Digg It |   Del.icio.us |   Printer Friendly |   PDF |   Email

Four Trading Lessons Hot off the BBQ

Friday, July 6, 2007 | Teeka Tiwari

Rating:
This July 4th was a rainy one for us in PA, but it didn’t stop me from standing in front of the smoker and Q’ing up some hickory smoked ribs that would make a Texas cowboy proud! 

It got me thinking that my journey from neophyte gas griller to master BBQ smoker extraordinaire had a lot of similarities to my journey from a greenhorn trader to professional investor.

Several years ago, I was introduced to the joy that is real, wood-smoked BBQ.  For years I had labored under the false belief that barbequing and outdoor grilling were synonymous.  Oh, how wrong I was!  It took the merest sliver of West Texas smoked beef brisket to shatter that false belief.

In a word, I was smitten!

The problem I encountered with my new love was a dearth of smoke houses in Eastern PA!  Undeterred, I committed myself to learning all I could about the fine art of smoking meats.

I read every book I could find on smoking and Tivo’d every cooking show that had the slightest mention of barbeque.  Finally, after gathering all the knowledge I could from TV and books, it was time to get started.  I went out to Home Depot and got myself a nice new smoker and about a half ton of hickory wood!

Lesson #1: Don’t put all your meat in the Smoker, otherwise known as don’t put all your eggs in one basket.

Like the true rookie I was, I put about $100 worth of meat in the smoker and loaded up the fire box with way too much hickory.  About 12 hours later I pulled out the meat, drooling at the thought of succulent brisket and deliciously smoked ribs.

That was the fantasy.  The reality was that I needed a saws-all to cut through the brisket, and I almost threw up on the first bite!  The smoke flavor was way too overpowering.  I had made the rookie mistake of oversmoking the meat and cooking it at too high a temperature.

The same holds true for investing.  There are certain nuances of investing that will not reveal themselves to you until AFTER you have made the investment.  That’s why when learning to smoke or invest, it is always best to start out small.

Lesson #2: Learn from your mistakes.

After spending half a day in front of the smoker and ruining all that meat, I was tempted to quit.  I just figured I didn’t have what it took to be a smokehouse master.  Many of you may have felt the same way when you have made a stock market mistake before.

But it was the gastronomic memory of that Texas beef brisket that spurred me back into action.  Instead of doing the same thing again, hoping for a different result, I knew that there must be a gap in my BBQ education.  I was missing something and was determined to find out what it was.

Lesson #3: Develop the awareness to know when you don’t know, and find someone who knows what you don’t!

I started posting my smoking results on various BBQ forums, and bit by bit, the pieces started to come together.  One guy in Kentucky turned me onto using charcoal first to build the heat, THEN to slowly add the hickory to build the smoke.  Another fellow from South Carolina suggested that I soak the hickory in water first, then add it to the fire box.

These two small tips alone dramatically improved my BBQ performance!

The same is true for investments.

At Tycoon, we put our money where our mouth is, and that’s why we’ve made a substantial investment in a brand new platform that will allow you to network with your fellow readers!  You now have the ability to post comments on all Tycoon stories and even post your own articles.

This is a great opportunity to get to know what other investors are doing, and a way for you to find out what’s working for them.  You just might find that little tweak that could lead to some dramatic investment improvements of your own.

Got a great investment story or educational article?  Share it with your fellow investors.  Got a great trading strategy or technical analysis approach that works?  Let your fellow investors know about it.  We need to stick together.  The institutions have their own clubs; think of The Tycoon Report as yours!

P.S.  Lesson # 4: Never Stop Learning.  To any fellow smokers out there, I am always looking for new dry rub recipes and BBQ tips.  So please feel to use the commenting tool for any that you wish to share!


Related Articles:  Make Money with Ice Cream, A Tale of Three Traders, What Sports Can Teach Us About Investing, How to Save You from Yourself



(Please let us know what you think about Teeka Tiwari's article.)
Rate his article here »



Teeka Tiwari
Chief Investment Officer
ETF Master Trader


Rate this article
Thank you for your vote!

