was very positive.  I am very excited to already be in the 700s for the GMAT, and with a month of studying remaining I hope to be able to reach my goal of 770.  The most positive aspect to come out of the test was that I excelled in verbal.  Normally I have been scoring 60th-70th percentile in verbal, but after a week of intense studying I was able to claim a 93rd percentile in verbal. 

One anomoly was where I have been scoring in the 90th+ percentile in math I came in at 80th.  I was also very pressed for time during the quantitative section.  This won’t be good when it comes to test day because to reach my goal of a 99th percentile quant score I will need to complete many 700+ level questions in a timely manner.

Tonight will be a nice relaxing valentines dinner, tomorrow is back to studying.

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GMAT studying: Take Two

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Feb. 3, 2011   1 Comment  

GMAT studying is well on pace and with encouraging preliminary results.  After studying the quant materials for two weeks I took a pair of Barron’s practice tests from 2009 and recieved a score of 650 and 680 overall with a quant score of 47 and 50 respectively.  While my math was hovering in the 85-97th percentile, my verbal, on the other hand, wasn’t doing too well.  I am currently testing in the 50th percentile, but I am not discouraged as this is before studying.

Since those tests I have started covering the critical reasoning and sentence correction portions of the verbal and, let me tell you, those sections are contradictory to everyday speach and thinking.  A challenge, but nothing that should put up too much of a road block. 

If you are interested the following is a little foray into the complexity of sentence correction:

I never realized how much we butcher the english language until I started doing sentence correction.  There are endless rules of minutia, which make for an endless pool of questions GMAC can use to create the GMAT.  If you are curious what I am talking about, take the following examples:

Use of “neither”: I never realized how tricky the word neither could be especially when coupled with “nor”.  Apparently in a complex subject the verb only has to agree with the last part of the subject.  Both of the following are correct sentences:

Neither the students nor professor eat pizza.
Neither the professor nor students eats pizza.

Also, consider the following: Amy’s daughter has better grammar than Sally’s children; neither of Sally’s boys ever seems to have correct grammar in his writing.

Is the above correct?  When trying to convey this thought you, most likely, would say the follwing: Amy’s daughter has worse grammar than Sally’s children; neither of sally’s boys ever seem to have correct grammar in their writing.

Anyways, that is all for my mini rant.  All is going well, have a great day.

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What is Risk?

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Jan. 26, 2011   Leave a Comment  

What is risk?  If you ask the layperson it is doing something dangerous that has the potential to cause harm.  In fact if you Google “What is risk” the first thing that comes up is the following definition: “hazard: a source of danger; a possibility of incurring loss or misfortune; “drinking alcohol is a health hazard”.

When the general public thinks about investing they view risk as a negative aspect.  Risk is viewed as something that will sweep in and take all of your money away.  However, this is an incomplete concept of risk.  Risk has another side to it; reward.

Think about it.  Risk is everywhere.  Every second of every day is a balance of risk and reward.  You get in your car and drive to the grocery store:  You are taking a risk by driving a potentially lethal device, but you do it for the reward of having food to eat.  You fly to a tropical destination:  Your plane may crash and you may die, but you do it for the reward of relaxing and having an enjoyable time in the sun. 

The aforementioned judging of risk and reward isn’t very much different from trading.  You may think that the risks of what you are doing daily are minimal, but that is exactly the idea.  When trading the idea is to take a risk apropriate to the potential reward.  Let’s say you had to swim 10 miles to get to that tropical island.  You wouldn’t swim there just for a vacation would you?  Of course not as you might drown.  The amount of risk is too high for the reward of relaxing, but what if you were to be given $100 million when you got there?  Then would you swim?  I might.

To trade effectively one has to identify the risks they are taking and make sure those risks are acceptable with the potential return.  When investing in treasury bills the investment is low risk, yet low return.  When investing in the stock market the investment is higher risk, but with potentially higher returns.  What you need to do to be an effective investor is match the balance of risk and reward to your needs.  This is why as you age you are encouraged to invest more in bonds and less in the stock market, because the risk of losing your life savings are less.  This is what risk is all about and a key concept to being an effective investor.

Filed Under: Trading, Uncategorized Tagged With: , ,

GMAT studying: Take One

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Jan. 18, 2011   Leave a Comment  

After studying for the GMATs for a week I can say without a doubt that I have not retained many details of the mathematical principles I was taught in middle school.  I have been relearning the principles of primes, divisibility, factoring, and exponents like I’ve never seen the material before.  To my credit I do remember a lot of the “advanced” topics that are being covered, but when it comes down to the basics I am seemingly clueless.  I don’t really understand how I’ve gotten to this point without retaining the basics.

