Matthew R. Kratter Quotes Page 3

“Buy shares in a few high-quality, well-run businesses at a fair price, and then hold them forever.”

“Personally, I would not pay more than a P/E of 20 (earnings yield of 5%) for a company like Coke.”

“You can calculate the 'earnings yield' of a stock in one of 2 ways:

1. Earnings per share divided by the stock’s price per share
2. Net profit divided by the market cap”

“Growth stocks tend to have strong momentum on the way up, and even stronger momentum on the way down.”

“Number of shares to buy = (account size x percentage risked on each trade) / (entry price - stop loss) = ($10,000 x 0.02) / (17.07 - 14.50) = 77.82 shares, which we will round up to 80 shares.”

“This makes sense, since human nature is a constant. Trend following seeks to profit from this collective behavior of market participants, who move into and out of the market, driven by vast alternating waves of fear and greed.”

“90% of your losses will come from 10% of your trades. 90% of your profits will also come from 10% of your trades.”

“A lazy trader always loses lots of money in the long run.

You need to treat your trading like a job, and take it seriously. To be successful, you need to learn how to run your trading like a business.”

“Always honor your stop losses. If you don’t learn to take small losses, you will eventually take a massive loss.”

“Always trade like a sniper, not a machine gunner. Wait patiently for your target to come into view, and only then pull the trigger. Don’t take just any trade out of boredom. This is a game in which patience is rewarded.”

“Don’t time travel: don’t dwell on past bad trades, or fantasize about future great trades. Allow trading to teach you to live in the present.”

“Fact, every bear market begins with many stocks’ 50-day moving averages crossing below their 200-day moving averages. Major stock indices (SPY, QQQ, DIA, and IWM) will also see their 50-day moving averages cross below their 200-day moving averages.”

“If a stock sells off on good earnings, get out immediately.”

“If a stock suddenly becomes much more volatile than usual, just get out, or at least sharply scale back your position in the stock.”

“If there are no attractive trading set-ups, do nothing. Go for a jog instead.”

“If you are just trading for the money, you will lose money. But if you are trading to honestly improve your character, you will make money.”

“If you are trading badly, stop trading immediately.”

“If you have a trade on that keeps you awake at night, it is either the wrong trade, or your position size is too large.

Either scale back the position size, or get out entirely. Life is too short to lose sleep over a trade.”

“If you keep working at it and keep your losses under control, you will eventually become a great trader.”

“In a bear market, the previous market leaders will often lead on the way down, just as they had led on the way up. Market leaders in a new bull market are rarely those from a previous bull market.”

“In trading, honoring a stop loss is like knowing when to fold in poker. A small loss lets you live to fight another day.”

“In trading, it is more important to play great defense than great offense. If you lose your capital, you are out of the game.”

“Knowing when to sit on your hands is half the battle in trading. Good trading should consist of more watching than trading.”

“Learn to treat your trading like a business: losses are just part of the game.”

“Many momentum stocks end up giving back all or most of their entire advance. For example, in the bear market of 2000-2002, many momentum stocks declined 80-90% from their highs.”

“Near the end of a momentum stock’s long uptrend, it will frequently be trading at a truly irrational P/E multiple.

No amount of business success or growth will ever be able to justify such a multiple.”

“Near the end of a momentum stock’s long uptrend, it will frequently be trading at a truly irrational P/E multiple. No amount of business success or growth will ever be able to justify such a multiple.”

“Never buy a penny stock that has been recommended by a co-worker or friend.”

“Only the market tells the truth. If you lose money, you are wrong. If you make money, you are right. It’s that simple.”

“Pick a place on the chart where the stock should clearly never go, if you are correct about the trade. That is where you should place your stop.”