17 Comments

Post your own comment

  1. adrian d (1 year ago) Is this Spam?

    excellent article and so beautifully written.

  2. phil j (1 year ago) Is this Spam?

    Loved the BBQ, so true, it is witty and is a good rule of thumb. By the way, I went out back to get some hickory bark (winter) it had poison ivy on it. Great smoke,but toxic. Be carefull, but at least try.

  3. david (1 year ago) Is this Spam?

    Sometimes, where there's smoke, there's a pyre!



    David S.

  4. Eleanor (1 year ago) Is this Spam?

    As always, I learn valuable info from your articles. They have made me aware of the mistakes and pitfalls of my past.



    Thank you.

  5. Donald (1 year ago) Is this Spam?

    Great article on smoking beef and makes a point.

    Don

  6. William (1 year ago) Is this Spam?

    Mr.Teeka Tiwari,

    I see that you are a hedge fund master, as a fellow tycoon, I came upon this article and it gave me much concern about the present market conditions above the issues that I learn about in the dailey report and through Chris Rowes TR membership. My question is a simple one is the following artice true??



    Friday, July 6, 2007 Issue #690

    The Biggest Threat Facing the Stock Market Today

    by Alexander Green, Chairman, Investment U

    Investment Director, The Oxford Club



    Dear Investment U Reader,



    The biggest threat facing stock market investors today isn’t a recession, the housing slump, $70 oil, a decline in profits, the war in Iraq, a potential rate increase or even terrorist activities.



    The biggest threat today is that nobody – and I mean absolutely nobody – understands what the world’s gun-slinging hedge funds are up to.



    And with trillions of highly leveraged dollars in assets under management, the potential for disaster is real… and perhaps quite high. Here’s why.



    Hedge funds pool huge amounts of money from wealthy investors, Wall Street banks, and, yes, other hedge funds. Their goal is to make money regardless of which way the stock market goes.



    Some of them invest in bonds, some in commodities, some in foreign markets, some in futures and options. Some short stocks, betting their prices will fall, not rise.



    Others turn almost any kind of cash flow – including credit card payments, home mortgages, corporate loans, plane leases, and even movie theater revenue – into securities and trade them.



    Hedge funds hold unparalleled sway over the world’s financial markets today. They are responsible for more than a third of all stock trades, according to industry sources.



    Much of what they are doing is good. For example, hedge funds help spread investment risk among many partners. In some ways, this “risk dispersion” has acted like a safety valve for investment banks and other lenders.



    However, with so much leveraged money sloshing around in these funds, the potential for catastrophe is increasing. By how much?



    Operating in the Dark



    That’s just it. No one knows. Hedge funds are almost totally opaque.



    As The Washington Post reported this week, “Shielded from regulators, and operating in the dark, the biggest and most influential hedge funds might be making bets that put the entire financial system at risk.”



    I suggest you go back and read that last sentence again… slowly this time.



    Your goal as an investor is to manage your hard-earned capital in such a way that you never find yourself in the same company as those poor souls who eventually wind up saying, “Jeez, I never thought THAT would happen.”



    And, bear in mind, THAT has almost happened before. In September 1998, for example, Fed Chairman Alan Greenspan helped organize a Wall Street bail out of Long Term Capital, a $130 billion hedge fund – run by Nobel laureates, no less – that almost turned world financial markets upside down.



    A few weeks ago, we had another close call when two Bear Stearns hedge funds made risky bets – with massive loans – in subprime mortgages and their derivatives. Fortunately, Bear had deep enough pockets to bail itself out.



    That may not be the case when the next big fund goes belly up.



    The problem is not just the lack of transparency of these funds, it’s the very nature of the beast itself.



    For example, let’s say I offered you an extremely risky bet, but with a twist. If you win the bet you make hundreds of millions of dollars. If you lose, it costs you nothing. Would you take it?



    Of course you would. And that’s exactly the arrangement that hedge fund managers have with their shareholders. They earn 20% of the funds’ gains each year. But if they lose, the shareholders are the ones left holding the bag.



