How to be a Successful Investor Over All 12 Months

Mark Twain once commented on the celebration of New Year’s and said something to this effect:   Last week everybody smoked his last cigar, took his last drink and swore his last oath.  This week we are a pious and exemplary community of investors.  Cheers to another new year as we leave last year’s obituaries behind.  Take a deep breath and let’s figure out what we all need to do more of so we can celebrate what we want to experience more of – profitable trades.

The cornerstone of profitable trading is routines.  My experience with new investors is that they begin to “short circuit” when I explain that they’ll need more than their one “buying routine” to succeed.  Imagine how these same folks react when I show them the complete roadmap of investment routines.  Suddenly, they need the equivalent of an emotional Band-Aid.  I try to convince them that the total can indeed become greater than the sum of individual parts by combining investment routines into a comprehensive written trading plan.

At this point, I hope I have moved them beyond mere curiosity and I have their undivided attention.  I explain that they must be willing to jab two fingers into the eyes of both the dragon of self discipline and the dragon of emotional control.  Once they muzzle and gain mastery over both these beasts, they can move on in their quest for profits.

Part of that quest in the broadest sense is to layout your investing routines on an annual basis.   I‘ve often used the “slinky” metaphor to describe the human nature of investors.  If you don’t do some strategic planning, you’ll find yourself and your trading resembling something of a series of events that stretch out the slinky and at some inopportune future time, come screaming back at you as the slinky once again compresses.  Painful, unproductive and unnecessary!

So here I propose a roadmap for the coming year to allocate your broad investing activities across all 12 months that will contribute to you maximizing your profits and minimizing the “slinky tail slap”.  By tackling these few tasks each month over the year, it will be quite manageable.  Try my plan and jettison the slinky.

JANUARY:  Update your net worth.  Contribute to your retirement plans (check if limits have increased).

FEBRUARY:  Gather up all your paperwork and start preparing taxes.  Revisit all your account information and update it (don’t forget to update your passwords).

MARCH:  Review your broad asset allocation strategies with respect to your family and your own personal risk tolerance.  Evaluate your portfolio diversification and present correlations to the markets.

APRIL:  File your tax return.  Review your emergency cash needs and the adequacy of your existing funds.

MAY:  Retirement review.  Are you saving enough to retire when you plan to?

JUNE:  Review your children’s educational goals and your financial needs.  Review your written investment plan (preferably while sitting by a pool with some ice tea).

JULY:  Half-year portfolio performance review, relevance and adjustments.  Revisit the percentage withholding on your paycheck.  Is it enough to cover your income taxes?

AUGUST:   Insurance review – check adequacy and deductibles.  General asset protection review.  Before you invest it, you have to protect it!

SEPTEMBER:  Meet with your estate attorney to plan and update your will to reflect changes in the law.  Check your debt situation.  Are you comfortably under control?

OCTOBER:  Evaluate your workplace benefits.   Review your medical, dental and disability insurance coverage for adequacy.

NOVEMBER:  Review any sizeable gains and losses to make smart moves before December 31st. Make any final charitable contributions before year-end.  Talk to your accountant about any tax law changes that might impact you.

DECEMBER:  Reassess your present asset allocation.  Are you over or underweighted in any of the key asset baskets?  Do a performance review of all investments before year-end.

In closing, I’d like to quote golfing great Ben Hogan:  “As you walk the fairway of life, you must smell the roses, for you only get to play one round.”  So muzzle your dragons and get it right.

Trade well; trade with discipline!
-- Gatis Roze

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Staying Atop the Market

The stock market is always one step ahead of you. The sooner you accept this fact, the better for your trading results. It helps to think of the market like the rabbit on the rail at the greyhound racetrack. As an investor, you should never mistake yourself for the rabbit or else the market will have to humble you and remind you that you are just a dog. The best you can expect to be is a greyhound in close pursuit, tethered to this market rabbit by an invisible rope. The fact is that the market rabbit is not really in the race. You are racing your fellow greyhounds. They are the ones whom you want to stay out in front of.

The questions you should ask are twofold. The first question is how to stay tethered to this rabbit. The second question is how closely tethered you actually want to be. Candidly answering the first may result in your answering the second by default. So focus on the first question and then ask yourself this: what you are willing to do each day to maintain your connection to the market? Your personal daily circumstances as well as your emotional commitment and discipline should guide you to generate a reasonable answer. With those inputs, you can then decide whether you allocate 30 minutes a day or 30 minutes a week.

The point here is that your allocation should be unique to you personally. To be successful, it must be based on brutally honest inputs by you about yourself. For this to work best, you must be willing to put it in writing, making it easier for you to revisit on a regular basis. You should also note that it’s not unusual to be overly optimistic at first about your abilities to pay attention and stay on top of the market.

As real time investing plays out, it might become a bit more comfortable to adjust your routines – let out some rope, so to speak – and not try to stay so close. By default, you therefore answer the second question. How closely tethered to the market rabbit do you really want to be?

It becomes crystal clear that the more closely you remain tethered, the more significant the commitment in both time and emotional capital required to do so.  A day trader better be prepared to be tethered to the market rabbit on a very short rope.  The position trader less so. A long-term investor comfortably less so.

The bottom-line is that there is no one magical tether. The challenge is to construct individual routines that match the personal fire in your belly so that you remain in equilibrium and are able to maintain consistent focus and discipline over the long period of time that you will be tethered to the market rabbit by this invisible rope of your own design.

