http://shareyournumber.ning.com/profiles/blogs/applying-rule-1-by-phil-town

Cheers,
KC

“@ Josh – Since you shared your chart. it looks like it doubled again (coming off a bit now) … I wonder what would happen if you COMBINED Rule #1 strategies (for pricing and/or trading in/out) with your strategy?”

I’ve done a post over at shareyournumber showing the charts as they relate to “Rule #1″ and Josh’s TTNP, with explanations of how to implement his favoured technical indicators on MSN Money.

Explanations and screenshots at:
http://www.shareyournumber.org/profiles/blogs/applying-rule-1-by-phil-town

KC

Thanks for the link…I think I read that post before, but it was a good refresher on your definition of investments (assets that provide income, and are not relied primarily on for short term appreciation) compared to a classical definition of investment “[a]n asset or item that is purchased with the hope that it will generate income or appreciate in the future” [http://www.investopedia.com/terms/i/investment.asp]

I guess I’m curious why you do not consider ‘short-term asset speculation’ an investment…is it the risk/variance of outcome, the % chance of it actually going well, the similarities with gambling, a personal experience with asset speculation, something you read somewhere?

Just to sum up (since we’ve digressed into semantics over the last several comments), in your previous posts regarding diversification, you recommend ‘focusing’ your money into an investment (that provides income and/or that you do not rely on to provide short term appreciation), but when it comes to speculating (buying an asset that you believe will provide you short term appreciation) you recommend a more diversified approach in order to manage the potential downside. Did I get all of that correctly?

I too share an interest in speculating on the stock market. My friends like horse and sports betting but I find the markets more fascinating.

The poker analogy is compelling because sometimes being right ISN’T good enough. External factors can crash our party (straight flush, market panic) and if you can’t afford to lose the hand/bet, you shouldn’t have the money on the table as a speculative bet. I have learned this with small amounts but acknowledge I haven’t invested the time to educate myself (yet) like Josh seems to have.

My point is more eloquently expressed here :
http://alephblog.com/2009/06/04/do-you-want-to-be-proud-or-do-you-want-to-make-money/#comments

This post explains the difference b/w ‘investing’ and ‘trading/speculating’ – but, only as I see it:

http://7million7years.com/2008/05/20/dont-let-all-of-those-stock-investment-choices-fool-you/

[Hint: it's not 'stocks', but what you do with them that, to me, makes the difference]

BTW: I hope that Josh reads this; very nicely put, thanks: “think your advice to Josh is sound–it allows him the opportunity to achieve atypically high results, while protecting him if he doesn’t get lucky.”

“Because Josh isn’t INVESTING he is TRADING / SPECULATING.”

Looks like you have just changed the universally accepted defintion of investing to not include the purchase of stock. I thought only Robert Kiyosaki could get away with something like that…[http://7million7years.com/2009/03/24/why-get-your-knickers-in-a-knot-over-robert-kiyosaki/]

I think your advice to Josh is sound–it allows him the opportunity to achieve atypically high results, while protecting him if he doesn’t get lucky. In many of your previous posts you concentrated (I felt to a fault) only on the potential positive outcomes from an investment–RE, stocks, and businesses. In this post it appears you take into consideration the potential failure of an investment…and recommended a strategy that didn’t allow Josh to ‘focus’ all of his investable dollars into one asset, and also forced him to purchase other investments that provided him a safety net.