8 Keys to Superperformance with Mark Minervini and David Ryan
Summary
TLDRThe speaker emphasizes the importance of discipline and a systematic approach in stock trading to avoid emotionally-driven decisions. They discuss the concept of 'forced trades' and the need to avoid them by sticking to a defined strategy that works across different market conditions. The speaker shares their guiding principles, which include no forced trades, no big losses, and not averaging down on losing trades. They stress the significance of trading in one's area of competence and focusing on setups that are familiar to minimize risk. The concept of 'professional trading goals' is explored, highlighting the pursuit of minimal risk for relatively large gains. The speaker also challenges the notion that one cannot time the market, arguing that by studying patterns and trends, it is possible to time entries effectively. They conclude by stressing the importance of defining one's trading style, avoiding 'style drift,' and the value of learning from both successes and mistakes in trading.
Takeaways
- 📈 **Discipline and Systems**: Develop a trading system that works in all market conditions and stick to it religiously to avoid forced trades and emotional decisions.
- 🚫 **Avoid Losers**: Do not average down on losing trades; it's a common mistake that can lead to bigger losses.
- 🎯 **Know Your Competence**: Stay within your area of expertise and avoid diversifying into unfamiliar territories just for the sake of diversification.
- 💰 **Minimize Risk**: Aim for minimal risk while capturing large gains relative to that risk, and maximize compounding by reinvesting profits.
- ⏱️ **Timing is Crucial**: Learn to time the market by studying historical patterns and trends to buy at the start of a move and sell when it tops.
- 📊 **Use Volume as a Signal**: Volume can indicate the strength of a stock's move; pay attention to volume changes during periods of volatility contraction and expansion.
- 🔄 **Turnover is Key**: Embrace turnover in your portfolio to cut losses quickly and lock in profits, which is essential for compounding returns.
- 📉 **Manage Drawdowns**: Protect against significant losses by managing your risk-reward ratio effectively and learning from past mistakes.
- 📈 **Buy in Uptrends**: Always buy stocks that are moving in an uptrend to stack the probabilities in your favor.
- 💹 **Sell into Strength**: Take profits when stocks are performing well rather than waiting for a potential downturn.
- 🧠 **Continuous Learning**: Regularly analyze your trades, especially the losses, to improve your strategy and avoid repeating the same mistakes.
Q & A
What are the three guiding rules mentioned in the transcript?
-The three guiding rules mentioned are: no forced trades, no big losses, and 'losers average losers.'
What is a forced trade and why should traders avoid it?
-A forced trade is a trade that a trader takes not because it meets their criteria but due to impatience or the feeling of needing to be active in the market. It should be avoided because it often leads to poor decision-making and emotional trading, which can result in losses.
How can traders overcome the urge to make forced trades?
-Traders can overcome the urge to make forced trades by developing a disciplined system or method that works in both good and bad markets and by filtering every trading idea through a set of rules.
What is the significance of defining one's trading style and staying within the area of competence?
-Defining one's trading style and staying within the area of competence is crucial because it helps traders to focus on what they are good at and understand the risks involved. It prevents them from venturing into unfamiliar areas that could lead to unnecessary risks and potential losses.
Why is it considered a mistake to add to a losing trade?
-Adding to a losing trade, also known as averaging down, is considered a mistake because it increases the overall position size at a lower price, which means that the stock would have to rise further to break even. This can amplify losses and is often a sign of poor risk management.
What does the term 'professional trading goals' mean in the context of the transcript?
-In the context of the transcript, 'professional trading goals' refer to taking minimal risk while capturing relatively large gains compared to that risk. It also involves maximizing compounding by reinvesting profits as many times as possible, with the frequency depending on whether one is a short-term or long-term trader.
How does the speaker define timing in the stock market?
-The speaker defines timing in the stock market as the ability to identify patterns and trends in stock behavior, particularly in successful stocks. By studying these patterns, one can determine the right moment to buy just as a move is starting, thereby increasing the chances of success.
What is the '50-80 rule' mentioned by the speaker?
-The '50-80 rule' refers to the statistical likelihood that big market leaders, once they peak and start to decline, have about an 80% chance of falling more than 50% and a 50% chance of falling more than 80%. This highlights the importance of not just holding onto big winners and being aware of when to sell.
Why is turnover considered a good thing in trading?
-Turnover is considered good in trading because it allows traders to cut losses quickly when they are wrong and to sell stocks when they have profits. This active management of the portfolio can lead to higher returns over time, as long as the trader has an edge and a solid strategy.
What is the importance of managing drawdowns in trading?
-Managing drawdowns is important because it helps to preserve capital and prevent large losses that can wipe out significant gains. By controlling the size of drawdowns, traders can ensure that they have positive months and quarters more consistently, which is key to long-term success.
How does the speaker approach the risk of a stock that has recently shown significant gains?
-The speaker approaches the risk of a stock with recent significant gains by selling into strength, taking profits when the stock is up, and being cautious of potential pullbacks. They also emphasize the importance of not holding onto stocks that have become very popular or 'crowded,' as they may be due for a correction.
Outlines
📚 Guiding Rules for Trading Success
The speaker emphasizes the importance of adhering to a set of guiding rules for successful trading. These include avoiding forced trades, not averaging down on losing positions, and focusing on minimal risk for maximal gains. They discuss the challenge of emotional discipline in trading and the need for a systematic approach to eliminate emotional decision-making. The concept of trading within one's area of competence and avoiding the temptation to diversify into unfamiliar strategies is also highlighted.
📈 Timing the Market and Identifying Patterns
The paragraph delves into the concept of market timing and the ability to identify repeating patterns in stock behavior, particularly in successful stocks. It challenges the notion that timing the market is impossible, arguing that by studying charts and recognizing base breakouts, one can time entries effectively. The speaker also touches on the importance of volume analysis and the significance of market leaders' performance over cycles, using Lumber Liquidators as an example of a stock that lost significant value after peaking.
📊 Technical Analysis and Volatility Contraction
This section discusses the use of technical analysis, specifically the volatility contraction pattern, as a method to time trades effectively. The speaker shares personal strategies, such as the 50-80 rule regarding the decline of market leaders, and emphasizes the importance of quick exits when trades go wrong. The concept of opportunity cost is also introduced, encouraging traders to focus on making profits and being willing to take on taxes as a result of those profits.
🔄 Turnover and Opportunity Cost in Trading
The speaker argues against the idea that high turnover is inherently bad, stating that it can be beneficial if an investor has an edge. They discuss the concept of opportunity cost and how focusing on short-term gains from multiple stocks can be more effective than holding out for a single large gain. The importance of defining one's trading style and sticking to it is also highlighted, along with the risks of style drift and the benefits of specialization.