Trade well; trade with discipline!
-- Gatis Roze

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Money Management: Why Market Wizards Claim It’s the Secret Sauce

In his Market Wizards books, Jack Swagger interviews an outstanding collection of renowned investors, traders and money managers.  The single most common thread that each mentions as being a major contributor to their success is their money management skills.

The challenge is to understand what they mean by money management.  The internet is full of definitions, ranging from simplistically useless to overly complex and potentially harmful.  In past years, I’ve surveyed my classes for their personal definitions.  On two separate occasions a decade apart, we constructed in class definitions that I believe accurately capture what these market wizards meant when they attributed their success to their money management skills.

What both groups of the investors I surveyed agreed upon was the notion that money management is a process.  In its most basic form, it involves setting goals, getting organized and executing a written investing plan.  Both groups also agreed that money management is very personal and individualistic in nature.  It will change over time as the investor’s needs shift, but honesty and candor are essential ongoing ingredients in any effective written money management plan.

My first investor group formulated a money management process consisting of 8 issues constructed as questions that challenged each individual investor to answer in writing in a manner most appropriate for him or herself. 

How do you get your money?  What are the sources of your cash flow and are they dependable or variable?How do you feel about money?  Did you inherit your wealth and see money management as a burden or part of your lifestyle?  What is your tolerance for risk?Where do you move your money?  What percentage of your assets are you comfortable placing in various asset baskets?  Do you see yourself as an investor, a trader or a watcher?How do you move your money?  What are your investment analysis routines and which trading methodology do you employ?Why do you move your money?  How will you decide it’s time to invest?How do you protect your money?  What sell disciplines do you have in place?  Have you adequately insured yourself and your family to protect all your assets?How do you spend your money?  What are your lifestyle priorities?  How much money will you invest, spend and distribute?When will you spend your money?  What is your time horizon and does your current estate plan reflect your present wishes?

Ten years later, I surveyed the second class of student investors.  Their definition was more concise yet the parallels were undeniable.

“Money management is a written, personally-appropriate financial framework describing the types of investments and strategies that you feel will align with your personal goals, objectives and priorities.  These guidelines describe the rules and tools you deem appropriate in managing your wealth.  They acknowledge your risk tolerance and the risk management techniques you employ to protect your assets.  Finally, they provide an ever-changing lifelong timeline and roadmap recording the methodologies and resources you use to ensure disciplined stewardship of your assets as you attempt to maximize the return on your investments.”

The key take-aways for all you budding market wizards are these:

A. Get organized and put it in writing.

B. Put the odds in your favor by having clear goals, routines and an investment methodology.

C. The roadmap to success requires that you know yourself and know enough to stick to your rules.

Trade well; trade with discipline!
-- Gatis Roze

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There's a chill in the long putter market

By E. Michael Johnson

Just 18 months ago some manufacturers were tripling or quadrupling their fourth-quar-ter forecasts for sales of long and belly putters. That's because the demand was skyrocketing after the major success of Keegan Bradley at the 2011 PGA Championship and several wins on the PGA Tour by other players. Eventually consumer interest reached a point where manufacturers struggled keeping up.

Since the proposal to ban anchoring was announced, putter buyers have been wary. Photo: Jeff Gross/Getty Images

"We couldn't make those putters fast enough," said Michael Fox, at the time TaylorMade's global product category manager for putters and wedges. "Retailers were ordering by the thousands where it used to be they'd just take a few at a time."

A year and a half later it's a different story.

When the USGA and R&A announc-ed their proposal to ban anchoring in November 2012, many wondered what impact it would have on sales and tour usage. Some data is now available, and the early returns suggest it has had a chilling effect. According to tracking firm Golf Datatech, total putter sales in December 2012 cratered 21.1 percent versus the same month in 2011, marking the largest decline in putter sales since the company began tracking such numbers in 1997.

Tom Stine, president of Golf Data-tech, said that although his company does not break out sales of longer-than-standard putters, the drop in the numbers strikes him as cause and effect. "Did the announcement cause confusion in the market and therefore turn off golfers from buying any putters?" said Stine. "It's an interesting coincidence to think about."

Although it is possible to connect the decline with the proposed ban, it is important to remember that sales in December 2011 enjoyed a spike because that period was when golfers were rushing to buy belly putters. According to Sven Kessler, VP of retail sales for Edwin Watts, consumers would literally walk into shops saying, "I want a belly putter." When asked what model or what length, many would reply, "I don't know. I just want a belly putter." Given that, the December 2011 numbers may have been artificially inflated, leading to a larger decline in 2012.

Still, Kessler leaves little doubt about the effect of the proposed ban on sales. "At their peak in spring 2012 nearly 30 percent of our putter sales were either mid- or long-length," said Kessler. "That number dropped substantially after the rumor surfaced last summer about a possible ban and has only gotten worse since the announcement in November. We're having trouble moving inventory of these clubs."

On tour the impact has been just as noticeable. As many as 25 long/belly putters were in use at several events last season, but so far in 2013 that number has been slashed. At the AT&T Pebble Beach National Pro-Am just six players used such putters. Between the Northern Trust Open and Match Play only 12 different players went longer than standard. While those who have such clubs for long periods of time or with significant success (such as Tim Clark, Carl Pettersson, Bradley and Adam Scott) continue to ply their trade with them, others who had only recently begun experimenting with them such as Charles Howell III and Robert Garrigus have decided not to go any farther down the belly-putter path until the rule is clarified.