Fortunately, learning the basics can be remedied.  What I am going to have a bit more trouble with is the format of the questions themselves.  For those of you that aren’t familiar with the GMAT you may not be aware that the creators are evil geniuses.  They managed to take the simplest of information and present it in such a way that it is almost completely incomprehensible to the untrained test taker.  Using their data sufficiency problem sets, where one must determine if option a; option b; both; or neither are sufficient to answer the question posed,  they create the highest levels of deception and trickery I have ever seen on a test.  I feel lucky that I have a couple of months to prepare as this isn’t your standard standard test.

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Turn of a New Year

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Jan. 13, 2011   Leave a Comment  

Let me tell you it has been a crazy month or so.  I apologize for no updates, but I’ve been busy with a lot.

Late November and early December was marked with a ton of interviews as I attempted to remove myself from the Real Estate field and move back into the financial one.  I am happy to say that I am now working in an operations role for the reconciliation of cash and trades over a wide asset class for a very reputable company which shall remain unnamed due to me not knowing their policy on blogs.  The job is great, but the hours have been killing me lately and it has taken me almost a month to get used to getting up at 4:30am everyday to head into work.  Something of a contrast to waking up at 9am to head into the real estate office or the 11am I would wake up at to roll out of bed and head to class just a year and a half ago.  A contrast that has left me lethargic for the last month and a half.

With this new job I am also looking at a new world of possibilities for my future.  I still want to trade, I have a passion that is driving me towards that eventuality.  I am just looking at additional paths to get to my goal.  One of which is a program at Boston University which I had not known existed until lately:  A Masters of Investment Management.  This course is exciting because it is CFA recognized with a chance to pass the Level I and II exams during the part-time coursework.

Of course this means that I need to be studying for the GMAT.  A task which is sapping a large chunk of my free time and not leaving me much time to trade.  All-in-all life is going well and I am excited for things to come.   Despite not having the time to practice my trading I’ll still come with updates on financial news and research now that I have my schedule and lethargy under control.

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Up and Down

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Dec. 1, 2010   Leave a Comment  

No, I’m not talking about the market going up and down I’m talking about my life.  Its been a crazy few weeks with interviews, turkey day, and my apparent complete lack of focus.  I don’t know what has been draggin me down lately, but it is time to snap out of this funk.

I’ll start with the down.  I haven’t picked up a book or even really looked at the markets at all these past couple of weeks.  I’m starting to forget why I started this venture in the first place.  Part of this has to do with being extremely busy over the past couple of weeks, but this is only exacerbating the simple truth that I’ve lost focus in my studies.  I’m struggling with doubt.  Doubt that I will be able to get funds to ever get started doubt that even if I do I won’t succeed.  I’m stuck in the old adage “if you say you can’t, then you’re right” and it’s starting to win.

I need to remember why I am doing this.  I love the markets, I love the thrill of placing trades, and most importantly I want freedom.  Freedom to work where, when and how I want.  Doubt is dragging me down right now, but I need to stay positive and know that I will make it.

It isn’t all bad though, there is some upside.  As I said I have had a ton of interview lately and I am getting out of the real estate game.  It is dragging me down and I needed a change.  I also needed a steady income right now (read: one that is not dependent on other people’s decision making).  It is still too early to say that I am starting a new job, but I did get two job offers from the interviews I’ve had and once the paperwork and background check clear I should be starting a new job in the financial services sector.  Needless to say; I’m pumped.

That’s it for now.  I’m going to dive headfirst into Trading in the Zone and try to pickup where I regrettably have left off these past couple of weeks.

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Some Thoughts on Networking

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Nov. 9, 2010   Leave a Comment  

If there was ever was a quintessential buzzword in the workplace and throughout professional life it is networking.  Everyone talks about it and few really know what it means.  Ask almost anyone and they will say they are networking with people they meet, but are they really?

Networking defined is communication within a group of people.  So yes, we all network, but when you are networking you are looking for an end result usually.  Whether that is a job, promotion, or something else almost everyone falls short when it comes to networking.  The norm is to go out and talk to your contacts and ask them some awkward questions about who they know and how they can help your situation.  From my experience no one really likes to network, and they feel bad asking for something.  Does this sound like you?

Now think about this.  You’re single (or once were) and you’re looking for a date.  Where do you turn? Your friends, family, Facebook, Match.com and where ever else you can think to turn.  You go around asking if they know any cute girls/guys that would be good for you.  Now you are networking.

So think about it, are you really networking when you are looking for that next great job or are you just going through the motions to feel like you are covering your bases?

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