🚫 Avoiding Drawdowns and Progressive Exposure
The paragraph focuses on strategies to minimize drawdowns, such as avoiding buying stocks in a downtrend and always trading with the trend. The concept of stacking probabilities by aligning multiple trends in one's favor is introduced. The speaker also explains their method of progressive exposure, starting with smaller positions and increasing them as trades become profitable, which helps to maximize gains during favorable market conditions and minimize risk during unfavorable ones.
📉 Protecting Profits and Selling into Strength
The speaker discusses techniques for protecting profits, such as selling into strength and moving stop-loss orders to breakeven once a stock has shown a profit. They emphasize the importance of being humble and cutting losses when necessary, rather than trying to recoup losses through revenge trading. The speaker also shares their approach to trading around a position and the importance of being flexible and adaptable in the market, even with stocks that have previously resulted in losses.
🛍️ Investing in Lesser-Known Names
The final paragraph encourages investors to look beyond well-known names to find the next big winners. The speaker reminisces about early investments in companies like Amazon and Yahoo before they became household names. They stress the importance of being open to investing in smaller, lesser-known companies, especially those in emerging technologies, as these can offer significant returns before they become widely recognized.
Mindmap
Keywords
💡Forced Trades
💡Losing Trades
💡Systematic Trading
💡Risk Management
💡Compounding
💡Market Timing
💡Technical Analysis
💡Portfolio Turnover
💡Opportunity Cost
💡Concentration and Diversification
💡Drawdowns
Highlights
Guiding rules for trading include no forced trades, no big losses, and not averaging losers.
Forced trades often result from emotional pressure and a lack of a systematic trading method.
Developing a disciplined system is crucial to overcoming the urge to make unwise trades.
Staying within one's area of competence is key to successful trading.
Professional trading involves taking minimal risk to capture large gains relative to that risk.
Maximizing compounding is achieved by rolling over profits as many times as possible.
Being in the market as little as possible is a strategy to minimize risk.
Timing the market involves identifying patterns in stock behavior and acting accordingly.
The 50-80 rule suggests that leading stocks in a market cycle have a high probability of significant declines when they peak.
Traders should focus on turnover and not be afraid of making frequent trades if it's based on an edge.
Opportunity cost is important to consider when deciding between trading strategies.
Concentration and risk-reward management are critical for achieving big returns in trading.
Minimizing drawdowns is achieved by learning from mistakes and applying discipline.
Protecting one's breakeven point is essential to lock in profits and minimize losses.
Selling into strength is a professional trading strategy that involves taking profits during a stock's rally.
Traders should be open to buying back stocks that have previously resulted in a loss if the setup is right.
Focusing on less popular, smaller names and new technologies can lead to significant gains.
The importance of buying stocks before they become household names to achieve substantial returns.
Transcripts
I want to start off with just talking
about my guiding rules that I actually
have a sign up on my wall in my office
and it says no forced trades no big
losses and I've had that sign up there
for for a long time I also have a sign
next to it that says losers average
losers and basically those are the big
three rules that I always follow and I
know they may sound may be obvious or or
simplistic but believe me there's uh
these are the things that most traders
deviate from the most and what I mean
about forced trades let's talk about
that for just a second and I'm sure
everybody that's a stock trader for any
period of time can relate to taking
trades that maybe you shouldn't have or
feeling antsy and itchy to do something
so you end up taking the trade then
later on you look back at it and you
notice you know why did I do that what
the heck was I thinking that's that that
pressure to to you know have action in
the market data I'm curious you know
you've been doing this for a long long
time and I'm sure back when you started
this was probably a problem just like it
was for me and for everybody else you
know how do you deal with that the other
feel the urge to you know actually you
know put on trades that maybe you
shouldn't or or do you get this kind of
a pressure on you ever yeah I mean it's
it's it that's very natural I mean for
anybody in the markets you have these
emotions weighing on you back and forth
should I be buying should I be selling
and the way you overcome this and the
way you overcome forcing trades is you
you develop a system or a method that
that works in good markets and bad
markets and so it really comes down to
discipline do you have rules that you
filter every idea through that's how you
get over forcing trades because forcing
trades all comes because you're
emotionally in the wrong place and and
you're not following some kind of
systematic system to eliminate the
emotion
yeah and you know of course you have to
have a system first but you know having
a system and and having a set of rules
is the very first step and some people
you know you may not even have that yet
and you're you're looking for those
rules and that that system that you
could follow but then you have to have
the discipline to actually follow it and
something that I always try to point out
to new traders especially is that you
have to define you know what it is
you're doing I mean if you're you know
if you're a certain type of trader you
got to stay in that in that area of
competence and that means sacrificing
you know some of the other areas main
thing is you know I'm always looking to
trade only setups that I am familiar
with that I know what to expect I'm
always trying to keep my losses as small
as possible back into the lowest risk
trades possible and I never ever had
money to losing trades if I'm down on a
trade I'm not gonna add to it that's the
you know probably the ultimate amateur
mistake I'm never ever adding to a
losing trade and averaging down worst
possible advice you could get that's the
kind of advice you're getting fire
whoever's giving you that advice real
quick let's just talk about you know
professional trading goals and what that
means to me professional trading for me
means taking minimal risk and and then
capturing relatively large gains
relative to that risk
now that word relative is really
important because if you are a day
trader well a 5% gain is probably going
to be a pretty big gain but if you're a
long-term investor that that wouldn't be
of course
so it's relative to your risk and then
you want to maximize compounding by
rolling that over as many times as you
can and again if you're a shorter term
trader you're going to have more you can
have more turnover you're going to be
rolling that over more often if you're a
longer term investor it's going to be
less often so it's relative now one of
the things that surprises a lot of
people is that when I tell them that I
want to be in the market as little as
possible as a matter of fact more if we
if we circle back to when I won the us
investing champion
ship that entire year I was a 155% that
year and if you looked at the whole year
and like averaged out my exposure in the
market I was only in the market about
50% of the time so if you take you know
12 months on average six of those months
I was out of the market so I I achieved
that return and many of my my big return
years have been achieved with being out
of the market and that's because when
you're in the market you're at risk so
I'm trying to be in the market at
specific particular times and that leads
me to the first key to big performance
and that's timing Dave you know a lot of
people say you can't time the market you
know I mean I always say anybody who
says now you can't do something it's
because they can't do it and they don't
believe somebody else can do it because
they can't see themselves doing it but
you know you and I've been timing stocks
for you know decades now you know what
do you say to that and then what any you
know advice for getting over you know
having that limitation and your in your