In the meantime, some manufacturers, anticipating the ban being enacted but golfers still wanting to use longer putters in a legal manner, have begun rolling out product designed for that purpose. Shortly after the proposed ban was announced Odyssey unveiled its Metal-X Arm Lock putter while TaylorMade recently debuted its Daddy Long Legs model on tour with Vijay Singh and Steve Marino putting the club in play. Both putters have longer-than-standard lengths but are designed to use counterbalancing, not anchoring, to stabilize the stroke.

Those putters may stabilize the stroke, but the use and sales of long and belly putters is likely to remain wobbly for the immediate future. For those still in the market for a long or belly putter, there is some good news, says Leigh Bader, president of 3balls.com and one of the driving forces behind the PGA Trade-In Network. "It may have been that people bought them and just found they couldn't use them very well, or it may have been the proposed ban," Bader said in January. "But belly and long putters are among our most-traded in clubs right now."

GARY WOODLAND // Driver alterations

Switching equipment companies almost always comes with a learning curve, and that's been the case for Gary Woodland, who has worked with a few drivers this year as he settles in with his new Callaway clubs. At PGA National, Woodland made some changes to the company's RAZR Fit Xtreme driver he had been using.

Although the club says it has 8.5 degrees loft, the actual loft is 8.2 degrees. Woodland also used the club's adjustability to put a 7-gram weight in the heel and a 14-gram weight in the toe. The thought behind the heavier weight in the toe was to move the center of gravity just enough to produce the hotter flight Woodland sought. The results seemed to indicate the changes worked as Woodland ranked third in driving distance at PGA National at 304.4 yards per drive.

MIZUNO JPX-825 PRO
PRICE: $900 (Set of eight, steel)

Stacy Lewis won the HSBC Women's Champions using these irons where the 8-iron through the wedges have a thicker face to promote a more penetrating flight.

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During the final-round telecast of the Honda Classic, announcers frequently referenced the 5-wood Michael Thompson was using but never named the club -- perhaps because they had never heard of the company. Thompson's 5-wood was a 17-degree Akira M117 prototype -- a club with a smallish head (120cc). A Japan-based company, Akira was formed in 2001 and its clubs have been used by numerous players on the Japan Tour, but rarely on the PGA Tour. ... Odyssey's Versa putter added a few converts at PGA National, including Branden Grace who used a Versa #1 Wide with black/white/black. Grace's putter was customized with a Metal-X insert that Grace felt was closer to the previous Black Series Tour Design #1 Wide putter he used during his four European Tour wins last year. ... David Duval shortened his Nike Method 006 putter a half-inch, making it 36 inches in length with a belly grip that counterbalances the putter. ... The 2-iron was popular again at PGA National. Among those putting the wind-cheating clubs in play were Tiger Woods (Nike VR_S Forged), who had the lie angle on the club bent more upright at the Match Play, and Hank Kuehne (TaylorMade RocketBladez Tour). Others included Paul Casey, Duval and Seung-Yul Noh.

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Onward & Upward into the New Year

It’s hard to improve upon the short and pithy advice from my favorite founding father, Benjamin Franklin. 

“Be at war with your vices, at peace with your neighbors, and let every new year find you a better man.”

In 2013, promise yourself to embrace your goals, your dreams and those you love.  Happy Holidays!

Trade well; trade with discipline!
-- Gatis Roze

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Five questions with Holly Sonders

A member of the Big Ten champion Michigan State golf team in 2007, Holly Sonders has been part of the Golf Channel's "Morning Drive" team since January 2011. Here she handles five questions from E. Michael Johnson.

Q: You just joined with Cobra-Puma. What kind of input might you have on its apparel line?
I've already spoken to them about that. For the Puma logo on my apparel, I'd like sequins or some kind of stones and have that be my signature. Girls like bling, and I think that would be cool to have on my Puma cats. I would love to have a say in shoes and developing golf dresses. I love fashion, and Puma is fashion-oriented.

Q: Is golf more frustrating or more fun since you entered the workforce?
A little of both. You have expectations for yourself, so when you chunk a chip or miss a five-footer, that's a little frustrating. I'm still a competitor. But the pressure is off. I played competitive golf for 16 years with teammates and coaches counting on me. Now I don't even have to keep score. That's a relief, so I think I enjoy it more.

Q: What have you learned from Martin Hall?
Martin is one of the most knowledgeable teachers on the planet. He thinks of items you might have around your house you can use as training aids. He's very visual and tailors tips to different players.

Q: What would you do on your first day if you were LPGA commissioner?
I'd like to see them move to a Friday or Saturday finish and get it away from the men's schedule.

Q: What time do you have to get up for work?
I used to live 30 minutes away and woke up at 1:45 a.m. to get in by 3:30 a.m. I got so many speeding tickets I had to move. I'm less than a mile from work now, and the call time is 5 a.m. I don't have to wake up until 4:15. That's a big 2.5 hours.

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Finchem, Nike's Davis among 50 most powerful in sports

(Getty Images photo)

By John Strege

PGA Tour Commissioner Tim Finchem and Nike Golf President Cindy Davis were the only two golf representatives on Sports Illustrated's list of the "50 Most Powerful People in Sports."