    Why not aim for the fence and hope for the mother of all paydays?



    This is why every one of the top hedge fund managers took home over $1 billion in compensation in 2006 alone.



    Three Ways to Protect Your Money



    Yet if we have a hedge-fund induced financial Katrina, Uncle Sam is not going to rescue you. So what can you do to lessen the risk to your own portfolio? Here’s what The Oxford Club recommends:



    1. Don’t risk more of your net worth than you need to. If you’re young and aggressive with a long-term time horizon, that’s one thing. If you’re older, retired or close to retirement, or have a shorter-term horizon, think realistically, not just optimistically. How would you feel if – even temporarily – we went through a severe selloff in the market? Think about it – and govern yourself accordingly.



    2. Diversify your assets beyond stocks into high-quality bonds, real estate, gold shares, commodities and inflation-adjusted Treasuries.



    3. Run trailing stops behind each of your individual stock positions. This gives you unlimited upside potential while strictly limiting your downside risk.



    There are other steps we recommend taking to protect yourself, as well. But the important thing is this: With huge amounts of capital under the control of these funds, you need to expect the unexpected.



    If nothing else, heed the words of legendary fund manger Peter Lynch, who used to tell investors “If you’re gonna panic, do it early.”



    (Incidentally, this analysis is not meant to scare anyone out of the market. I’m just telling it like it is. Next week I’m going to detail one of the biggest positives facing equity investors today: the rise of sovereign wealth funds.)



    Good Investing,



    Alex



    Thank You, Bill McCoy

    macspage|seanet.com

  7. emdfl (1 year ago) Is this Spam?

    When I was part of a team replacing radar systems in the Canadian Northwest Territories we went to one site that had the most unbelieveable Artic Char fishing. We were catching 100 pounds of cleaned fish in an hour.

    So I built a smoker using a heating element from a stove, an equipment shipping crate and some salvaged refrigerator shelves. For wood all I had was the skid pieces from the crates - luckily it was oak.

    I smoked fish continuously 24 hours a day until was time to head to the next site. We carried smoked fish with us to the next two sites and ended up shipping a couple of cases of it down to our support group in Thunder Bay. Where there's a will...

  8. Stephanie (1 year ago) Is this Spam?

    Hey Big T - Nice analogy. Only problem I see is that you bought your smoker at Home Depot. Professionals of every kind (myself included) have learned the hard way that Home Depot cuts corners. Buy cheap, buy twice!

  9. Antonio (1 year ago) Is this Spam?

    Hi Teeka, very good analogy it resembles very much my investing learning process of trying to trade options to quickly after reading 2 how to trade options books and blindly following a system that I didn't quite understood. The worst part was that I started out well which gave me a false sense of confidence and then when trades started to go bad I took too long to get out because of my earlier little success. Finding the right mentors is half the battle the other half is our own determination to succeed. I am very please with Tycoon's commitment to educate their subscribers, keep up the good work.

  10. frank w (1 year ago) Is this Spam?

    Yes, always keep learning and studying. In many ways the markets are always the same, and in many ways always changing. Random events - both good and bad - constantly occur. Those that think they are 100% right ALL the time have to relearn that lesson the hard way.

Add Your Comments

Please keep your comments relevant to this blog entry. Email addresses are never displayed.

Please fill in the missing field(s).

Important: To comment on Tycoon Report articles, you must first log in. If you are a paying customer of Tycoon, you may use the same login and password that you use normally. If you do not yet have a login, please take a moment to register below. It’s free, and you only need to do it once.

Register

(email address and password information will NOT be displayed publicly)

Name *

Email *

Password *

Subscribe to The Tycoon Report
By registering, you agree to our terms of service.

Already a member? Log in!

(you will not be taken away from this page)

Email *

Password *

Remember?

Forgot Password?




Important Notice to all stock spammers, scammers and penny stock pump-and-dumpers: You will get no respect here. Don’t bother submitting fraudulent or misleading information in the guise of an article, because we will remove it. Any piece of content submitted on this site can be removed at the sole discretion of the Tycoon staff.