8 Keys to Superperformance with Mark Minervini and David Ryan

Summary

The 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

00:00

📚 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.

05:00

📈 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.

10:01

📊 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.

15:02

🔄 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.

20:03

🚫 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.

25:05

📉 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.

30:06

🛍️ 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.

Keywords

💡Forced Trades

Forced trades refer to entering into a trade without a solid rationale or against one's trading plan, often driven by emotions or the urge to be active in the market. In the video, the speaker emphasizes the importance of avoiding such trades by sticking to a disciplined trading system that filters every trade idea through a set of predefined rules.

💡Losing Trades

Losing trades are transactions that result in a financial loss. The video discusses the common mistake of 'averaging down' on losing trades, which means adding more investments in the hope of reducing the average cost per share. The speaker advises against this strategy, advocating for cutting losses quickly instead.

💡Systematic Trading

Systematic trading involves using a defined set of rules and strategies to make trades, which helps eliminate emotional decision-making. The video speaker highlights the significance of having a systematic approach to avoid forced trades and to ensure consistency in trading performance.

💡Risk Management

Risk management is the process of identifying, assessing, and mitigating risks associated with investments. In the context of the video, the speaker talks about managing risk by keeping losses small and focusing on minimal risk for capturing relatively large gains.

💡Compounding

Compounding refers to the process where profits are reinvested to generate additional returns, leading to exponential growth over time. The video emphasizes the importance of maximizing compounding by rolling over profits from successful trades as many times as possible.

💡Market Timing

Market timing involves making decisions about entering or exiting the market based on predictions of market movements. The speaker disputes the notion that timing the market is impossible, sharing their experience of identifying patterns in stock behavior to time trades effectively.

💡Technical Analysis

Technical analysis is the study of historical price and volume data to predict future market trends. The video mentions the use of charts and patterns, such as the volatility contraction pattern, to identify stocks that are set up for a move and to time trades accordingly.

💡Portfolio Turnover

Portfolio turnover is the rate at which securities are bought and sold in a portfolio. The speaker argues against the idea that high turnover is inherently bad, stating that it is a natural part of an active trading strategy and can be beneficial when done with an edge.

💡Opportunity Cost

Opportunity cost is the potential benefit that is lost when one option is chosen over another. In the video, the speaker discusses the concept in relation to trading, suggesting that by focusing on multiple smaller gains, one can achieve the same result as a few larger gains, without the risk associated with highly concentrated positions.

💡Concentration and Diversification

Concentration refers to investing a significant portion of one's capital into a small number of investments, while diversification spreads investments across many assets to reduce risk. The video speaker argues for a concentrated approach for higher potential returns, as long as it is managed with proper risk-reward practices.

💡Drawdowns

Drawdowns are the peak-to-trough decline in the value of an investment portfolio. The speaker discusses the importance of minimizing drawdowns to protect gains, sharing personal strategies such as progressive exposure and selling into strength to mitigate losses.

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