Finchem was ranked 25th and Davis 46th on a list headed, not surprisingly, by NFL Commissioner Roger Goodell. Those on the list with peripheral ties to golf include NBC Sports Chairman Mark Lazarus (the Golf Channel is part of the NBC Sports Group), CBS Sports Chairman Sean McManus and IMG Worldwide CEO Michael Dolan. Lazarus is ranked seventh, McManus 13th and Dolan 14th.

Given golf's niche status in the world of sports, it perhaps is not surprising the list included only two from golf. BusinessWeek once had Tiger Woods listed No. 1, ahead of Goodell and NBA Commissioner David Stern, in its list of the "100 Most Powerful People in Sports."

There were no active athletes on Sports Illustrated's list (Michael Jordan, now the owner of the NBA's Charlotte Bobcats, came in 50th).

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Would You Like a Promotion?

Think of the new year as a promotion for you.  The exercise is simple in its execution and somewhat more challenging in its implementation. You’ve been promoted and are moving upstairs to Suite #2013 which has an improved view and is much more spacious for all your investment activities.  What makes this move unique and unlike any other is that the relocation requires you to review your 2012 trading journal and make a careful inventory of all your experiences and investing behaviors from last year. 

To quote Eric Zorn, you should think of it as “a cleansing ritual of self-assessment and repentance that demands personal honesty and ultimately reinforces humility.”  No one enjoys revisiting poor trades and bad executions, but remember that these are the building blocks of your growth as an investor.

Once this is done, you decide which achievements and accomplishments you want to bring with you into the next year.  When you’ve completed this list, you then review it and check off only those deeds and behaviors that you want to move with you into the new Suite #2013.  All the others that you’ve deemed to be unnecessary or unworthy can then be jettisoned from your luggage. 

So into the new year you fly – a new investor!  What remains with you is a compilation of only the “good stuff”, a sort of greatest hits from your 2012 trading year.  This transition clearly involves two objectives:  what you consciously leave behind and what you purposefully take with you.  Your move into this new metaphoric Suite #2013 must be executed with deliberateness and finality.  There is no going back to your old ways.

Personally, having done this exercise for years, I have found that a major benefit of this approach is that it forces me to address those instances when my analyses were correct but my execution was off (and vice-versa).  Even then, it’s necessary to unbundle my execution and look at both halves  -- the technical execution and the emotional execution.  

It should be crystal clear why your trading journal is such a powerful ally.  Your journal is where you record your past responses, feelings and thoughts – as honestly as your can since these underlie your trading behaviors.  This emotional awareness allows you to dissect the trading process into smaller tasks and helps you track non-productive deviations.  This feedback loop is the secret sauce!

In his book The Successful Investor, William O’Neil wrote:  “I know how bad habits are formed and how hard it is to break them.  But break them you must, so you can develop new habits based on how the market actually works.”  The intention is that you become a modernized version of the investor you know you can become if you would only leave behind those tools and behaviors that will not contribute to this new version of yourself.  You only pack up and retain those elements that you know are the building blocks of this improved investor self.  Think of it as your personal 4R Program.

ReshapingRealignmentReprogrammingRefinement

You leave behind your old self – for it was imperfect – and as you let it go, you begin the transformation into the new self.    T. S. Eliot’s verse seems so appropriate: “For last year’s words belong to last year’s language, and next year’s words await another voice.”  As an investor, embrace the challenge and possibilities of the coming 12 months.  Next December, you’ll know the effort was well worth it.

Trade well; trade with discipline!
-- Gatis Roze

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Blind Spots

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-Gatis Roze

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Personal Productivity & Routines

Have you heard the famous cliché about discipline?  “You’ve got to do what you have to do before you can do what you want to do.”   Every stock market investor seems to be spring-loaded to his or her favorite news service, blog, website or shall I politely call it his or her second-tier activities of interest.  It’s like bubble gum for the mind.  It’s human nature.

Much has been written about the power, effectiveness and necessity of having recurring investment routines.  Much less has been written acknowledging the reality of irregular and non-recurring routines.  There are two crucial elements to understand when it comes to investing.  First, you must recognize that each of us has a particular time of day when we are the most productive and effective, and this time of day varies by individual.   Secondly, we each have our own limited amount of time available each day to allocate to our investing endeavors, and this variable time allotment gets divided between our recurring and non-recurring routines. 

You need to consider these two elements on an individual and personal level.  For myself, I know that I am most productive in the mornings.  From the time I get up until the time markets close (1:00 PM here on the west coast), I am clearly in overdrive.  I deal with my less important non-recurring To-Do list items appreciating that fact.  Each evening, I write out a fresh To-Do list.  My regular investment routine items are not listed here because, as recurring tasks, they are non-negotiable.  Since these recurring routines have become second nature to me, there is no need to put them on the list.  The next morning at the office, I inevitably add to the non-recurring list. 

Herein lies the productive little habit I’ve gotten into.  All items on the To-Do list are highlighted in either yellow or blue.  Yellow means they are the high priority items that need my attention before the markets close when my morning energy and focus are at a peak.  The blue highlighted items are meant for after the market closes, after I’ve had lunch and taken a break.  Clearly these items are less imperative in importance.