thinking well the timing is is coming
down to looking at how a stock is acting
and there's certain patterns that repeat
themselves over and over again in
especially in successful stocks stocks
that are in up trends they they act a
certain way so once you identify a base
or how a stock breaks out or starts a
move or even in the middle of the mover
and when it's topping out if you can
identify that by looking at charts and
studying them then you can get down to
the point where you're buying just as
the move is starting and I've just you
know I've looked at probably millions of
charts now and and have studied them and
and looked at these moves and they're
defined patterns that show up over and
over again so to say that you can't time
the market I would just say well I'll
show you so many charts so many
different situations where the timing it
worked and it continues to work it's the
same thing oh yeah the other thing I you
can look back at charts going back into
the 1930s and
20s and even I've seen charts of even
below 1900 where the same patterns
repeat themselves over and over again so
timing is is is done by looking at
charts and it continues to to help in
finding the best stocks to buy
yeah and charts are just showing the
price I mean it's not there's nothing
magic about them it's not like it's a
precursor to anything it's actually the
end result so it's just showing the
price but even Warren Buffett is timing
his trades you know maybe they're based
on a different factor maybe he's not
even looking at a chart you know he's
looking at fundamentals but when those
fundamentals deteriorate he's out when
when he sees the right valuation the
fundamentals he's in there's still a
timing mechanism you have to make a
decision to buy a decision to sell so
that timing factor you know and I think
the big point that people have to
realize is that you're not gonna make
big returns in the market when I say big
returns I'm talking about 40% a year or
greater is what I always shot for as my
minimum level and what I really wanted
was a triple digit a year that's what I
always shopper was that triple digit
year I had a lot of years that I was
able to do that about 75 80 percent of
my ears
I had triple digit years for over a
decade but then you know on the years
that weren't so good I wanted to return
35 40 percent and then if there was a
real big bear market and you know if I
broke even or just had single digit
losses I was happy but regardless you're
still gonna have to have some sort of
timing and people think that you could
just put a stock away and and hold it
doesn't work that way
I mean even if you do get on to a long
term winner and you put it away when it
really all comes down to it in the long
in a long run you're not gonna get that
consistent those consistent returns
where you're you're making a career out
of this in here and you're making a
living off of it that that requires some
trading and some timing I want to point
out something that that I call the 50 80
rule and and as much as I've pointed
this out and I've talked about it in my
books and so forth a lot of people don't
realize that the big market leaders of
one cycle when they finally top when you
get a big
secular move and it tops and it was a
key leader the chances of it going down
50% are about 80% and the chances of it
going down 80% are about 50% and the
average the average leader when it tops
goes down about 70 75 % now that's a
huge decline we have a portfolio of
these big high-octane names that are
doing great in a bull market and when
they finally top you could be sitting at
a huge loss lose everything you've made
an even more this is a example of Lumber
Liquidators which was you know a market
leader coming out of the 2012 market and
had a big move and then of course you
can see gave up everything and this
isn't something that's new this happens
cycle after cycle you know David pointed
out you can look at charts going all the
way back you know we've looked all way
back to the 1800s and it's exactly the
same it happens the same way every time
you'll see the same the same patterns
develop you'll see the same type of
emotions taking hold of people you know
holding on to the the big high-flying
names that have been going up for a long
period of time and then when everybody
wants to own them like back in the 90s
you had you know you had Qualcomm JDS
you to you know phase you had even
Amazon back then was it was a big leader
Yahoo EMC and when these stocks finally
topped and became household names many
of them were down 80 90 percent some of
them went completely out of business and
then dead money for 16 years Dave we've
seen this how many cycles have you seen
this the same story
87 top you know the 90s now you know
going into this market with the Fang
stocks Apollo's will probably be will be
talking about 10 or 20 years from now
let's talk about you know about get roll
back a little bit on timing okay so for
those of you who have read my book they
probably know about the volatility
contraction pattern or that vernacular
and how this is nothing you know new as
far as you know Dave's been doing this
and O'Neil has been doing this for a
long
time I just came up with a sort of an
overlay the a way to look at say like a
cup with handle or some of these
patterns and have just a little bit
better way of determining when one was
actually setting up constructively
because I found over the years so a lot
of people would come to me and say hey
you know is this a cup of handle and it
just wasn't a very good setup so I came
up with this volatility contraction idea
and it's really helped people quite a
bit and and this is something again that
we're not we can't cover everything here
today if you want to spend in a few days
with us and we go over this stuff with
400 pages of workbook material you can
attend the master trader program and
maybe in the future we'll be able to do
like a technical analysis webinar but
we're going to touch upon some things
here and stick to the bigger concepts
but you should you know definitely of
course only else book is is is a is
probably one of the greatest books ever
written on the stock market I think my
books are right up there too and I think
they all work very very good together so
you can learn a lot about that by just
reading those books I think if you just
read or nails book in my two books you
don't really need anything else and
you'll learn a lot about this but the
timing I want to be going into these
stocks as they're coming out of these
consolidations and you'll notice how the
stock is moving very quickly see this is
where the this is where you're
maximizing that compounding your timing
that trade at a point where it's either
moving very quickly or it's moving maybe
against me and that's also it may not
like having a loss but if I'm going to
have a loss I want that loss to happen
pretty quickly I like to know because
then I can move on into something else
it's sort of like you know would you
want to be in a bad marriage for 20
years and no you know I'd like to know
right away that this isn't gonna work
and then I could find someone else
that's right for me I mean that's the
way you have to look at a stock you want
to try to know so by timing your trade
and knowing what to expect
knowing whether you're right or wrong
very quickly it saves you a lot of time
and time and also add that you not only
have to look at the chart itself but
also look at the volume because when a
stock is contracting and it's it's
getting tighter and tighter the volume
is usually drawing
and then when the stock comes out of
that starts breaking into above the base
then the volume really picks up the
demand should really pick up if it
doesn't then you've got a problem and
it's probably gonna reverse and start
breaking down and and that looks a
perfect time let's talk about breaking
down not all these patterns are gonna
work all right and then when you're as
long as you know your criteria is sound
then you'll have a pretty good idea that
the markets not right see if your trades
aren't working there can only be one of
two things wrong either one your
criteria is flawed or two the markets
just not right at that time it could
only be one of those two things if you
have solid criteria and you're buying at
the right point well then the only thing
that's gonna hold that back is it is it
a negative market is a hostile market
but if you have poor criteria you might
be in a great market and you're not
doing well so you have to go back and
