First Post

This Blog is my attempt at tabulating my findings, results, and returns of my equity positions in the stock market.

-Pareto-
The name Pareto comes from the Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor sparsity). The observation is that for many events, roughly 80% of the effects come from 20% of the causes. Italian economist Vilfredo Pareto observed that 80% of the land in Italy was owned by 20% of the population. It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients." This principle applies well to the markets (with the focus of this blog being the stock, futures, and commodities), as the most informed participants will eventually increase in size as they continue to profit. With some training and diligence, one can discern what the smart money is doing and invest in a similar fashion. This can be profitable because it can takes months or years for institutional investors to completely enter or exit a position, but an individual can enter/exit in one day.

-Trends-
Anyone that seriously considers putting money to work in the markets should be aware of the three trends in the markets:
1) short term- timeframe: days to weeks
2) intermediate- timeframe: weeks to months
3) long term (primary trend)- time frame: months to years

-Time Horizon-
The short term trend is hardest to determine because it is often moved to and fro by news and noise, which are inherently unpredicatable. The intermediate term and long term trends are easier to discern, and therefore the risk/reward ratio is better. Anyone that ignores the trends in the market will do so at their own peril. GOD help them!