Therefore, the first half of the aforementioned cliché “you’ve got to do what you have to do” applies to the important morning items on the To-Do list whereas the afternoon activities apply to the latter portion of the cliché “before you can do what you want to do.”  As a trader, I have found that this simple little exercise yields admirable results.

Trade well; trade with discipline!
-- Gatis Roze

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Gear On Tour: WGC-Cadillac Championship

Gear On Tour: WGC-Cadillac Championship: Golf Digest #sponsorship-ad { margin-right:15px; }#sponsorship-ad.has-sponsor { margin-bottom:10px; height: 60px; }}#sponsorship-ad.no-sponsor iframe { height:1px; }.utilities.utilities-blog {display:none}.comments .commentAnchor .entry .body img {display:none;}.tweetriver h5.tr-header {padding-bottom:0;visibility:hidden;}.socialicon { height: 41px; width: 200px;}.ss_blogs #urail .features.set10{ height: auto; margin: -20px 0 20px; min-height: 200px;}.ss_blogs #urail .set10 .feature{ height: auto !important; padding: 150px 0 0 0px !important; width: 140px; margin: 0 12px;} Close Close Welcome, Logout | Edit profile Welcome to golfdigest.com Log in | Register Subscribe to Golf Digest SUBSCRIBE NOW! Give a gift Renew International Subscription Questions Subscribe Subscribe Equipment HOT LIST Drivers Fairway Woods Hybrids Irons Wedges Putters Golf Balls Golf Bags Golf Shoes Used Golf Club Trade In America's 100 Best Clubfitters Golf Style Instruction Driving Short Game Sand Play Putting Swing Sequences Fitness Stack and Tilt Golf Digest School The Instruction Blog Sean Foley Butch Harmon Hank Haney Jim McLean Tiger Woods Sea Island Instruction Vision54 Courses and Travel COURSE FINDER Book A Tee Time The 75 Best Resorts Buddies Golf Myrtle Beach Las Vegas Scottsdale San Francisco Golf Near The Busiest International Airports Golf Digest Ambush News and Tours Tour Stats & Scores PGA Tour LPGA Tour Champions Tour College and Amateurs The Masters U.S. Open British Open PGA Championship Ryder Cup Blogs Local Knowledge Hot List 365 The Instruction Blog New Stuff #Reaction Blog Campus Insider GeoffShackelford.com MyUsualGame.com Golf Digest Woman Forums Main Forum Index Tour & Pre-Release Forums Equipment Forum Clubmaking Forum Fashion Forum Tour Talk Forum General Golf Talk Forum Instruction Forum Courses & Travel Forum Magazines Golf Digest Golf World Golf Digest Shop Hot List Rankings Style Swing Sequences Slideshows Video Golf Digest Live Shackelford APPS GD Woman Hot List Rankings Style Swing Sequences Slideshows Video Golf Digest Live Shackelford APPS GD Woman 2013 Shoe Guide The Week In Style Welcome To Miami Best Buddies Trips 18 Landmark Moments More Annoying Golfers Golf Digest Golf Equipment Print E-Mail Feeds Golf Equipment: golfdigest.com Share Golf Equipment Gear On Tour: WGC-Cadillac Championship A glimpse of what players are using this week at Doral's TPC Blue Monster in Miami Photos By GolfWRX.com March 2013 NOTE: GOLFWRX.COM HAS MORE PHOTOS FROM THE WGC-CADILLAC CHAMPIONSHIP Play Slideshow Pause View All Thumbnails Previous 1 of 20 Next Chris Wood's Iron Recent European Tour winner Chris Wood plays Mizuno clubs, but he has a Titleist 2-iron in his bag this week. Play Slideshow Pause View All Thumbnails Previous 1 of 20 Next Keywords: golf, equipment, PGA, gear on tour, GolfWRX, WGC-Cadillac Championship, TPC Blue Monster Print E-Mail Feeds Share Ratings Rate it: 1 star 2 stars 3 stars 4 stars 5 stars Comments Post a Comment E-Mail Share Replay Related Links The Grind: A look at the week in golf & beyond 2013 Hot List: Category Leaders The Complete Hot List 2013 Hot List: Drivers Hot List 365 Blog New Stuff Blog The latest on golf digest How To Play Swing Sequence: Matt Kuchar A closer look at the swing that won the WGC-Accenture Match Play. Getting into golf? Our beginner's guide A frame-by-frame look at players' swings Video instruction from top teachers Video: Our collection of quick tips that help More Golf Instruction What to play The Complete 2013 Hot List Your search for the year's best new clubs begins here. The 2013 Hot List: Category Leaders Hot List 365: Equipment news year-round New Stuff Blog: The latest products Talk to our editors on GolfWrx.com More Golf Equipment Photos The PGA Tour's Better Halves How well do you know the tour's significant others? Photos: Pro golfers on Instagram Mr. Style's Best Dressed of 2012 Dressing up for the Ryder Cup Gala LPGA's Sandra Gal voted hottest golfer More Slideshows Where To Play Away Game: New Mexico Mixing a little art and a lot of golf in Santa Fe. America's 100 Greatest Public Courses Photos: The most beautiful golf courses Ranking: Best buddies-trip destinations Course Finder: Find A Place To Play More Golf Courses & Travel News & Tours Land Of The Tour Pros Why Florida's Jupiter area has become the hottest spot in golf. Golf World: A closer look at David Feherty Our early-season PGA Tour awards The GD 50: Ranking golf's top earners Golf's all-time biggest rules blunders More News & Tours Features The Most Annoying Golfers The only thing worse than playing with one of these golfers is being one of them. Our golf style guide for dummies Photos: The most annoying golf partners gallery: the nfl's most-crazed golfers Video: the greatest golf movie scenes More Humor and Fun Golfers On Instagram
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Pyramid Trading: Greater Profits with Less Risk

