Critical Skills For Stock Traders

In another interview between Stuart McPhee and Daryll Guppy skills for stock traders are discussed.

DARYL: When people get frightened, they go home, and they take their money with them. And that's part of what's having a dramatic impact for instance in Korea, very, very dramatic impact in Japan, is the withdrawal of U.S. funds from non-American markets back to the U.S. And this has happened in Europe. It's not just in Asia. So the strength is created by a return of funding to the U.S., not the diversion of funding from other places to the U.S.

STUART: I just said to the crowd today how appreciative I was at the opportunity to speak here. And I think on the back of the Beijing Olympics and the financial crisis we now see, China's on everyone's minds right now, and it's becoming the talk of the town, and that's why it's so fantastic to be here. And I know walking out of the hotel in the morning, all you hear is jackhammers and cranes. There's building. There's a real buzz, and I think that's really exciting to be here. The place is abuzz, and everyone's talking about China. And I think seeing here now, people want to invest in China, in the infrastructure.

DARYL: It's two ways. There is some demand for investment in China, but the primary demand is to take money out of China to invest in the West. And certainly, the event we're at today is to a large extent Canadian resource companies and other companies who are looking for Chinese capital to continue their funding, and this is in direct competition of what's happening in Australia. If you go to another event, not in Dalian but in Beijing, then what you're finding is there are a whole lot of Australian companies there chasing Chinese capital, courting Chinese investors because that's where the money is at the moment.

STUART: Okay. Let's move on, and we'll talk about some other things. You and I were both in Mumbai, India, formerly Bombay, earlier this year and we were both on a panel, and you said something really interesting. You were talking to those who wanted to be successful stock traders. And I just want you to perhaps talk to people about this. At the time, the Indian cricket competition was really abuzz, and there was a lot of money being poured in and threatening to ruin the game worldwide of cricket.

And we were in a town where Sachin Tendulkar, one of the most famous cricketers was known. You said, "Who here knows the rules of cricket?" And of course, a cricket-mad town, everyone knew the rules. And then you said, "Well, okay, you all know the rules. Why aren't you all playing in this premier competition? Why aren't you the best? Why aren't you out there playing?" And I guess the analogy you were drawing out was we may know the rules of trading, but we may not all have the same levels of aptitude.

DARYL: That's, correct. And we're finding that to a significant extent in the current market conditions, there's a whole lot of retail investors out there who knew the rules, read all the books, and did a whole lot of good things when the market was going up because every boat, no matter how good or bad it is, rises in a rising tide. And now the tide's gone out, and what we're finding is this tremendous gap between aptitude and knowing the rules.

And trading is not for everyone. Investing in the market is not for everyone. But certainly, trading isn't for everyone. You can know the rules, but until you actually get in there and do the work, you don't know whether you've actually got the aptitude and the skill to be able to apply. And in a bull market, it's so easy to confuse brains with a bull market, and there are so many stock traders that have done that.