check your criteria if it's if it's
sound then you have to realize there's
times where you're gonna get stopped out
and here you go here is a perfect
example of another and I wanted to show
during this webinar I wanted to show
some of these very high quality quote
unquote quality companies and how what
happens to them when they top this is
going into the subprime debacle going
into oh eight oh nine and here's
Citigroup you know again another name
that has never come back
most of these names banking names have
not come come even back to their
breakeven points but you should be
selling stock as it's coming up just
like David said volume picks up prime is
picking up on the downside here your
cell rules are getting hit should be out
of this stock and you and you're never
in this you'll end it and of course this
will not meet your trend template
criteria once it starts rolling over
like this all that criteria goes out
through out the window and you're not
even going to be thinking about owning a
stock like that and you to save yourself
a lot of aggravation here so I'm looking
the time my trades based on the trend
template and looking for those vcp
patterns but also I'm going to admit
when I'm wrong very quickly and and like
I said I want to I want to know I'm
wrong as quickly as possible time is
money in the market
turn over alright here's another thing
that you hear a lot about turnovers bad
you know you gotta pay taxes you don't
want to you know take that profit well
you know I mean if you wait long enough
you have losses you won't have to worry
about paying taxes I want to pay lots of
taxes I want to have lots of profits
makes a lot make lots of money and pay
lots of taxes that taxes are good it
means you're profiting but again you're
gonna have to turn your portfolio over
okay you're gonna the yeah gonna have to
do some work you know if it's not
there's just putting into a basket of
names and by the time you see a basket
of names like the fang names or
something and you see this huge
outperformance believe me the best is
behind you and once it convinces you
that you could just salt it away and
everything's gonna be okay trust me
you're you got a big problem coming down
the road when you least expect it you've
got to turn over your portfolio and that
means cutting losses very quickly when
you when when you're wrong and selling
stocks when you have profits and nailing
those profits down turnover is not taboo
turnover is a good thing as long as you
have an edge all right talk about
opportunity cost now people think that I
made all these big returns especially in
the 90s because so many stocks went up
huge I had these giant winners and
there's a lot of these names that I
bought right before they made huge huge
gains Yahoo was a perfect example I
bought Yahoo it doubled I sold it I
bought it back it doubled again I sold
it I brought it back and went up about
40% I sold it well I brought it back
again it went up 30% you know when it
was all said and done I don't know what
my compound that return on Yahoo was but
it was hundreds of percent but it went
up 8,000 percent okay a lot of the
trades that I've done are swing trades
the shorter term in nature compared to
that the big moves so if you can find
one stock that goes up 75% well you can
get the same result by finding finding
three stocks that go up 20% or 6 stocks
that go up 10% or twelve stocks will go
up 5% if you compound that out you have
to first of all to find what your
strategy is and decide what's going to
be the easiest route can you is it
easier to find
restocks ago up 20% or six docs go up
10% I think so
for me it is I'm better at finding those
stocks than I am at finding a handful of
stocks that go up 75% so I'm usually in
that category this would be the more of
a short term trading category a very
short term sort of scalping that's not
my you know my wheelhouse but my
wheelhouse is in that you know 10 to 20
when I get a big winner might be 35 40
50 percent and I'll I'll nail that down
Dave I'm curious because of course you
know when I was starting as a stock
trader and reading about you winning the
us investing championship three years in
a row that's what got me interested in
entering the u.s. investing championship
you know were you making those big
returns because you had some giant
winner or and I know it's evolved over
time I know back then we we did have
bigger winners and now you know we're
all trading a bit more but I'm just
curious if that particular time was a
result of big winners or did you also
have some of these you know these
quote-unquote shorter term trades yeah
at that time when I was winning those
Championships they were shorter term
trades but they weren't trades where I
was in for two days or three days or so
I would probably usually I'd hold them
for at least a couple of weeks or if not
a month or two and get these 30 40 50
percent moves and when I felt that those
were getting tired or that individual
stock was getting tired then I would
shift and I'd move into something else I
was constantly looking for for the next
breakout the next big winning stocks
that have all these characteristics and
so I'd be rotating my money from stock
to stock so yeah there were a lot of
shorter term trades but it's not a
trading it's it's more weeks and then
and then some months and and when I
really like a company I don't want to
lose a position in it and completely
sell out of it I might cut the position
way down and keep a token amount until
it rebuilds a base and then I come back
and I buy back you're gonna find that
the traders that are getting the big
returns
tell me that's the key consistently I
mean you can have you know a big year
every now and then you get a bull market
and you're in the right names but to
consistently turn out big returns year
after year you're gonna find that it
comes from timing and turnover and as
you're hearing David's talking about
having turnover even back this is in the
80s when training was really we didn't
do short-term trading back then much it
was really a cutting edge thing to to
trade it out because commissions there
were so many things against you at the
at that point it's it right now it's a
really great time to be a trader you
have just so many benefits of very you
know tight spreads and just incredible
access where you can trade off your
phone and commissions are so low so it
opens up a lot of a lot of opportunities
you need to define your style sorry
yeah and mark a fight mark if I could
add I don't think I've ever thought
about taxes when I've when I'm in a
stock and thinking about selling it I've
never said you know I've got to go long
term and I've got four months to go I
always base my decision on how the stock
is acting and if it should be sold it
should be sold regardless of taxes and
one last thing is that you know so many
people have IRAs and Roth IRAs there's
no tax consequences within those and so
they don't even have to worry about you
know it's a very you know ignominious
way of thinking when you start thinking
about taxes no type of things you're
you're really thinking very small and
you're not you're missing the big
picture the big picture is to make big
returns and I know a lot of people don't
believe they can do that they don't but
again you know I mean I can't fly a 747
either but I'm sure if I got the
training and I went through the classes
and became a pilot I'd be flying a 747
several years down the road if that's
what I chose to to do as my profession
so you just need to get the proper
training and then spend the time getting
the experience but you can you can you
can you can beat the market every year
and you could do really well and make
big returns just like we're doing it's
not something that we're naturally
gifted with one of the keys is to make
sure that you define your style and you
stick to it
in the beginning you really want to
perfect something and get good at a
particular style before you start
drifting off of it you don't want to
have style drift that's the first thing
you want to make sure that you don't
have style drift now if you're a day
trader you're gonna sacrifice bigger
moves but you're gonna have the comfort
of not holding overnight you'll have no
overnight risk but you're probably never
gonna have a you know a fifty or a
hundred percent move like a long-term
investor would if you're a swing trader
you're going to maybe sell some stocks
that are up twenty or thirty percent
only to watch them go on to become 50