No, the pyramids are not a range of mountains between France and Spain.  Yes, there are over 80 pyramids in Egypt.  There are also triangular, pentagonal and oblique pyramids in math.  No doubt you’ve also come across ecological, nutritional and even income pyramids.  This blog is about my pyramid.  It is a method that I use for both buying into a position as well as exiting an equity position.  My trading pyramid is both a method and a discipline.  It involves adding to a position in a systematical manner to take advantage of an equity showing increasing strength while simultaneously limiting risk.  It’s loosely based on two market clichés:  “the trend is your friend” and “buy strength, not weakness.”

The pyramid trading method simply advocates wading into a full position in small controlled chunks rather than buying 100% of your target position on the first purchase.  I describe it as both a method and a discipline because often when investors finally make the emotional commitment to buy an equity, human nature seems inclined to want to devour the entire position in one big bite.  In the market, as so often is the case, human nature is wrong.

The pyramid method allows you to buy, for example, 25% of your intended full position, set your stop and then wait for the market’s next wave up to confirm the wisdom of your first purchase decision.  If the market trends higher, you show a profit and the market has reinforced your good judgment.  If it trends down, your stop is executed, you controlled your risk, and you book a small loss on only 25% of your full intended position.

In a sense, you must retrain yourself.  This is not like shopping at Nordstrom.  You aren’t waiting for a lower sale price before buying.  Pyramid trading is the absolute opposite.  It may seem counterintuitive at first, but you want to pay more for each subsequent entry into the market until you’ve acquired your complete 100% position.  As your equity continues to trend up, you exercise a parallel discipline of moving your stop up to follow the positive trend and protect your profits.

One misconception about pyramid trading is that you can pyramid down as well – this is incorrect and potentially suicidal.  The market offers a litany of clichés, such as “catching a falling knife”, to address such poor and inadvisable behavior.   The power of pyramid trading is that it forbids you from adding a second position unless you already show a profit on the first position.  This simple caveat should be chiseled in stone.

In the excitement and ensuring madness of a market media blitz – when the hype says one thing but the charts say another – this rule has saved me time and time again.  To quote James Russell Lowell, “one thorn of experience is worth a whole wilderness of warning.”  The corollary rule and benefit is that, as an investor, you must adjust your stops when you buy your second position which might account for anywhere from 25% to 50% of your full target position.  In a nutshell, you continue to add to your profitable positions and take advantage of the equities up trend as well as controlling your risk by diligently raising your stop following behind your positive trending equity. 

In summary, to reflect the fact that equities typically move up more slowly than when they reverse and break down, I pyramid into a long position using approximately 25%, 35% and 40% as rough guides.  But on the exit, I reverse that strategy, closing out 40% of my position firstly and then following that with 35% and 25% if the equity continues to deteriorate.  Pyramid trading is a method that has been validated by numerous academic studies.  Because it takes advantage of bullish trends by increasing position size with each upward wave, it instills the added benefit of disciplined stop adjustments that will make the average trader better and the good trader exceptional.

Trade well; trade with discipline!
-- Gatis Roze

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A $320 golf polo? Yes, from Treccani Milano

By John Strege

Have you ever wondered what a $320 golf polo shirt looks like? Neither have I. Nonetheless, there it is, shown above. It seems to resemble an $80 polo or a $60 polo, though it is custom made.

Treccani Milano, an Italian fashion concern boosted by what company founder Emanuele Bonasia called "overwhelmingly positive response to our custom golf shoes and custom golf leather bags," decided to expand into the polo business. The cost of the golf shoes started at $1,020, while the leather bags started at $11,000 and went up to $38,000.

In other words, their products aren't for everyone.

The custom-made polos offer color choices and options that include "100% cotton piquet or stretch from a cotton mill in Switzerland, a choice of pocket, sleeve length, stitching colour and buttonhole colour. Other features include selecting the colour, shape and thickness of the mother of pearl button, as well as shirt monograms," a news release states.

Production of each shirt takes four weeks, the company said.

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35 Years and 5 Key Personal Investment Passages

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February 1, 2013 at 8:30 AM | written by Gatis Roze

I stumbled into a gift shop full of tchotchkes today.  It was one of those retailers with endless trinkets and specialty items that encourage you to revisit your youth and marvel at someone else’s creativity.  I became fascinated by one of those intricately detailed Russian “Matryoshka” – the wooden nesting dolls of decreasing size placed one inside another.  Perhaps because the markets were particularly challenging today, I found myself getting pensive about the parallels of my life as an investor to my unbundling of these nesting dolls.  I’ve always felt that investing is like peeling back the layers of an onion one-by-one, and therein lays the parallel.  I realize that like all other investors, my journey has followed the path of the 5 enlightenments as I peeled back my personal investment onion over the years. 

