The 8 rules of Carney

1. Never get into something you can't get out of. Every trade you make, look for the exit. Always keep your eye on the exit.

2. Don't take anything at face value - that's the biggest lie of any market. Nothing is ever priced at its true worth. The key is to figure out the real, intrinsic value - and get it for much, much less.

3. One minute, you have your feet on the ground and you're moving forward. The next minute, the ground is gone and you're falling. Never land - keep it in the air as long as you can.

4. You walk into a room with a grenade, and your best-scenario is walking back out still holding that grenade. Your worst case scenario is that grenade explodes, blowing you into bloody pieces. Moral of the story : don't make bets with no upside.

5. Don't overthink. If it's look like a duck and quacks like a duck - it's a duck.

6. Fear is the greatest motivator. Motivation is what it takes to find profit.

7. The first place to look for a solution is within the problem itself.

8. Ends justify means, but there's only one end that really matters. Ending up on a beach with a bottle of champagne.

(Quotes from "Ugly American$")

Risk-less profits ?

Is there anything like "risk-less" profit in the world ?

Well, theoretically there is and that's called "arbitrage". Arbitrage happens when the "law of one price" is violated.  Traders take advantage of the inefficiencies in different markets and simultaneously buy and sell the same underlying assets (or similar assets in different forms) to lock in the price differentials (assuming zero-transaction costs).  The pair transactions must happen at the same time.

However, in reality, arbitrage opportunities are rare and unavailable to non-professionals.  And when they appear, they are usually short-lived.  The arbitrage pair-trades move the prices in the two different markets, causing them to converge.

Noteworthy though, arbitrage isn't an "investment".  When capital is invested and the acts of buying and selling happen at different points in time, that's an investment.  And investment involves R-I-S-K - the potential or probability that your action (or inaction) will lead to undesirable outcomes.

Raise your red flags when you hear investment like "fast growth", "high yields", "emerging markets", etc, promising "sexy" returns .  Read carefully the disclaimers.  Remember that Wall-Street will sell whatever Wall-Street can sell.  There is always a story behind, and it spells the same four-letter word : R-I-S-K.

Whenever something sounds too good to be true - yes, you are probably right.

The Richest Man In Babylon

This is the first-ever book I read about investment.  Told in a bible-like story, the richest man in babylon shared with his long-time friends his secrets on wealth-management.

1. One key reason why a person has never found any measure of wealth is he never sought it.

2. A man's wealth is not in the wallet he carries.  It's the regular stream of income that constantly keeps his purse full.  

3. Set aside at least one tenth of the income for savings.  Let the money grow itself. 

4. Yet, life is meant to be enjoyable.  Don't overstrain to save.

5. Differentiate between necessities and desires.  Plan your budget.  

6. Set simple, definite and practical goal. See it through and complete it, no matter how trivial it is.  How else can we trust ourselves if we can't even do small things ?

7. A small and safe return is far more desirable than a risky fortune.  Capital preservation runs before potential profit (or loss). 

8.  Put your money into familiar businesses or purposes. 

9. Own your own roof.

10. Pay all debts, promptly.

11. Take care of the family, both physically and financially. It builds your character. 

12. Make a will - we never know when God calls. 

13.  Help the less fortunate within reasonable limits. 

14. Good luck comes to those who accepts opportunity.  Take action and do not procrastinate.    

15. Be tactful whom you take advices from.