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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: pezz who wrote (34250)5/23/2003 10:06:25 AM
From: TobagoJack  Read Replies (2) of 74559
 
Hi Pezz, <<OFFENSE is the best defense! ...I think... >>

I received the following by e-mail, and am passing it along.

Chugs, Jay

From James "Rev Shark" De Porre:

Someone asked me an interesting question the other day: Which is more important, good money management or good stock-picking?

I have found that good money management is more important than good stock-picking. I like to think of money management as defense and stock-picking as offense.

Defense is what keeps us in the game. If money management defense is poor, a few stock-picking mistakes can put us on the sidelines. Our most precious commodity is our capital, and money management is the way to guard it.

It is very tough to be a consistently good stock-picker. Even the best will have some very poor picks and long losing streaks at times. It's money management that protects us when our offense goes cold.

Money management helps protect us during the slow times so that we can prosper when things are clicking. The traders who "blow up" are the ones who fail to use basic money management.

The vast majority of commentary about the stock market focuses on stock-picking and market-timing, which causes readers to presume that those are the ultimate determinates of success. Money management is a much more complex topic, is fairly boring and is difficult to write about, so we don't hear nearly as much about it.

Over the long term, I firmly believe that an individual who focuses on money management and grinds out gains will tend to outperform the trader who is a good stock-picker but a poor money manager.

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