I started as a “novice” with a potpourri of random investment tools.  I progressed to an “advanced beginner” where I added some selling methodology to the mix.  Next, I moved into the “competent” realm where I embraced the importance of the investor self.  From there, I transitioned to the “proficient level” with a smaller set of trusted trading tools.  Finally, I arrived at the “expert level” where my self-discipline was maintained and I allowed my intuition a seat at the table.

Despite what we each want to believe about our abilities, there is no pole-vaulting here or jumping the queue.  We must all pass through each of the previous 4 enlightenments to arrive at the “expert level”.  Unlike many of my previous blogs about what I have learned trading the markets, this one highlights 5 pivotal events that happened to me and provided catalysts that drove my journey ahead and allowed me to move forward to transform myself into the next investor stage.

I had been diligently attending investment conferences and money shows all across the country, sponging up each and every nugget of wisdom.  It was after a 3-day show in Las Vegas that an epiphany struck.  I realized that I had accumulated an unwieldy collection of investment tools that held very little promise of profitability.  At these conferences, the talking heads never really intended to turn me into a successful investor.  They merely strove to convince me that investing was far too complicated for me to do myself.   Their not-so-subtle alternative was for me to buy their newsletter, their mutual fund or management services and let them do it all for me.I energetically began to consume books on investing.  The good fortune at that time was that I had crossed paths with a gentleman who managed Stanford’s endowment and he shared with me a powerful axiom that has served me well for many decades.  He said “Never read any investment book unless it is recommended to you by at least two other investors you trust and respect.”  I therefore plowed through all the classics and the recommended “good stuff” and for the most part, I did not get sidetracked or misinformed by so much of the truly damaging garbage which parades itself as investment wisdom.I would be woefully remiss if I did not acknowledge Dr. Hank Pruden at this point.  He was an educator, a mentor and a role model for me as I took his Wyckoff investment classes at Golden Gate University in San Francisco.  During this period, what galvanized me was the realization that I wasn’t driven by the money but by my vision to gain mastery over myself as an investor and mastery of a profitable trading methodology.  It was this vision that continues to motivate me to this day.Sometimes in life you just find yourself in the right place at the right time with the right people.  Fortunately, I realized this about that same time as several others, so we built a community.  The group of investors who came together in Dr. Pruden’s classes were wholly unique.  We learned the Wyckoff method together, we studied and passed our CMT certification together, we formed a monthly investment club together, and we hired famous trading psychologists to work with us.  It’s not my place to name names, but many in our group went on to truly distinguished careers as managers of hedge funds, mutual funds or became famous traders.  Years later, my Christmas card list still reflects our unique connections.  My fellow traders taught me another essential insider secret during these years – one that has allowed me to befriend a wide variety of successful investors over the years.  It’s the trader’s version of the Rule of Reciprocity.  It merely says that if you are always a taker and don’t bring to the table something of value for the other traders, you will soon be ignored and your education will cease.  Traders don’t warm up to takers.It was soon after this period that another eureka moment happened.  My investing tool kit came together and still exists in much the same configuration today.  Woodrow Wilson once said that if the only tool you have is a hammer, you tend to see every problem as a nail.  My challenge was the other extreme.  I had so many tools that if I were a hardware store, I’d look like Home Depot!  Any fool can complicate a methodology.  It takes experience and clear thinking to move in the other direction.  Investing is often made overly complicated because human nature tends to want to make it so.  Overcome this and you’ll discover one of the market’s insider secrets.  Low and behold, once I embraced this realization, my investing results reflected this adjustment to simplicity almost immediately.  To this day, I advocate an essential tool kit of 10 indicators and no more.  This seems to be the “sweet spot” for most investors.

Therein lies a portion of my journey and a few key personal passages along the way.  In summary, I’d like to suggest that patience is a key ingredient with every passage.  Patience is what allows us each to work hard at our craft for years until that moment in time when it all comes together and we achieve “overnight success.”  So it might seem to the casual novice, but of course we know the truth.

Trade well; trade with discipline!
-- Gatis Roze

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High-altitude adjustments

By E. Michael Johnson

Flying high: Fowler added a full degree of loft to his driver. Photo by: Jed Jacobsohn/Getty Images

Adjustable drivers aren't just for correcting swing flaws. The WGC-Accenture Match Play was a reminder that they might help you take advantage of high altitudes.

At Dove Mountain, 2,600 feet above sea level, several players added loft for extra distance. Rory McIlroy upped the loft on his Nike VR_S Covert Tour driver to 10.5 degrees. Rickie Fowler went from 7.5 degrees to 8.5 degrees on his Cobra AMP Cell Pro, and Lee Westwood went up half a degree on his Ping G25.

Yet the benefit might not be as great as players believe. Those who get the most distance are golfers with high swing speeds and spin rates from 2,200 to 2,400 revolutions per minute, says Brad Schweigert, Ping's director of engineering. Even that comes with a caveat: On mis-hits where spin is reduced, distance can be lost. At higher elevations, shots with spin rates of less than 2,000 rpm have difficulty staying in the air.

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A $320 golf polo? Yes, from Treccani Milano

By John Strege

Have you ever wondered what a $320 golf polo shirt looks like? Neither have I. Nonetheless, there it is, shown above. It seems to resemble an $80 polo or a $60 polo, though it is custom made.

Treccani Milano, an Italian fashion concern boosted by what company founder Emanuele Bonasia called "overwhelmingly positive response to our custom golf shoes and custom golf leather bags," decided to expand into the polo business. The cost of the golf shoes started at $1,020, while the leather bags started at $11,000 and went up to $38,000.