100 200 percent winners or more so
there's a price to pay but you have to
realize there's benefits and there's
there's good things and there's bad
things about every approach but you're
in your particular wheelhouse you know
that's your limitation but there's a
benefit from it so you know I find
people are constantly thinking there's a
better way you know you do it this way
and they know it doesn't work they
switch over to this one and you end up
being just a little bit okay at a bunch
of things instead of being really great
at one thing and the reason why I've
done so well and I think David's done so
well we've stayed with a particular
style for decades we didn't just commit
to it for a year to see how it does we
believed in it we realize it's timeless
and we've stayed with it we learned
everything about it and that's that's
what I would recommend that you do too
and it doesn't matter if you're picking
my style or you know or some that
doesn't that's irrelevant well there's
lots of ways to skin the cat my strategy
is not the only way you know but but
there's many ways but you want to stick
to one of them and really learn it and
become great at it I'm going to talk
about the next two keys and that's there
basically we run them together
concentration and risk reward management
go hand in hand and the reason why is
again you're not going to make big
returns if you're wildly diversified all
over the place you're gonna have to get
concentrated if you want big returns and
you want to consistently turn out big
returns year after year you're gonna
have to get your portfolio concentrated
you're gonna have to get away from
thinking that diversification is going
to protect you and that the first of the
keishon is is a good thing for your
portfolio it's not it's not to a certain
degree to a certain degree but
diversification is just going to limit
your your upside and I'm going to show
you that mathematically in just a second
but you know it's all based on how you
manage your risk reward if you're you
know if your plane is upside down and
you you're not doing very well a good
job at managing your risk reward ratio
well then the more concentration you
have the more you'll lose if you have a
negative you know you don't have an edge
on or a positive edge
we show you some math here this is just
taking we have a little calculator that
we have on for my members that you can
put in your various parameters and then
see how they would play out like we call
it result based assumption forecast so
if I took a hundred thousand dollar
portfolio and I had a position size of
ten percent I used to 10% position sizes
and my desired return is 40 percent I
have an average gain of 12 percent and a
loss of an average loss that is of 6
percent with a 50/50 batting average so
half my trades or 12 percent winners
half my trades are six percent losers
right I take that and I take a look I
put it into you know we call it the
hopper and we look over here it's gonna
take a hundred and thirty four trades to
get to that forty percent return now
that's doable I've done a few I've done
250 I've done 500 trades in a year swing
trading so that's very doable right so
now let's just let's just take and we'll
up that position size to 25 percent now
and I'm not saying that every one of
your trades should be 25 percent but
this is where I shoot for when I try to
get built into a position and have some
of my bigger position to be 15 20 25
percent of my portfolio now that same 40
percent return is going to be achieved
with just fifty four trades so see you
have to do far less trades now if we
take a look here don't we do one hundred
and thirty-four trades with that same
concentration that gets us a hundred
percent return now doing the exact
amount of trades as we did before now of
course if you're like they said if you
have a negative expectancy raising your
exposure is going to actually hurt you
more so you have to be a
a profitable trader but once you are a
profitable trader and you're managing
that risk reward it's important that you
realize that you don't want to be too
diversified so we covered timing
turnover concentration risk reward
management as four key principles to to
get a superior performance now we want
to talk about draw downs because when
it's all said and done I I mean I had
clients I'm not going to mention any
names but we had one client they managed
a hedge fund and they they literally
were up over a thousand percent the
hedge fund was up over a thousand
percent a year and a half later they
were down over 99 percent and the funny
part was they sent out a letter to their
investors and they said that they felt
they could get it all back within 12
months which was extremely comical they
actually of course went out of business
but they were in that they were hugely
leveraged and in Qualcomm and some of
these names that were the big
high-flying and they were they were
leveraged but drawdowns are really and
if there's anything that if I look back
at my career and my performance in the
market I'm proud of the fact that I had
a lot of big ears and I've gotten a lot
of those triple digit years but it would
be meaningless if I gave it all back in
the bear markets what I'm really proud
of is that 88% of my months have been
positive and almost all my quarters I've
only had a few quarters in in several
decades in several decades I've only had
a few quarters that were even negative
and they were all they were all single
digit so this has really been the key to
my success and I'm going to go over with
the four principles of how how I'm
achieving that Dave you know as far as
you know drawdowns are concerned I know
you had early on you know you had where
you you were up big and then you gave it
back and that was sort of a big lesson
for you any words of advice as far as
drawdowns are concerned and you know
your own story what you learned from it
and yeah you should you should use we
can go we can go through this you know
teach you all these rules
you can read all the books that that
Marx put out and Bill's put out but a
lot of this is learning from yourself
and so when you do have a drawdown and
you do get hit the market it takes money
away from you don't get so down on
yourself but take it as a learning
experience because what I did is when I
first started out I took an account and
I doubled the account and then I lost it
all back and and more I mean I went from
thirty to sixty thousand and I came down
into that like the low 20s and I spent
an entire weekend going through every
mistake that I had made for the last
year and I learned from those mistakes
and I said I'm gonna get so discipline
I'm only gonna look for this exact setup
and when I got down to that point and
got that determined to only look for
that setup that's when my performance
started taking off but it all started
from studying my mistakes and and
learning from what I had done what I did
are you ever buying a stock that's
plummeting oh no no I'm usually always
behind a stock that's going up I just
there's no reason to buy a stock that's
in a downtrend or a stock that's getting
hit extremely hard because there's a
reason why they're getting you know
they're getting hit like that either the
bad news bad news has come out earnings
have slowed down or sales of slowed or
something negative is happening I am
always buying a stock that's in an
uptrend that's maybe coming out of a
base after once on all the direction
going in your direction so rule number
one is to always trade directionally and
when I say directionally that's the
trend the long-term trend the
intermediate term trend the short-term
trend and the action that's happening
that day as the stock is moving you want
everything to be put all the trends in
your favour and that's that's what I
call stacking probabilities you want to
stack probabilities when you start
stacking probabilities it becomes it
becomes multiplication not it's not
addition it's not 1 plus 1 plus 1
probability equals 3 or 4
it's a multiple of that when you start
putting all these things together they
give you a much higher probability I'm
always moving I'm always buying in the
direction of a trade here's an example
and I'm going to show you some examples
here in just a minute we're gonna show
some charts and some I'm sure some
recent trades - that I've just recently
done so this is WR Grace at the time
they had some asbestos issues and they
they started to get them resolved I
forget but there was you know court
cases and so forth but the stock set up