In other words, their products aren't for everyone.

The custom-made polos offer color choices and options that include "100% cotton piquet or stretch from a cotton mill in Switzerland, a choice of pocket, sleeve length, stitching colour and buttonhole colour. Other features include selecting the colour, shape and thickness of the mother of pearl button, as well as shirt monograms," a news release states.

Production of each shirt takes four weeks, the company said.

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Tips For Her: Grip it in your fingers

Editor's note: Each week, Megan Padua, a teaching professional at Maidstone Club (East Hampton, N.Y.) and Belfair Plantation (Bluffton, S.C.), and one of Golf Digest's Best Young Teachers, offers tips and advice for women golfers.

By Megan Padua

Most golfers tend to place their golf grip in the palm of their hands. As a result, it's difficult to create leverage during the swing. Here's a quick tip that will get your grip more in the fingers of your hands:

Hold a tee between your thumb and pointer finger. As you do this, your golf grip will shift out of your palm and into your fingers. You want to see at least two knuckles in your lead hand (left hand, for right-handed golfers), and your grip should rest under the pad of your hand nearest to your pinky finger.  

Getting the grip in your fingers and out of your palms allows you to hinge the club, thereby putting your hand in a more powerful position. Grip changes are never comfortable, but if you stick with this adjustment you will be on your way to hitting more solid shots with less effort.

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A contrite McIlroy admits, "I should have stayed out there"

By Dave Shedloski

MIAMI -- The dichotomy was striking.

A contrite and self-deprecating Rory McIlroy exuded maturity and humility Wednesday morning at Trump Doral Resort while explaining why those seemingly innate qualities were absent last week when he quit in the middle of his second round at the Honda Classic.

Related: McIlroy has company with odd withdrawal

"I gave myself a red card last week," McIlroy, 23, said jokingly to a standing room only crowd of reporters, appropriating a soccer term. (A red card signifies that a player has been ejected from the game.)

"No matter how bad I was playing," McIlroy continued, "I should have stayed out there. I should have tried to shoot the best score possible even though it probably wasn't going to be good enough to make the cut. At that point in time, I was just all over the place, and you know, I saw red. . . . It was a mistake and everyone makes mistakes, and I'm learning from them."

Photo by Getty Images

McIlroy, who is back in action this week in the WGC-Cadillac Championship, stood seven over par after eight holes last Friday at PGA National Resort and had just hit his approach to the 18th green into the water when he shook hands with playing partners Ernie Els and Mark Wilson and hastily walked off the Champion Course, where a year earlier he had won by two strokes and ascended to No. 1 in the world rankings for the first time.

As he departed PGA National, McIlroy admitted he "was not in a great place mentally." About an hour later he issued a statement blaming a sore wisdom tooth for affecting his concentration. McIlroy said both lower wisdom teeth are troubling him, and he had braces put on to alleviate the pressure. He intends to have them pulled when he returns home to Northern Ireland after the U.S. Open in June.

Being the No. 1 golfer in the world, living under a microscope, and playing poorly to begin the year after a total overhaul of his equipment have compounded the pressure on him and affected his amiable disposition.

"[It was both.] I wasn't in a good place with my golf game . . . my head was all over the place," he said. "But at the same time, I have been struggling with my lower right wisdom tooth for over a year. So, yeah, look, my tooth was bothering me, but it wasn't bothering me enough to probably, you know, quit, but that's just the way it is.

Related: Why there is no Rory-Tiger rivalry just yet

"I think it was a buildup of everything," he added. "I've been putting a lot of pressure on myself to perform and I've been working so hard and not really getting much out of it. That's just been the frustrating thing, and that's what happened. It was a buildup of high expectations from myself coming off, you know, the back of such a great year last year, and wanting to continue that form into this year and not being able to do it. I just sort of let it all get to me."

McIlroy felt well enough over the weekend to practice extensively at The Bear's Club near his U.S.-based home in Jupiter, Fla., and he senses progress to correct a flaw that has crept into his backswing where he picks the club up and outside the line. He clarified that he is not trying to change his swing so much as "trying to change it back to where it was.

"I've worked my ass off over the last four or five days to really try and get this right," he said. "Still, it's a work?in?progress. There's no quick fixes in golf, but I'm going to go out there this week and all I care about is my swing, and I know if I can get my swing back on track, that the results will follow."

Having not played a tournament round on the weekend this year, McIlroy is looking forward to four rounds in this week's WGC-Cadillac Championship. There is no cut in the $8.5 million event that features 65 of the top players in the world.

Related: How will Rory & Tiger fare on Trump's turf?

McIlroy is paired with No. 2 Tiger Woods and No. 3 Luke Donald for the first two rounds at the TPC Blue Monster at Trump Doral, with their opening tee time at 11:53 a.m. off No. 10. That marquee group already figured to be the most watched, but the critics will undoubtedly pick apart whatever McIlroy does after his premature exit from PGA National. He was OK with that and doesn't believe his actions will affect his popularity.

"Yeah, I actually think in the long run, Friday will be a blessing in disguise," he said. "It was like it just sort of released a valve and all that sort of pressure that I've been putting on myself just went away. And I was like, [let's] just go out and have fun. It's not life or death out there. It's only a game. I had sort of forgotten that this year."

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