really nicely I remember if I remember
correctly there was a correction in the
market in o4 and this came right out
about just a perfect perfect DCP pattern
just beautiful and you see I'm buying it
as it turns up and this is another thing
I wanted to have Dave talk about because
back when I was just starting out and I
was reading the very very beginning
issues of investor's business daily and
I actually attended a seminar with Bill
and and David it was like it was right
in the beginning - because it was like
25 people in the room no one or even you
know knew about them at the time Dave
said something and I didn't never forgot
it and I've been living with this
principle ever since he said the best
thing that I would I know that I know
I'm gonna have a profit in the stock is
that I'm off right away on it that you
know usually the best names and the
biggest gains that I've made are
profitable right away and you know I
found that when I look back because I
keep a record of all the trades that
I've made and we do a lot of post
analysis we find that that's so true
that when the stock gives you a hard
time from the beginning
it usually you know ends up being a poor
performer and when they're hard to buy
and they just come out and and they're
you you wish you bought more you know
this is the perfect example you see just
came out and it was up I held on to this
stock for quite a bit I didn't make the
full hundred forty-seven percent but I
made up I made a big move it was close
to a hundred percent in a pretty short
period time just a couple months and the
reason was and this is an O'Neill rule
basically and I don't always follow this
but coming out of a bear market if a
stock shoots up 20% you know in a very
short period of time and the pullback is
very shallow and it recovers very well I
usually hold that
and give it because it's shown me such
strength here's a recent name this is
Shaq I was in a fur trade but you can
see same principle I'm just buying it
off here this is what we call a cheat
area it's basically just a low handle if
you will sometimes you get a few
different pivots and handles that will
form if it's in the very lower third we
call it a low cheat if it's in the mid
third we call it a cheat and if it's in
the upper third we call it a handle that
would be the classic O'Neil cup with
handle but um you can see as the stock
it goes through this consolidation as
it's turning up that's where I'm buying
it and then I'm at a profit right away
it gives me a little cushion I'm able to
go and hold into earnings to take
advantage of the gap so well and then I
actually sold it too early I into this
gap I think I sold some a little bit
right up here and then it drifted a
little bit higher there okay let's talk
about another principle of minimizing
draw downs so another thing that I do
that I really feel like this is one of
them the absolute most important and the
the things that have been the the
principle that has been most responsible
for me not having big draw downs and
that is that I always expose
progressively and what that means is
that I never just plunge into the market
on my opinion even if things start
looking really good and everything
starts taking off I'm usually just
putting a toe in the water and I'm gonna
take a few trades and I say I'm in 100%
cash and we're in a correction some
stocks are setting up they start
emerging are you sure we're in a
correction some stocks are setting up
they start emerging are usually going
about 25% invested if things are really
looking good I might go to 50 but
usually my first toe in the water is 25%
invested and I might buy two stocks at
10 or 12% positions or maybe four or
five stocks at 5% positions just a toe
in the water things start working I move
it up to 50 pretty quickly and if they
work from there I try to go to 100 as
fast as possible but I'm always
pyramiding on my success now let me
explain why this is important and this
is a this is a key sentence right that
you should always remember if
you build into your exposure when you're
trading well and things are going well
and you scale back when things aren't
going well you're going to get ripped
around every now and then you will zag
against the zig if you will but what's
going to happen is when you finally get
into a bull market or a bear market
you're going to be trading at your
largest when you're trading your best
and you're going to be trading your
smallest when you're trading your worst
so it will protect you in the bear
markets and it will make sure that
you're invested heavily in the bull
markets and that's all the noise in
between is is is or is going to be there
but this is where it really all comes
down to is when you have to make the
money in the bull market and you have to
keep it doing the bear markets now very
simply let's just use a full position at
25% we'll call a full position 25% so a
quarter position will be six point two
five percent right so let's say going on
at risk five hundred dollars and I'm
trying to you know be a two-to-one
trader so we'll just use you know once
you get a two to one gain you're selling
it so I take $1,000 profit well now I
can take that thousand dollars and I can
bump my position size up and I can risk
a thousand bucks and go to a twelve and
a half percent position now let's say I
get another profit I can now move that
and move that and risk two thousand so
maybe I lose on there I still have a
thousand dollars left over that's in my
piano that can now a finance a half
position and I can go through this whole
cycle and and not lose anything okay now
if if things are working and I start
pyramiding at some maybe say well who
the hell wants to break even right okay
but if things are working and I keep
pyramiding and things work out and I
don't get stopped out of these names now
I've got myself at a big at a nice
invested position and I've really
positioned myself well but if things
turn around on me I'm out of the market
so bending just bending with the market
bending with the market I know Dave I
know that you know your your toe in the
water guy too you know you you're not
gonna just jump in and any um you know
we all have our own sort of little ways
we do it and rules that we do I know you
know you and I are both
you know more conservative than we used
to be you know we're not doing a whole
town in one name anymore any any rules
for you know or guidelines for usually
determined I now I usually go I start
with a I have ten stocks in my portfolio
and when I'm buying a position a new
position that's gonna be 10% of my my
portfolio I usually start at at a 5%
position I just figured what I'm gonna
put into that count and and I start with
a 5% position and if the stock starts
working out pretty quickly then I'm then
I move that up up to 10%
you know you sometimes it might be the
same day but in lots of times it's the
following day or the third day and so
I'm I constantly just adding money to
positions that are already starting to
work for me if that 5% position starts
down and and starts coming off I'm not
going to be adding any money to it until
I can see it's holding and starting to
go back up up through new highs so it's
it's going back to that principle of
always adding to winning positions and
not adding to losing positions and and
then as time goes on if I get if I have
a nice 10% position and that stock makes
a nice move and it's you know I'm up 20
or 30% and it builds a whole new base
well I might even double the position at
that points because if you can get one
or two great stocks in a year and you
add to them on progressive basis that's
where you're gonna make up for all the
small losses you might take and have
have great gains over a year period of
time in your account yeah and this
really goes bright you know and flies in
the face of where I see a lot of people
they tend to revenge trade so if they
start to have losing trades they'll so
ramp up their exposure and try to get it
back quickly and start doubling up and
that's how you blow yourself up you've
got to be humble alright I've been doing
this now for three over three and a half
decades David's been doing it for four
decades and we still have to cut our
losses and it
we're wrong you know we haven't gotten
so good we're we're not gonna have
losses and you're not going to either
so you have to realize that you know
revenge trading and trying to make it up
and going in there you've got to bend in
it sometimes you know your people like
they'll send us emails and and messages
on Twitter and say you know all right
you know I scaled up and then everything
started getting hit then I scaled down
everything started taking off and it's
not working okay but again that's the
noise in between but that's the price
it's like an insurance policy okay if
that's the insurance that's the small
price that you pay to keep yourself in
the markets or the good markets and
heavily invest it and out of the markets
that are poor just a quick note to if
you're looking at you know some of these
charts and they have low prices some of
them might even show you know it's
pennies it should split adjusted so
they're not the actual price I'm I'm not
buying you know stocks that are trading
at 20 cents or even usually $10 it's
usually going to be a no higher price
names so the next thing that I do and
that really helps me with my draw downs
is that I protect my breakeven point as
quickly as possible now there's there's
a little bit of latitude there or that's
a you know that's a relative term the
key is not to choke the trade off you
want to protect your break-even point as
quickly as you can but give the stock
enough room to fluctuate normally and
and that's what takes time to learn on
what is a normal action and what is
abnormal action when you know what's
normal then you know what's abnormal and
you know when you have to get out of the
trade so what I normally do is if the
stock is you know moves on let me see if
we have a chart here yeah okay so here's
an example of a recent trade not too
long ago in January it started rolling
over the market went into a correction
here go into February and this stock you
know went right in as the market started
to top there but I bought it coming out
right here you can see a little bass
coming out stock ran up and because the
market got a little heavy I actually
sold a little up here and I
and I cushioned myself a little bit and
then it came in and I got and I got
knocked out at breakeven right here and
then of course it's not going a lot
lower the market correct it now that's
how it happens
sometimes sometimes I'll i won't even
sell any as it turns up and what I
normally do is if the stock goes to its
first pullback and then goes into new
high ground I'll then move my stop to
break-even and that'll I usually don't
move my stop to break-even I stick to my
original stop until the stock goes to a
first natural reaction and then gets
into new high ground from there and then
the break-even point becomes a critical
level that I'm usually protecting and
then from there let me see if we have
another example ok so here's another
example of you know where sometimes you
know it hoses you here's a perfect
example I bought this stock back here in
June and it came out of a nice big base
here a nice tight pivot point came out
really well and you can see it had a
little natural reaction then went back
at the new high ground so that's my
that's my cue to move my and you know
what I should be using my I'm sorry I
should be using a pointer there we go
there we go sorry about that I'm
thinking the whole time you're seeing my
pointer so right here we break out we
come through a little natural reaction
here and then we get into no high ground
so then I move my stop of the break-even
unfortunately start came back really
quick knocked me out and then ended up
taking off now that happens that like I
said that's the price that I have to pay
sometimes it's gonna happen there's
other times I move my stop to break-even
keeps going I i Ratchet it up and I end
up taking advantage of a big gain it you
know again it's all about what you do
over time and what happens on average
not any one particular trade if you've
got a Monday Morning Quarterback and say
oh well I should never do that again
that's like saying you know you you had
aces and which is the best starting hand
in poker and you lost with them so you
say I'm never gonna play aces again well
that wouldn't be too smart that's the
best starting hand you can have or you
win with a pair of threes and then you
think I could always play a pair of
threes you don't judge stocked ratings
about probabilities you have to think
over the long term you're gonna make
hundreds of trades thousands of trades
I've been over and over mark if you go
back later another thing and I do this a
lot let's say let's say you did buy it
on the breakout and the stock pulled
back and then you got sold out and then
it came back up and it's set up again
well this this stock gapped but if this
stock started breaking out and it wasn't
too far extended and came through that
48 area you can buy it back that's where
your ego you have to throw your your ego
into the trashcan every time you step
into the market because just because you
lost money on it
you took a small you step into the
market because just because you lost
money on it you took a small loss
doesn't mean that you can't buy it back
again and I sometimes I've lost money
two or three times in a stock and
finally I buy it again and then the
thing just takes off and goes so that's
that's where the you know ego or you
have to just dismiss it and and look at
every situation getting into a more
advanced more advanced techniques of
that that's what we call a reset there's
a pivot reset a pivot failure reset a
base failure reset these are things of
course that we'd have to spend a lot
more time on oh absolutely David is a
hundred percent correct you know you you
don't don't think that you know the
stock has it out for me or or that you
know it's bad this stocks bad luck if it
sets up again the fundamentals are there
you know just because their stocks
stopped me out it's highly unlikely that
the fundamentals changed that
dramatically in just a few days unless
this was on some key report that had
some horrible news but it wasn't at the
time so you know you can still have all
the you know all the fundamentals are
there let me just move on here I know
I'm kind of pushing a little bit quick
here now because we're running running
tight on time let's see so here's
another one this USA K as a trucking
company and it real tight you know I
bought it thinking you know as for a
trade here it had a nice they came out
of the gate pretty nice for a few days
came back and a lot of times what I'll
do is I'll rather sell some of it as it
runs up quick and then move my stop to
breakeven or what I'll do is I'll break
even I'll move my stuff to break even
on half my position and then I'll
maintain my stop on my my original stop
on my other half and that's what
happened this time where it came back
and knocked me out of half but then it
was able to move up here I got a nice
gap on it it took off and I sold it into
the into that rally and have myself a
little profit on it finally um let's
talk about selling into strengths and
again this is really the hallmark of a
professional is to sell amateurs get all
in a murder and the stocks going up and
they start having all kinds of illusions
that the things going to keep going
forever and then because a lot of times
go mental is so great they'll sell it
and then it'll go higher and go thinking
alright that was a dumb thing to do but
again you can't Monday Morning
Quarterback you're not gonna get the
high did the chances of you getting the
high even once in a blue moon are almost
zero so it's really you shouldn't even
think of that you're trying to do is
make a decent profit just make a profit
and make more than you're risking and do
it as many times as you can that it's
meaningful enough for you to go to
compound a nice big return at the end of
the year and here you know very simply
I'll show you a way that I you know
played a recent trade this is Shutterfly
we were actually talking about it today
David and I it's now this stock is top
and looking like a short par maybe so it
comes out of this power play here some
people call it a flag and comes off a
little cheetah area coming out a lot of
times these little flags I'll bio come
out the cheat area so I buy it here it
runs up and I reduce I reduce my
position and then I move my stop to
break-even so what's happening now is
I'm free rolling the trade I'm going to
make money no matter what unless it
gapped it down and gets this giant gap
maybe on news you know that's the only
way I could lose money on this and would
have that gap quite a bit because of
course I've already nailed down a profit
now as it started to go through this
basing period I was actually going to
add back to it and very often what I'll
do is I'll trade around my position so
I'll trade out of some it's resets as it
turns back up I'll trade back in so I
hold part of it I trade part of it
that's called trading around your
position but what happened was it gapped
out
so instead of having the opportunity to
buy it coming out it got ahead of itself
so quick that I actually just sold it
and took the profit so this is just a
very typical way that I'll play a swing
trade let's see so this is another one
recently not too long ago orgy thx where
I bought it again very similar you see
almost the identical type of trade where
it's a very high momentum corrects
doesn't correct much and as it comes
through that low cheat I start buying it
I sit through it as it consolidates it
runs up I'm up 23% I reduced the shared
I sell some of my position now I'm up
almost 40% I sell a little bit more now
I start back stopping it and it was up
to him back in when I was only up 22%
and I decided that's it I'm out and
stock came in from there but I just
stuck to my original stop until his
Netflix this is a recent trade in
Netflix so I bought Netflix you can see
it was putting in this base
if you'll notice everything that I do
has vcp okay for those of you that
understand vcp you know exactly what I'm
talking about for those of you who don't
you should refer to my books and also to
O'Neill's book bucket look at the couple
of handles and look at what we're
talking about and the characteristics
that should happen while you're getting
these price consolidations you can look
at charts going all the way back to the
1800s
same thing timeless this is never going
to change it's simply the law of supply
and demand on display so I'm buying it
here right it's coming out of this
coming out of this nice little tight
area we run up a bit I reduce some we
run up some more I sell it into the
strengths so again you see I'm using I'm
using strength I'm almost always selling
it to strength unless I'm being forced
out and it's coming back in then I'm
being forced out of the stock but I
don't want to give the stock a chance to
break I don't ever want to give the
stock a chance to break I want to get
out when the getting's good because what
can happen is just like you know say I
wait here and I used to keep waiting in
backs to say well let me see in total
starts rolling over and then look at
here Wham it gets you give up all this
ground in such a short period of time
you would have been better off selling
it on this first rally face and not even
waiting
so a lot of times if you get out when
the stocks up your do better than if you
use a moving average or something and
wait for it to roll over and to have a
trailing stop so I'm always trying to
sell into strength Dave are you you know
not when you're at a profit
are you using strength for settling has
that been part of your repertoire for a
number of years yeah yeah yes it at
times when the stock is in thing about
this stock is if you can watch my
pointer it was going up at this angle
and then it started almost going
straight up when I when I have a stock
that's going straight up like that I
watch it very very carefully for signs
of a top and when I see a reversal on
volume or here it looks like it had an
inside day and gapped down I I do look
to cut down the position I don't want to
lose the position because it's usually a
very very good stock but I will cut it
back and I'll cut it back dramatically
if it starts showing those tyent signs
of topping well what and what this one
did it looked like it started building a
whole new base again did not break out
but actually broke down and that's where
the room the rest of the position if if
I had owned this would have been gone
but I look to see those signs of when
something is getting very very excessive
and there are there are some signs where
we've had some technology stocks
recently that have had those signs of
excessive moves to the to the upside
yeah and if I was in much lower and I
have a very big long-term gain on it may
playing it for a big move I might wait
for it to break down a bit and I might
give it that type of room but what I was
doing here and and and to David's point
is I started to see these Fang stocks
really starting to get very popular and
what I call crowded and I was looking
for some type of blow-off move and
that's sort of what we got here this is
sort of a little mini a little mini melt
up so I'm just gonna sell right into
that because I know that it's gonna
break hard once it comes in off of that
so I'm in the later stage of the bull
market I might be treating things a
little bit differently if I was you know
buying this stock coming out of a
off of a bear market I probably wouldn't
be selling you know any of my shares her
or maybe reducing a little bit but I'd
be holding for a much better move so
really it depends on where it occurs yes
I'm Markin we would like one recent
example someone asks I saw when someone
asks the question do I still own Ali its
Ali's bargain outlet and I still own it
and I've owned it for over two years now
but there have been times where the
stock e just even recently had a really
nice run from 66 to 90 and right before
earnings I cut back on the position to
just to take some profits because that
thing was going straight up into an
earnings report so that's an example of
selling into strength when it's when
it's so good and it's had such a good
run it's time to reduce the position and
just take some off the table
yeah and Ali's you know that's it that's
a name that David and I bought I think
on the exact same day we bought it
coming out of that nice IPO base and I
traded out of it and then I come back in
it traded out of it went back in and
he's been holding it pretty much the
whole time I'm pretty sure he's way
ahead of me right now as far as gain on
the stock but again you know there you
can trade it different ways you can
trade around your position you can book
but here's the point I wanted to bring
out and always is a good example always
is a name that if you were to ask the
average person about Ali's I doubt you
know but a few out of a hundred would
know who Holly's is I happen to know cuz
there's one nearby in my neighborhood
that I and I go to what every now and
then but um most of these big winners
are big winners before they become
household names and everybody knows them
again I'm gonna swing back I wanted to
start with the Fang names and the and
the the Amazons and I'm going to end
with those because you you really have
to start to move into areas that you
might feel uncomfortable with smaller
names relatively small names small
mid-cap names names that you haven't
heard about technologies that might be
new technologies that's where you want
to look when I was buying the Amgen's
and even Microsoft then Dell and Cisco
and Amazon when I was buying these
stocks when before they made the really
moves me see I know we have some charts
is Yahoo you know I'm buying this in 97
you know no but I always make the jokes
I went to the institutions and I said
you gotta buy Yahoo and they said Yahoo
you know what are you talking about that
stock trades at nine hundred and thirty
eight times earnings and I'm like yeah
but it's breaking out of a base and it's
this incredible technology and you know
and everybody just laughed at me and
then then the stocks of eight thousand
percent two years later so so these are
the type of names that you know again if
you take a look at listen to go past
that Amazon here's what I'm buying you
know this is my first purchase in Amazon
Amazon goes up twenty-five hundred
percent in just 16 months from this
point here and almost eighty thousand
percent over the next two decades now
you want to buy Amazon now and hold it
for 20 years yeah yeah I could tell you
right now you're not getting eighty
thousand percent out of it the next 20
years and I doubt you're gonna get
twenty five hundred percent in the next
16 months okay but that's when at this
point nobody even knew Amazon and those
who did hated Amazon Amazon was one of
the most hated companies for a law as
far as I can remember it's only in
recent very recent times that people
started saying that Amazon could even
make money I was thought that Amazon
would never make any money so you want
to find the next Amazon no and I hope
everybody this has been helpful I know
we can only cover so much in an hour and
15 minutes or so but hopefully this is a
this helps you move you a little bit
further along on the learning curve okay
take care thanks for coming
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